Performance, Firm Size and the Heterogeneity of Competetive Strategy for Long-lived Small Firms: A Simultaneous Equations Approach
This paper examines the relationship between firm size, competitive strategy and performance, for the long-lived small firm in Scotland. It uses structural modelling to test the hypothesis that small firms need to remain small if they are to be long-lived. In a three-equation simultaneous model, performance, size and the dimensions of the competitive strategy of the firm are jointly determined. Econometric estimates of the three equations are reported, using 2SLS and iterated 3SLS. A trade-off is found to exist between firm size and performance. Further, we find that to attain higher equilibrium values of performance, a varied competitive strategy needs to be adopted. Our prescription is that small firms need to adjust downwards in size, and to cultivate a more varied competitive strategy, if there the entrepreneurs are to have a positive influence on performance, thus promoting longevity of their firms.
|Date of creation:||Feb 2003|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 01334 462420
Fax: 01334 462438
Web page: http://crieff.wordpress.com/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hall, Bronwyn H, 1987.
"The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 35(4), pages 583-606, June.
- Bronwyn H. Hall, 1986. "The Relationship Between Firm Size and Firm Growth in the U.S. Manufacturing Sector," NBER Working Papers 1965, National Bureau of Economic Research, Inc.
- Singh, Ajit & Whittington, Geoffrey, 1975.
"The Size and Growth of Firms,"
51715, University Library of Munich, Germany.
- Schmalensee, Richard., 1984.
"Do markets differ much?,"
1531-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Reid, Gavin C & Smith, Julia A, 2000.
" What Makes a New Business Start-Up Successful?,"
Small Business Economics,
Springer, vol. 14(3), pages 165-82, May.
- Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
- Beccarello, Massimo, 1997. "Time series analysis of market power: Evidence from G-7 manufacturing," International Journal of Industrial Organization, Elsevier, vol. 15(1), pages 123-136, February.
- Slater, Martin, 1980. "The Managerial Limitation to the Growth of Firms," Economic Journal, Royal Economic Society, vol. 90(3593), pages 520-28, September.
When requesting a correction, please mention this item's handle: RePEc:san:crieff:0307. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bram Boskamp)
If references are entirely missing, you can add them using this form.