Resource reconfiguration by surviving SMEs in a disrupted industry

ABSTRACT

This paper investigates the strategies employed by surviving small and medium sized enterprises (SMEs) in a technologically disrupted industry facing continuous market decline. Using fuzzy-set qualitative comparative analysis, we discover multiple strategy combinations utilized by survivors to grow. Key findings suggest firms utilize ambidexterity, absorptive capacity, and agility to reconfigure their internal resources and reduce their reliance on the declining external network. This process increases self-reliance and returns higher rates of growth. These findings run counter to extant research which suggests increased network integration is a way for SMEs to overcome resource limitations. We attribute this difference to the context of firms operating in disrupted, declining markets. This study contributes to research on dynamic capability theory, warning against an over-reliance on external resources in a declining market and in doing so it provides practical paths for growth for SMEs facing disruption.

KEYWORDS:

• Small business/small and medium enterprises
• strategic management
• entrepreneurship
• disruption

Ethics approval

This research received full ethics approval from the Ethics Systems and Support Officer at the Office for Research at Griffith University, Australia (GU Ref No: 2019/620).

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ In this paper we use the word “demise” to cover all forms of involuntary exit by the firm – whether through actual or impending bankruptcy, involuntary shut-down, “fire-sale” takeover, or similar adverse situation.

² It is important to theoretically justify the expected causality of each antecedent condition to avoid false positives that would arise if antecedent variables are included which are not causal for the focal outcome (see Braumoellor, 2015; Gelman & Loken, 2014; Krogslund et al., 2015).

³ See Yang and Liu (2012) as an exception.

⁴ Faced with the choice of outsourcing production, firms may choose to order products from their network, or produce products in house, using their own production know-how.

⁵ Prepress operations are those that take place before printing is undertaken and so could include image or text creation, color control or other design functions. Postpress operations are those operations that take place after the print process, possibly in the realms of fabrication – examples include book binding or the creation of sub-assemblies for point of sales systems.

⁶ We use the phrase “seemingly causal” since fsQCA is an inductive method which does not prove causality of the conditions for the outcome. Like cross-sectional correlational analysis, results either support (rather than prove) or do not support (rather than disprove) the theoretical propositions that underlie the inclusion of the condition in the model at the scoping and linking stages of the fsQCA process (Furnari et al., 2020).

⁷ FsQCA may return three solutions differing in complexity. The “complex” solution considers only the combinations observed in the data; the “intermediate” solution considers both the observed combinations and the “easy counterfactuals” (unobserved combinations which are theoretically valid); and the parsimonious solution considers also the “difficult counterfactuals” (those not explained by theory). The software prompts the researcher to specify their expectation that each condition will be either “present” or “absent”, or “either present or absent” and to choose among “tied” combinations of conditions, before calculating the truth tables. If there are no difficult counterfactuals or tied combinations, no parsimonious solution is provided, such that the intermediate solution is presented, as in this study.

Additional information

Funding

This work was supported by the Printing Industries Association of Australia.