Can hybrid strategy improve SME performance? The role of innovation and adaptive capacity

Santiago Gutiérrez-Broncano, Jorge Linuesa-Langreo, Mercedes Rubio-Andrés and Miguel Ángel Sastre-Castillo

European Journal of Innovation Management, 2024, vol. 27, issue 9, 173-197

Abstract: Purpose - This article focusses on the hybrid strategy, a simultaneous combination of cost leadership and differentiation strategy. The study aims to examine the impact of hybrid strategy on firm performance through its anticipated positive effects on process and product innovation. In addition, we study the moderating role of adaptive capacity in the direct relationships of hybrid strategy with process and product innovation. Design/methodology/approach - Structural equation modelling was used to analyse 1,842 Spanish firms with fewer than 250 employees. We randomly selected small and medium-sized enterprises (SMEs) operating in Spain from the Spanish Central Business Directory (2021) database. The overall sample design was based on stratified sampling. Findings - We found that hybrid strategy is positively related to firm performance and to process and product innovation. Additionally, in firms implementing hybrid strategies, process innovation fostered firm performance. Finally, adaptive capacity strengthened the relationships of hybrid strategy with process and product innovation. This sheds light on how and when hybrid strategy is most effective in fostering SME performance. Practical implications - We highlight that SMEs need to establish strategies that use diverse resources and capabilities and not just generate competitive advantage using one strategy (cost leadership or differentiation strategy). This requires an agile and flexible systems and structures. Originality/value - Our research provides novel results by proposing the adoption of hybrid strategies instead of pure strategies (cost leadership and differentiation strategy) as a way for SMEs to survive during crises. Unlike “stuck in the middle” strategies, our study demonstrates the importance of hybrid strategies in a comprehensive model that links them to innovation and firm performance, with adaptive capacity being a determining factor.

Keywords: Performance; Small to medium-sized enterprises; Product innovation; Process innovation; Hybrid strategy (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ejimpp:ejim-07-2023-0566

DOI: 10.1108/EJIM-07-2023-0566

Access Statistics for this article

European Journal of Innovation Management is currently edited by Dr Vincenzo Corvello

More articles in European Journal of Innovation Management from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().