Entrepreneurial configurations of small firms

The purpose of this paper is to develop contemporary entrepreneurial configurations of small firms and relates them to performance. Adding a process dimension, the authors extend the more commonly used resource and growth taxonomies in this field of research.

A review of current literature on small firm configurations is followed by a discussion of its dimensions, namely, context (external and internal environment), content (entrepreneurial orientation (EO)) and process (strategy making). These are related to perceived performance, using cluster analysis and ANOVA for a sample of 320 small New Zealand firms.

The results isolate young corporates, young simple and mature consolidator clusters. Young corporates outperform their counterparts in dynamic environments in how they use formal structures, and their high EO and generative strategy-making (GSM).

This study uses self-reporting measures and a cross-sectional design.

The findings show how young, small firms can enhance their performance practically by aligning the key dimensions of an entrepreneurial configuration. These firms could benefit from early formalization of systems and structures, a high EO, and by using a GSM approach.

The contribution is threefold. First, the authors empirically verify the existence of three clusters of small firms and then link these to perceived performance. Second, by basing the small-firm configurations on a content, context, process framework, the authors highlight the importance of aligning these dimensions to performance. Third, the authors find evidence of the role of early formalization to accompany GSM and EO if small firms want to improve performance outcomes.