To read the full version of this content please select one of the options below:

Competitive strategy, capabilities and uncertainty in small and medium sized enterprises (SMEs) in China and the United States

John A Parnell (School of Humanities & Economic Management, China University of Geosciences (Beijing), Beijing, China, AND, School of Business Administration, University of North Carolina - Pembroke, Pembroke, North Carolina, USA)
Zhang Long (School of Humanities & Economic Management, China University of Geosciences (Beijing), Beijing, China)
Don Lester (Jennings. A. Jones College of Business, Middle Tennessee State University, Murfreesboro, Tennessee, USA)

Management Decision

ISSN: 0025-1747

Article publication date: 16 March 2015

Abstract

Purpose

The purpose of this paper is to investigate linkages among competitive strategy, strategic capabilities, environmental uncertainty, and organizational performance in small and medium sized enterprises (SMEs) in China and the USA.

Design/methodology/approach

In China, a survey was administered to managers of SMEs in Shanghai and Guangzhou. In the USA, a survey was administered to managers of SMEs in three major cities. Competitive strategy, capabilities, uncertainty, and performance were measured by previously validated scales.

Findings

Findings support the integrity Miles and Snow generic strategic typology. Performance satisfaction was significantly lower in firms employing a reactor strategy as opposed to those employing prospector, defender, or analyzer strategies. Additional support was found for the concept of strategic clarity, as businesses reporting moderate strategic clarity had lower levels of satisfaction with performance than those reporting either a single strategy or a combination emphasis on three equal strategies.

Practical implications

Chinese SMEs tend to prefer cost-based approaches to their local markets. A differentiation market approach is challenging in most local Chinese economies due to the low wages of most jobs in an economy that is still largely centrally planned. In the USA, more disposable income leads to more market opportunities. While this situation is gradually changing in China, it is not at a point where SMEs feel comfortable pursuing totally differentiated strategies.

Originality/value

Several distinctions in competitive strategy, capabilities, and environmental uncertainty between China and the USA are recognized by analysis. Analyzers and defenders in Chinese SMEs tend to follow industry prospectors with lower prices and/or superior service. They might change strategies after gaining a foothold in the market. Performance for SMEs with low strategic clarity often depends on established guanxi with governmental agencies or stated-owned enterprises, a situation very different from that in the USA.

Keywords

Citation

Parnell, J.A., Long, Z. and Lester, D. (2015), "Competitive strategy, capabilities and uncertainty in small and medium sized enterprises (SMEs) in China and the United States", Management Decision, Vol. 53 No. 2, pp. 402-431. https://doi.org/10.1108/MD-04-2014-0222

Publisher

:

Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited