Boxing or golfing: a view of small business competition

Abstract

Abstract The field of competitive dynamics has relied heavily on observations of large, visible firms while underestimating the nuances of small and medium-sized enterprises (SMEs). However, due to their size, resource endowments, and customer relations, SMEs might compete differently than large firms. This qualitative research, performed through semi-structured interviews, draws on managerial perceptions to examine the competitive dynamics of nine SMEs in a single geographic market. For comparison, we also interviewed three large firms in corresponding industries. Using the awareness–motivation–capability framework as our foundation, we observed that the competitive dynamics of SMEs differ from large firms in two key areas, competitor analysis and competitive interaction. Most notably, SMEs approach competitor analysis very informally and interweave the process with other activities. However, SMEs are very aware of the competitive environment although they downplay their attention to competition. This awareness does not necessarily motivate SMEs to compete in the classic sense of head-to-head competition with rivals. Instead, SMEs favor cooperation with competitors and focus their attention on serving their customers rather than on besting rivals.