The Strategic Orientation of New Businesses

Francis J. Greene, Kevin Mole and David J. Storey

Chapter 5 in Three Decades of Enterprise Culture, 2008, pp 106-120 from Palgrave Macmillan

Abstract: Abstract From the above quote, it might be thought that the concept of strategy is somewhat esoteric for smaller businesses. However, those who write on small business strategy suggest that everyone starting a new business has to choose ‘where’ and ‘how’ to compete (Hofer, 1975; MacDougall and Robinson, 1990; O’Gorman, 2000). Strategy is then two sets of decisions: first, the decision to compete in a particular industry (the where), and second, the decision concerning what aspects of the business to emphasise (the how). Rumelt (1991) compared the proportion of profits of large business accounted for from the industry structure compared with that from individual business. Although both factors were significant, the biggest contribution proportionately to the profitability of a particular business was from factors that were individual to the business rather than the contribution of the industry. Moreover, for writers on strategy there is an implicit belief in a positive and causative relationship between strategy and performance. The purpose of strategy is to confer competitive advantage so that greater profits accrue to the business with the ‘best’ strategy (Katz and Green, 2007).

Keywords: Competitive Advantage; Small Business; Strategic Orientation; Individual Business; Workforce Skill (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28801-0_5

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DOI: 10.1057/9780230288010_5

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