Small Business Strategies: Refining Strategic Management Theory for the Entrepreneurial and Small Business Contexts

Abstract

Research in entrepreneurship has debated the differences between entrepreneurial and small business ventures for quite some time, arguing that entrepreneurial ventures are small growth-oriented, strategically-innovative firms, while small business ventures are neither growth oriented nor strategically innovative. However, scholars often treat both types of ventures analogously in terms of both construct and theory, which poses clear problems given their differences. As a result, we may have missed opportunities to advance both our understanding of new firm survival and growth and our understanding of how theoretical perspectives in strategic management apply to entrepreneurial and small business ventures. Since we understand far less about the strategies of small firms than the strategies of large firms, these problems present a substantial opportunity to refine strategic management theory for the entrepreneurial and small business contexts. Thus, in this study we examine the extent to which small firms may engage in strategic pursuits of competitive advantage to determine the applicability of strategic management theories to the contexts. We do so by empirically examining the types of strategies employed by entrepreneurial and small business ventures. Contrary to common assumptions, we find the essence of small firm strategy is to stay small. We discuss the implications of our findings for future research and practice.

Keywords: entrepreneurship, small business, ventures, growth, innovation, strategic management theory

JEL Classification: M13, L21, L1, L2