ROLE OF SELECTED STRATEGIES IN INCREASING SMALL FIRMS’ PERFORMANCE UNDER DIFFERENT MARKET CONDITIONS

Abstract

This study aims to identify the impact of organizational strategy on the performance of small firms under different market conditions. In particular, the impact of four strategies (namely, market penetration, market development, product development, and diversification) on market performance, financial performance, and firm growth is examined. The study focuses on comparing the strengths of the impact of strategies on performance during three periods, namely, before the crisis, the beginning of the crisis, and the continuation of the crisis. The sample comprises small printing companies operating in Poland. We employed basic descriptive statistics, variance and correlation analyzes, and a generalized linear model (GLM). The results confirm the impact of three strategies (that is, market penetration, market development, and product development) on firm performance. Furthermore, the strength of the impact differs depending on the type of outcome (i.e., market performance, financial performance, and firm growth) and changes along with market conditions. The results obtained confirm that external conditions need to be analyzed on a regular basis and included in the strategic planning process; during dynamic changes in the external environment, often modification of a firm strategy can be required.

Keywords: strategy, small- and medium-sized enterprise (SME), crisis, generalized linear model (GLM)

JEL classification codes: L10, L22, L25