Moderating firm growth: The small size strategy

Abstract

Strategic paradigms include an assumption: growth ambition feeds a firm’s strategy. This paper inductively investigates the management’s cognitions of the Italian electronics firm Majestic. Without doubting the general validity of paradigms developed through the traditional economics and strategy approaches, this paper shows that those cognitions are the de facto developers of strategies and their analysis provides a complementary firm view, according to which some firms are not predisposed to increase their size. Majestic’s management aims to occupy declining segments that larger companies are no longer interested in. These segments do not require to grow and they allow Majestic to not face the competition of bigger and stronger players surviving with a small size. In addition, Majestic just need few resources and a limited innovation capacity to benefit from the declining markets which are not attractive for the bigger players but they are still profitable for small firms. The Majestic’s business vision...