The Competitive Advantage of Small and Medium Enterprises (SMEs): The Role of Entrepreneurship and Luck

Abstract

Jay Barney's article in 1986 has provided two very important indicators for the long-term success of small and medium-sized enterprises (SMEs), which are entrepreneurship and luck. In SMEs where resources and capabilities are scarce, entrepreneurs need to shoulder the responsibility of ensuring the survival and success of their firms. In addition to that, flexibility in operations and adaptability to changes afford SMEs with a greater possibility to gain from unexpected changes and accidental discoveries. To examine the impact of entrepreneurship and luck on the competitive advantage of SMEs, 356 usable survey responses collected from Malaysian SMEs were analysed. The data were analysed using multiple regression analysis with the results suggesting that both entrepreneurship and luck do play a significant role in influencing the competitive advantage of SMEs. The findings provide an important contribution in the fonnulation of a model of competitive advantage among SMEs. From the findings of this study, policy makers are advised to consider incorporating entrepreneurial traits development in the education curriculum to inculcate these characteristics among our future business leaders. Apart from that, SMEs are encouraged to cultivate a flexible and adaptive organisational structure in order for it to benefit from both endogenous and exogenous luck.

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