The Role of Propinquity and Coordination in Influencing Competitive Advantage of Retail SMEs in Malaysia

Abstract

The existence of hypermarkets and supermarkets with modern retail format has affected the performance of many retailers in the category of small medium enterprises (SMEs) in Malaysia. In this era of disruptive marketing, the main challenges of retail SMEs are the ability to survive, to remain competitive and to sustain the business. With the challenges of finding the right strategies to compete effectively, there is now an inclination to look at social networks as means of establishing strong market presence. Engaging and maintaining social networks in their business relationships is essential for retail SMEs if they want to address strategic positions and subsequently build strong competitive advantage in the business. This study postulates that establishing social networks, specifically in terms of propinquity (related with network cluster, network centrality and geographic proximity) among social network members, will enable the gathering of important resources needed by retail SMEs to secure more sustainable competitive advantage. However, only few studies have focused on social networks especially from the Asian context and many have overlooked the importance of social networks in retailing. This study also suggests the need to focus on coordination in relation to propinquity of social networks which refers to the location of retail SMEs and their ability to coordinate efforts to gain competitive advantage. This study extends the literature on social networks by providing a conceptual framework describing the importance of propinquity on coordination of activities leading to the development of competitive advantage for retail SMEs.