Small Firms Owners and Managers Construction of Competition

Abstract

This study explores how small firms' owner-managers view competition in their business environment and how this view may be associated with specific strategic choices leading to a competitive position in their markets. Its main research question deals with why different small firms' owner-managers choose different competitive strategies in a given industry setting. One of its main contentions is that in examining this phenomenon it was necessary first to explore the mental categorisations that guide the entrepreneurs' understanding of their competitive environment. Competition is a core concept in strategic management, and analysis of competitors' strategies is thought to be essential for a better understanding of competition and strategy formulation. Top managers' understanding of their competitive systems influences their decisions and acts, and in turn shapes their environment (Weick, 1979). As Zahra and Pearce (1990) have indicated, there is considerable theoretical and practical importance in further exploration of the processes that influence decision choices of dominant individuals within an organisation. One situation in which the views of an individual (as opposed to those of a political grouping) are likely to be dominant is that of the small business owner-manager, suggesting that studying samples of entrepreneurs could be a starting point for developing more psychological models of strategic choice. Data were collected with a sample of small firms' owners and managers running their businesses in the city of Londrina, Pr. The data collection procedures involved detailed and systematic interviews. A cognitive perspective was followed using Repertory Grid Technique that is derived from George Kelly's Personal Constructs Psychology. This technique allowed for the elicitation of constructs adopted by the respondents in the process of making sense of their competitive environment. Further data analysis indicated the most common features associated with the entrepreneurs' view of competitors' strategies. This allowed for the construction of taxonomy of strategic positions based on respondents' perception of their competitive environment.