The Performance and Competitive Advantage of Small Firms: A Management Perspective

Abstract

PETERJENNINGS, NOW WITH SOUTHAMPTON Institute, England, was at the time of writing with Sheffield Hallam University, England, and Graham Beaver is with Nottingham Trent University, England. Successful small firms practice strategic management either consciously and visibly or unconsciously and invisibly. Failure and success are interpreted as measures of good or indifferent management and are usually defined rational criteria which ignore stakeholder aspirations. Many owner managers pursue personal objectives which inhibit the probability of success if measured using these rational criteria. The majority of existing studies of small business performance tend to focus on either the symptoms arising from problems within the firm or upon the reason cited for failure. Comparatively little analysis of the ingredients that promote and sustain competitive advantage has been undertaken. Notwithstanding the fact that generic skills and abilities are required, the management process in small firms is unique and cannot be considered to be the same as professional management in larger organisations practised on a reduced scale. The multiplicity of roles expected of the owner-manager as the principal stakeholder often causes dissonance which enhances the probability of poor decision-making and inappropriate action. The authors consider that the root cause of either small business failure of poor performance is almost invariably a lack of management attention to strategic issues.