Strategy models and their application to small- and medium- sized enterprises

Authored by: Amit Sharma

Handbook of hospitality strategic management

Print publication date:  July  2008
Online publication date:  September  2008

Print ISBN: 9780080450797
eBook ISBN: 9780080914343
Adobe ISBN: 9781136439520


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Small businesses have been part of social and economic fabric of nations since the beginning of economic activity. Still, most business strategy literature that currently exists is from the perspective of larger businesses. One of the reasons for this bias was the emergence of large businesses in the 19th century as a source of economic progress. The complexity of bringing together factors of production on a large scale intrigued economists and later business strategists. However, as there appears to be resurgence of interest in entrepreneurship, especially through small businesses, it is vital to revisit small business strategy process to understand how current theories can be applied to the investigation of small businesses. The purpose of this chapter is to understand why strategy theories and models are not commonly applied to small businesses. Given this understanding can hospitality small business literature be strengthened? The paper uses evidence from two recent hospitality small business case studies and tests the application of two leading strategy models—Michael Porter's generic strategies model (1985) and Olsen et al.'s (1998) co- alignment principle—to assess their applicability on small businesses. This paper argues that as most hospitality strategy literature is based on strategy models with a lesser emphasis on small businesses, by default the emphasis has been on studying large businesses even though hospitality and tourism industries as such include a larger number of small businesses. Therefore, to strengthen hospitality strategy literature and in favour of studying small businesses, researchers will need to expand the existing models and theories. This will also have implications on methodological approaches. Resulting argument is that earlier strategy models and theories may have (unintentionally) excluded small businesses resulting in the dire need for a parallel stream of literature focused solely on small businesses. However, given that both small and large businesses exist for similar purposes, to maximize wealth for their owners, then attempts should be made to reduce this polarized approach.

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