Strategies for superior performance under adverse conditions: A focus on small and medium-sized high-growth firms

Abstract

This article explores the strategies pursued by small and medium-sized firms to actively sustain growth within declining markets. A critical analysis of relevant growth theories informs the development of a semi-structured interview schedule; findings drawn from 20 case studies indicate that firms adopt a multiple-strategy approach in which they simultaneously pursue an innovative differentiation and product or service-customisation strategy. Following this strategy, it was found that firms make an intentional search for high-margin products, avoid aggressive price competition and maintain tight control of costs. The article demonstrates that an adverse environment does not necessarily inhibit firm growth and that individual firm-specific strategies can be invoked to overcome volatile market conditions.

Entrepreneurial behaviour, firm size and financial performance: the case of rural tourism family firms

“…(Hotel,9 employees) The interaction effects of the EO-performance relationship with firm size showed that the positive effect of Proactiveness particularly on financial performance is hampered by micro firm size. This finding indicates that despite the flexibility originating from their small size (Bamiatzi & Kirchmaier, 2014;Getz & Carlsen, 2000), micro firms might face difficulties in either implementing proactive efforts due to limited workforce, expected margins, or that they simply do not have the financial means to exploit these proactive capabilities (Weiermair & Peters, 1998). Drawing on the literature of social networks in tourism and the regional embeddedness of tourism family firms (Peters & Kallmuenzer, 2015;Strobl & Peters, 2013), one can find that microsized rural tourism family businesses use their networks and social ties to cooperate (Chrisman et al, 2015;Glover & Reay, 2015) and overcome their size disadvantage (Harms, Memili, & Steeger, 2015;Sundbo et al, 2007).…”

“…Larger (family) firms are also usually more able to endure financial crises (Lee, 2006) due to greater financial endowment. At the same time, small firms can benefit from more flexible business behaviour, such as being able to quickly react to environmental changes or by focusing on niche strategies (Bamiatzi & Kirchmaier, 2014). To conclude, previous findings lead to the hypothesis that firm size negatively affects the implementation of EO in rural tourism family firms, as micro firm size potentially blocks an effective exploitation of innovative, proactive and risk-taking efforts due to restrictions in capital and workforce.…”

“…Practical implications refer to the fact that the economic development of tourism regions could profit from fostering the entrepreneurial (Ahmad, 2015;Beeton & Graetz, 2001) and cooperative capabilities (Pansiri, 2007) of local family firms such as the creation of cooperative regional initiatives in the form of, for instance, festivals, which in return would contribute firm growth and the creation of jobs (Bamiatzi & Kirchmaier, 2014). Rural tourism is in particular need of long-term oriented, sustainable family entrepreneurs which would assure the longevity of the region (Getz & Carlsen, 2000;Komppula, 2014;Zhao & Getz, 2008).…”

“…Bamiatzi & Kirchmaier, 2014;Lussier & Sonfield, 2015;Smith, Guthrie, & Chen, 1989) has shown that firm size has substantial impact on financial performance. Considering the dominance of small and micro firms in rural tourism (Getz & Carlsen, 2005), this study aims to investigate the moderating impact of firm size on the effect of EO dimensions on financial performance.…”

“…Considering the dominance of small and micro firms in rural tourism (Getz & Carlsen, 2005), this study aims to investigate the moderating impact of firm size on the effect of EO dimensions on financial performance. Previous research on the relevance of firm size has shown that small firm size, as is prevalent in rural tourism, can block organisational development due to a lack of economies of scale, access to capital, bargaining power and employee attraction (Bamiatzi & Kirchmaier, 2014;Pansiri, 2007;Sundbo et al, 2007;Weiermair & Peters, 1998;Zhao & Getz, 2008). Larger (family) firms are also usually more able to endure financial crises (Lee, 2006) due to greater financial endowment.…”