If it ain’t broke, don’t fix it? Indian manufacturing SMEs’ quest for strategic flexibility

Abstract

Research suggests that small and medium-sized enterprises (SMEs) in India are hesitant to adopt the leading management practices. This exacerbates their competitive disadvantage against larger firms in a highly competitive and rapidly evolving marketplace. Indian SMEs’ reluctance to embrace advanced management practices may be explained by their satisficing business behaviors. In other words, Indian SMEs are highly likely to continue with business as usual - a customary of deficient modus of operandi, and refuse to search for optimal solutions and practices. We argue that overcoming satisficing biases may require Indian SMEs to strive for strategic flexibility that allow for prompt adjustments in value creation activities. A higher strategic flexibility allows SMEs in the manufacturing sector to rapidly adjust product range, variety, innovativeness, and speed of development to capitalize on new opportunities and minimize the negative impact of changing market conditions. This may allow SMEs to overcome competitive disadvantages and compete effectively against larger firms in the market. We argue that SMEs seeking to obtain strategic flexibility must focus on information quality and supply chain integration. We assess the proposed model using a sample of 100 top SME managers operating in India.