Competitive Advantage in SMEs: Organising for Innovation and Change

Citation

Simpson, M. (2004), "Competitive Advantage in SMEs: Organising for Innovation and Change", Journal of Small Business and Enterprise Development, Vol. 11 No. 2, pp. 263-264. https://doi.org/10.1108/14626000410537209

This is an interesting book consisting of 15 chapters written by academic experts in various aspects of small business. The ability to gain and sustain a competitive advantage is an important area of research and practice in SMEs and anything that adds to the general knowledge and understanding in this area is to be welcomed. This book is a comprehensive coverage of the basic ideas of competitive advantage starting with Ansoff, Porter and others, and going through to a proposed conceptual framework based on Man and Chan (2002) in chapter 2. Each chapter covers some aspect of SMEs and the ability of SMEs to gain a competitive advantage. Thus, topics covered are diverse and include strategic management, corporate governance, sustainability, human resource management, share ownership, creativity, innovation, networking, E‐business, supply chain management, financial management and retailing and services marketing. Each chapter is well thought out, has excellent references to the latest information and is written by experts in the field. The authors of each chapter appear to be mainly from Manchester Metropolitan University. This reflects the strength of that university in this area of research.

I use the word research here largely to indicate the academic quality of the text. Each chapter reads rather like a research paper and engages with the academic literature in the usual way. Sometimes the conclusions and recommendations are rather broad and sweeping and of limited practical value unless you are a policy maker. This makes the text largely inaccessible to owner‐managers who are not familiar with the academic literature or some of the issues and are looking for practical solutions to real problems. Thus, the target market of the text appears to be academics, students, researchers and PhD students. For this audience the text is ideal and I have recommended the book to my PhD students with enthusiasm and it has been well received.

The problem I have is that I sometimes disagreed with the findings of these chapters based on my own experience and research. At first I found this worrying and was thinking that I should write a very critical review. However, research is by its very nature contentious and the sheer difficulty of research in the field of small business is likely to result in problems of generalising the results of a particular study to the wider population of SMEs. The diversity of types and sizes of SMEs and owner‐managers often makes meaningful and generalisable research almost impossible to do. Combining this with the difficulty of determining if an SME can or has gain(ed) a competitive advantage by doing certain things leads to a really rich and difficult area of research. In any case even if I disagreed with some outcomes it is likely that someone else would be able to corroborate the research. If an area is really that contentious perhaps I ought to get a PhD student or research assistant to research it in more depth. In any case a second edition may well review some of my own research.

However, this is the real strength of the book – it raises these difficult issues (for example, sustainability and competitive advantage) reviews the academic literature from zero knowledge, offers a few frameworks, reviews the literature in some depth, examines policy, education and training and asks why it is that so few SMEs have tried to gain a competitive advantage this way. Very often the answer, as with all these chapters, is that the policy makers do not understand SMEs, help is not targeted properly, SMEs owner‐managers are unable to understand the ideas and are too busy running a business to get a grip on them and finally it all comes down to an embracing change. Now, I know this sounds cynical and sounds like an abstract of any SMEs paper but what really concrete advice can an academic give to an SME owner‐manager when the research is so complex and difficult to do and the concepts hard to understand even with a PhD? How does one advise an SME owner‐manager to gain a competitive advantage? Do we operate in one battlefield at a time or do we suggest tackling many of the issues raised by this book all at once? The concluding chapter goes some way to answering these questions and offers some suggestions about the frameworks that might be useful. Inevitably there is a debate on the irreconcilable Porter approach versus the resource based theory approach and how recent attempts have found a way through to a solution and that it actually may well be the SWOT analysis! Such an approach may indeed lead to a competitive advantage based on the research done in Greek SMEs by Spanos and Lioukas (2002).

The point I am making is that it seems to me, at least, that research (never mind practice) in this area is in its infancy and that this book provides a good deal of food for thought on the whole subject of SMEs and competitive advantage. Is the book any good? It is excellent! The problem is that it raises more questions in my mind than it provides answers for. This is good if you are a PhD student looking for project or an academic looking for something to do or advising your PhD students and research assistants, but may not be all that useful for SMEs owner‐managers. Should owner‐managers read this book? I believe they should if only to try and get some idea of the possibilities that are afforded by different approaches to competitive advantage. Perhaps my final point relates back to the need for third stream activities (i.e. academic links with businesses). This book looks at an area where academics and SMEs could benefit greatly via stronger and more formal links. Such opportunities could look more closely at the long‐term performance of SMEs adopting certain approaches to gaining a competitive advantage. This would be a very interesting research indeed. I look forward to a second edition in the future.