Differentiating through clustering: contrasting SMEs with large-sized firms

Abstract

This paper investigates the impact of globalisation on the international strategic management process of small to medium sized enterprises (SMEs), within the Australian wine industry (AWI). We identify the particular complexities of international strategy processes for this type of firm. Findings suggest that these complexities stem principally from fundamental variations in strategic outlook between different organisation types, particularly in relation to organisational size, geographic location and the perception that SMEs have of the phenomenon of globalisation. We infer, through 14 case studies with both SMEs and large suppliers within the AWI, that globalisation accentuates the strategic divide between small and large organisations. In particular, the international strategic options available to smaller AWI firms are significantly fewer. SMEs are compelled to adopt almost solely 'business' strategies, as opposed to large firms, which can adopt an array of 'corporate' and 'business' strategies. We also found that AWI SMEs utilise the benefits of location (or 'clustering') namely geographic proximity and that this is different to large organisations, and they face different challenges, stemming from the industry life cycle as a whole.