The Configuration Approach to the Strategic Management of Small and Medium-Sized Enterprises

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The Configuration Approach to the Strategic Management of Small and Medium-Sized Enterprises Josef Mugler
Department of Small Business Management and Entrepreneurship, Vienna University of Economics and Business Administration, Augasse 2-6, A-1090 Vienna, Austria Abstract: The configuration approach to the strategic management of small and mediumsized enterprises (SMEs)

is presented as an
alternative to the traditional
approach
of

industrial
economics. The configuration approach
combines the traditional
market-based

view
with a resource-based view of strategic
management theory, stimulates the consideration
of interdependencies instead of
unidirectional dependencies, and takes
into

account
the timing of strategies within the
business
life cycle. The configuration approach thus
provides a suitable frame of reference for
SME and entrepreneurship research
as
well

as
education and training in entrepreneurial behavior.
Keywords: configuration approach, strategic management, small and medium-sized enterprises (SMEs), entrepreneurship 1 The Challenge of Strategic Management in SMEs
The SME sector has shown steadily increasing numbers of enterprises and employees in the traditional market economies of Europe for many years, and in the new market economies since the fall of the Iron Curtain in 1989 . In most regions of Europe, however, entrepreneurs, representatives of small business associations and politicians are complaining more about threats than about opportunities. Indeed, there has always been turbulence within the sector: Entry and exit rates (measured in terms of stock turnover) are around 10% on average. A small number of fast-growing new businesses and a large number of selfemployed entrepreneurs

and micro-enterprises
have provided
many
new jobs,

while
downsizing
and streamlining
have reduced the
number
of jobs in
large

businesses.
Industries which provided secure
income
for generations in traditional

1
2
market economies (small trade, crafts, agriculture) have now declined, whereas new types of businesses and entrepreneurs have appeared in the course of the development of new technologies and new markets. Economists are often urged to forecast which sectors or types of SMEs will be profitable in the future, which ones will at least survive, and which ones will be replaced by large supply chains, by more aggressive marketing concepts, or by new IT-based selling. Which factors will influence success for SMEs in the years to come? Both entrepreneurs and politicians hope for an easy and reliable answer. However, such an answer would either be wrong or very abstract, leaving space for a wide range of possibilities. Neither option is particularly helpful to the type of businessman/woman who expects or even needs concrete recipes for orientation. However, entrepreneurs who merely want to follow recipes are, by definition, not true entrepreneurs. Even imitators of rewarding business ideas usually do not simply copy well-proven recipes but transfer the core of such ideas into new environments or adapt them to different requirements. One simple success factor which has proven itself theoretically as well as empirically is a large market share. 3

Consequently, firms are advised to strive for a monopolistic market position. SMEs, however, are often said to be too small for such positions in relatively free, open, and in some cases already globalized markets. Consequently, SMEs would need relatively small market niches if they wanted to attain a large market share. However, many of them suffer from a lack of specialized technologies, of human resources, and of knowledge on how to approach specific markets. Management schools and gurus have developed a number of strategic actions recommended to SMEs and large companies alike. 4

The target group of consultation for strategic management primarily includes those who...
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