Strategic orientation and organizational performance of small firms in Malta: a grounded theory approach.
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Although the contribution of the small enterprise to a nation’s economy, job creation and innovation is well known, comparatively little is understood on how small firms behave strategically and how the more common patterns of strategic behaviour relate to different levels of organizational performance. The following thesis aims at mapping out the strategic behaviour of small firms in the small island state of Malta, and in relating the evident patterns of strategic behaviour to the performances of these firms. The thesis follows on the logic of understanding strategy as a dynamic phenomenon, one that can be viewed as pathways between identifiable life cycle states. It also views strategy as behaviour, part deliberate and part emergent, thus allowing for the inclusion of both external influences and internal decision making. To be able to achieve this dynamic viewpoint of strategy a particular research methodology had to be deployed, observing both the context and the consequences to a firm’s strategic actions, as well as the very actions and interactions themselves. A Grounded Theory method of enquiry was adopted for this purpose as it is ideal for observing patterns, the very theme of this thesis. The research in question has focused on small firms with up to 49 full time employees, in line with the E.U.’s definition of both micro and small firms, and in a broad range of industries in Malta. Results confirmed the predominance of five trajectories, or pathways, of small business strategic behaviour, each passing through a sequence of distinct life cycle states. For each pathway a unique performance situation was observed, resulting from the dynamic coalignment of the owner-manager’s entrepreneurial philosophy, the competitive behaviour adopted by the firm, and the competitive environment to the firm. Understanding which strategic pathway a small firm belongs to allows for a comprehensive insight into the firm’s competitive behaviour, and a prediction of the consequences to that behaviour. The audience to the research consists of government entities involved in policy construction, small firm owners and managers, and the academic community involved in research and policy design.