Diversity in Small Business Strategy

Research in business has acknowledged the critical role of strategy for organizational survival and success. In contrast, 'little work has been done on small business strategy' (Low and MacMillan, 1988:144). The current study addresses this deficiency in the research by examining the relationship between business strategy and small business success. The Small Business Strategy Typology developed in this study represents an attempt to translate the Miles and Snow Typology into operational statements concerning three aspects of business strategy of relevance to new small businesses: products/services, customers, and competitors. Self-administered questionnaires were distributed to 578 Victorian New Enterprise Incentive Scheme (NEIS) graduates who had completed business training and established businesses before 1994. Factor analyses of the data using LISREL (7.20) indicated two distinct dimensions in the instrument: Proactive and Reactive Small Business Strategy. Details of each sub-scale and the corresponding items are provided in the paper. Implications for entrepreneurial performance and further research are discussed.