Understanding the competitive process: A guide to effective intervention in the small firms sector

The paper describes a project undertaken within the Economic and Social Research Council’s ‘Competitiveness of British Industry’ research programme. The aim of the project was to assist agencies who intervene in a local economy to try to help individual small firms. Guidance currently available to such agencies was considered to lack an adequate theoretical basis in relation to either the choice of firms who should be granted assistance, or the form of assistance which might be given. In particular, there is a lack of recognition that there is scope for management strategy among smaller firms, affecting the way they compete in the market place and having a clear bearing on their revealed performance. From a study of 100 small firms located in Telford New Town critiera were derived for classifying the ‘competitive stance’ of small firms. This was identified as the key to the potential performance of the small firm. The extent to which it reveals a potential for future growth can determine whether a firm is or not a suitable candidate for assistance. And the strengths and weaknesses in an individual firm’s stance can determine the most suitable form of assistance to give. The survey and analysis exercise leading to the identification of components of competitive stance are described, and the classification of firms into a range of stance types. Then the usefulness of the competitive stance classification as a guide to selection of firms and choice of form of assistance is considered.