How SMEs Compete Against Global Giants Through Sustainable Competitive Advantages

Abstract

Despite the influence and resources that large firms possess, small and medium size enterprises (SMEs) can find great success of their own when they find a niche with a sustainable competitive advantage. The literature has extensively discussed how SMEs can demand a price premium in a consumer segment based on focus differentiation. This paper explores how SMEs focus-based competitive advantage relies upon on competency-based factors that support their strategy. First, they have a non-scalable core competency that global firms cannot easily recreate due to their large size. Second, the emphasis for SMEs are on people or differentiation-based process core competencies, which also tend to be the most non-scalable. Third, SMEs find growth by shifting away from a niche to a differentiation strategy (if their core competency is scalable) or leveraging their non-scalable core competency to find a “string of opportunities” that are too small for large firms to notice separately, but taken together form a decent size business.