Sme Performance: A Case for Internal Consistency

Abstract

We develop the theoretical arguments for a contingent path relationship among variables representing the environment, capabilities, strategic orientation, and firm performance. The premise underpinning our study is that internal consistency or fit among contingent relationships yields higher performance levels. Structural equation modeling allows for the statistical examination of multiple relationships simultaneously to test our hypotheses. We find support for the notion that internally consistent paths lead to higher levels of performance for a sample of 181 mid-western small and medium-sized manufacturing firms. A discussion of the implications for these findings with respect to managerial practice and future research is provided.

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