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Uncertainty Management by SMEs in Mature Industries: a main vs. minor positioning of companies using a portfolio analysis.

Aouatif El Fakir and Aurélie Delemarle

Laboratoire Techniques, Territoires et Sociétés (LATTS) Marne-la-Vallée, France.

Introduction: Seeing that companies operate under uncertainty becomes commonplace. Globalization,

new technologies or industrial mutations increase uncertainty and thus the demand of

effective concepts, frameworks and tools to manage it. We define uncertainty here as

unknown issues (but potentially knowable) about the technology, the market or the

business system that prevent forecasting verifiable outcomes. Courtney et al. (1999)

classify, on the basis of past works, uncertainty into 4 level: 1) a clear-enough future; 2)

Alternate future; 3) A range of futures; 4) true ambiguity. Their analysis offers ways to

handle uncertainty for each of the situations showing that there are not only two situations

“no uncertainty” or “uncertainty” but a large variety of situations, each situation requires a

specific management, a portfolio of actions which called strategic postures. “A posture is

not a complete strategy. But, it clarifies strategic intent but not the actions required to

fulfill that intent” (1997: 74). By and large (including Courtney et al.’s analysis), research

about uncertainty management focuses on large companies and high-tech industries while

the majority of companies are small operating in mature businesses. SMEs do not have the

resources and/or means to bear the risks the same way large firms can. Moreover in a

mature field the possibilities to create a new market or to develop a whole new technology

are much less possible. Both cases reduce the range of actions that an SME can take.

In this paper we attempt to figure out how small companies manage strategically

uncertainty, whether they take options to maintain their competitiveness and how they

manage to shape their sector and whether this management materialize at projects and

portfolio levels. Our hypothesis is that the management of uncertainty, that can be

followed by studying strategic postures, is highly different in large firms and in SMEs: the

set of actions should be different. We develop an original analytical framework on the basis

of theories and concepts that scholars built previously and that can tackle, in our opinion,

the question of strategic management of uncertainty in SMEs. We use the notion of

innovative projects portfolio rather than considering innovation as a whole.

Our study mainly contributes to highlight the way SMEs build their strategic

postures. Our study shows that innovative projects i.e. development of new

products progressively build the portfolio of SMEs and allow them to acquire

know-how and master a given technology. These three elements (portfolio,

technology and know-how) allow SMEs to build their strategic postures. Our

study shows also that innovating is the way for SMEs, with limited resources, to

test new directions and to assess opportunities of changing.

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Our second contribution is the tool that we developed (to understand strategic

postures building) and that could be a strategic tool for SMEs to check whether

their innovative projects are strategically relevant to maintain their

competitiveness or not.

In section 1, we point out how literature focuses on large companies and high-tech

industries to build concepts and tools to manage uncertainty. Section 2 contains our

analytical framework and methodology. In section 3, we put forward and discuss our

findings. We conclude with new research questions that our survey gives rise to.

1. Literature review:

Theorizing and research about uncertainty try to answer mainly three questions: what is

occurring or what is likely to occur in company task domain (State uncertainty)? Given

what is occurring in the task environment, how is this likely to affect the company (Effect

uncertainty)? And how should the company respond to what is happening in the task

environment (Response uncertainty)?

On the basis of empirical observations, Courtney (2001) points out three strategic postures

under which one can put all strategies to manage uncertainty. The strategic posture was

defined by Courtney et al. as “the intent of a strategy relative to the current and future

state of an industry” (97:73):

Shaping posture

strategies

Adapting posture

strategies

Reserve the right to play

(options) strategies

Imposing company’s

preferred technology or

business system as the

industry standard.

Following a potential

shaper’s lead

Growth options that provide

a preferential position to

reinvest in the future (build

on existing commitments)

Introducing fundamental

product, service, or

business system

innovations into the market

Hedging against future

market uncertainty

Insurance options that

provide a preferential

position to divest in the

future (change strategic

direction)

Restructuring the industry

to reconfiguring its

structure to strengthen the

company’s position

Probing through continuous

experimentation in

products, services and

business systems

Learning options that

provide a preferential

position to invest in the

future (launch altogether

new strategies)

Replicating existing

business systems in new

markets

Building a flexible

organization to adapt

quickly to their changing

environment

Influencing the uncertain

competitors’ actions

Table 1: strategic postures. The authors based on Courtney (2001).

The credit of Courtney (2001, 1997) taxonomy is to summarize what scholars has already

made out. Porter (1980) assumed that ‘firm may choose to try to cause the most

advantageous scenario to occur if it has resources; or it may be forced by limited resources

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or great uncertainty to maintain flexibility’. Wernerfelt and Karnani (1984) argued that

companies can also ‘wait and act only after the uncertainty is removed’. It is what

Copeland and Weiner (1990) call flexibility or options strategy. In their works and notably

their book ‘The Entrepreneurial Mindset: Strategies for Continuously Creating Opportunity

in an Age of Uncertainty’, edited in 2000, McGrath and MacMillan identify main strategies

under uncertainty that we can rank amongst the three postures: Redesign of products and

services; Redifferentiation of products and services; Reshape the market; Creation of new

competitive advantages.

However, Courtney based its taxonomy on large companies and there is actually not much

literature about small and medium enterprises (SMEs). Concepts and tools are mostly

designed on the basis of large companies’ behaviour and are supposed to be relevant for

other categories. But, SMEs have limited financial, human, organizational and technological

resources and their strategic behaviour is possibly different. The few empirical works about

SMEs strategic management date from the late 1980s and 1990s. Dilts and Prough (1989)

analyse the behaviour of 201 SMEs in the retail travel service industry in USA and conclude

that “small firms differ substantially from larger ones in the strategies managers perceive

as effective”. Small firms’ managers carry out fewer and different strategies than their

larger counterparts notably because they lack of expertise, information and financial and

human resources. They also operate on fewer markets and have less power. Shrader et al.

(1989) study shows that “most small business planning is done by the top manager alone.

The top managers plan alone because they think planning is costly and time consuming”.

On the basis of the study of 177 firms, Matthews and Scott (1995) argue that “When faced

with an inability to predict or to understand the environment because of lack of

information…small firms respond with less sophisticated strategic planning”.

The other works about uncertainty management by SMEs focus on dynamic high-tech

industry. Therefore, uncertainty corresponds mainly to technological issues and scholars

focus on R&D activity. They point out that limited resources and capabilities of SMEs make

them facing several pressures in their R&D and innovation efforts and pursuing different

strategies than large companies (Winch and Bianchi 2006). Those strategies comprise

alliances (Barnir and Smith 2002) and even co-opetition to create economies of scale,

mitigate risks and leverage resources together (Morris et al. 2007). Gnyawali and Park

(2009) argue that the best strategy for SMEs under uncertainty is to be flexible all the

time.

In short, few empirical studies point out that SMEs behave differently but; the literature

focuses mainly on large companies and high tech industries. A large part of reality is

insufficiently studied as the strategic management of uncertainty by SMEs in mature

industries is still an unexplored area. In this paper, we attempt to explore it by testing the

Courtney’s concept of strategic postures. This concept is very interesting as it explains that

there is a supra level determining strategies under uncertainty. Our main enquiry is

whether strategic postures are built in the same way in SMEs. Courtney (2001) explains,

for instance, that shaping strategy can be achieved by imposing a preferred technology or

business system, introducing fundamental innovations, reconfiguring the structure of the

industry or influencing the uncertain competitors’ actions. All of these examples suppose

that the company has significant resources; which is not the case of SMEs.

Furthermore, if we consider a review of literature about new product development (see for

a good review Krishnan and Ulrich, 2001) four perspectives are taken:

- a marketing one in which a product is a bundle of attributes that would fit on a

market;

- an organizational one, in which a product is the result of an organizational process;

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- an design engineering one in which a product is a technical artefact resulting from a

complex assembly of components;

- an operation management one in which a product follows a sequence of steps from

development to production.

Each of these approaches intrinsically maps the locus of innovation in one point of the

organization. In the marketing approach for example, the choice of developing a new

product relies on the observation that some customers’ needs are not satisfied on the

market, while the engineering perspective points to new functionalities to be introduced on

the market. The major drawback of these literatures is the focus on single projects while

the strategy literature often points to the portfolio of activities of companies.

We make the hypothesis that an SME strategic posture would be shaped by the

combination of the technology that it uses, the know-how that it has and the

portfolio that it develops. In other words, by developing new products, the SME

masters the technology in use, acquires more or less specific know-how and

defines its main position on the market. On the basis of these elements, the SME

outlines its strategic posture: head the sector, take options or just follow the

leader. So, how we can test this hypothesis?

2. Analytical framework and methodology:

To test our hypothesis, we choose to study the way SMEs developed new

products i.e. their innovative projects to identify patterns of innovation, if any,

that build particular portfolios and determine strategic postures that SMES can

have.

On one hand, by questioning companies on their innovative projects, we intend to identify

how SMEs innovate: to solve which problems/ to satisfy which demand? With who the

SMEs innovate? How is innovation carried out internally? Do they use any network? And

what is the output of the innovation process strategically speaking?

On the other hand, we make a distinction between innovative projects linked to the main

position of SMEs on the market and those revealing minor positions. The main position

reflects the core of SMEs activities: related innovative projects are less risky because the

SMEs master their core technology and know the markets. Minor positions are more risky

either on the technological or the market dimensions. We suppose here that minor

positions are trials/tests of new directions or milestones on the path towards a new main

position. The output can be fostering the main position of SMEs or shaping new one. Here,

the framework that we developed for this survey:

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Figure 1: Interview guide figures.

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2.1 Profile of new products: technology and know-how:

The competitive advantage of a company on a market is based on its ability to master a

technology better than competitors. It includes the ability to pre-empt rare assets and

complementary assets (Teece, 91). Thus, a technology can be simple to master, which

puts the company at risk on a market as it can be easy imitated. But, the possession of

strong complementary assets such as distribution channels or privileged links with

customers prevent imitators to take large market share.

The ability for competitors to imitate a technology also depends on the degree of tacitness

of technical knowledge. A technology can be considered as simple but a company can

acquire specific know-how while competitors do not. Then, it has unshared assets that feed

its competitiveness. To take these elements into consideration we map each product on

figure 1.1 in figure 1. In addition, we asked the interviewees to place the company (main

position) on the figure to confirm/infirm our idea of it (based on our documentary analysis

of its environment and competences) and to check the existence/absence of minor

positions.

2.2 Innovation process: problem-solving or new demand:

Once we defined the profile of products that companies developed, we focus on the process

of the innovation. New products always face some degree of uncertainty in their

development process, which will be solved differently based on the resources of

companies. On one hand, internal companies resources are mobilized differently depending

on the kind of problems to be solved: they can be familiar or novel (Blackle, xx)1. On the

other hand, Pitt and Clarke (1999) argue that problem solving and the way to handle them

rely on the forms of knowledge development activities in organizations (personal initiative

vs. collective initiative). However, SMEs do not always have the resources, to solve

themselves problems, and they must find them outdoor. Kline and Rosenberg’s (1986) and

Chesbrough’s (2006) specify that the injection of exterior resources (knowledge,

information, skills) can occur at any stage of innovation process.

We thus identify the nature of problems that SMES solve and assess their ability to solve

them internally or to find partners to solve it for or with them (figure 1.2). This figure and

the next one allowed us to better understand the difference between the main position and

the possible minor ones.

2.3 Innovation process: partners mobilized for each innovative project:

Considering that a company may look for solutions outside of its boundaries, there is a

need both to know what kind of partners are mobilized and at what stage of the process.

We use as insight Kline and Rosenberg’s chain linked model to specify at which stage they

intervene in figure 1.3. We add the figure 1.4 to specify the kind of partners (university,

suppliers, machine tool providers, clients etc).

1 Taking a resource-based view perspective, learning capabilities and routines are considered as resources.

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2.4 Innovation process: company’s organization:

This step allows us to establish whether SMEs have a formal structure devoted to

innovation (ex: an R&D lab), or an informal structure related to projects that will evolve, or

no structure and innovation relies on individuals (Pitt and Clarke, 1999). The formalizing or

non-formalizing of the innovation process at the company level has consequences on the

approach used to solve problems and the creation of routines, knowledge and know-how.

The second element rests on the network of partners and its nature, in a different

perspective than figure 1.4 uses.

Previous steps allowed us to understand how companies developed new products. We

could thus move out from a project perspective to a company one. Indeed if projects may

be different, they build all together the main position and the strategic posture of the

SMEs.

2.5 Company’s strategy:

By mapping innovative projects and retracing innovation process, we discuss with the

SMEs in figure 1.5 their orientation (more technologically or market oriented) and their

strategic postures (shaper or adapter).

2.6 Methodology:

We choose to achieve our survey in the French industry of technical textiles. In fact, this

industry witnessed many technological changes that modified manufacturing process as

well as applications. But, technologies in use seem standardised and mature; and

innovations are likely incremental. France is the second larger producer of technical textiles

in Europe after Germany. The industry produced 600,000 tons and accounted for 3,9 €

billion in 2006 (27% of the whole French textile production and 17% of European

production). Though, this industry generates more added value (40% of benefit in textile

industry by 2006) price competition as well as progress in biotech, electronics or nanotech

can induce uncertainty (DGE 2006).

The first step of our survey consisted in probing the 63 members of CLUBTEX, an industrial

association of technical textiles accounting for 3300 employees and € 500 millions and

covering the whole industrial chain (www.clubtex.com). We focus on CLUBTEX members

because we think that their membership means that they are looking for information,

networking and cooperation. We selected 30 companies among them regarding different

positions within the industrial chain, employment, turnover and markets. The second step

focused on the exploration of the 30 selected companies’ communication (commercial

documents, websites, etc.), local and national press and literature on the industry (books,

reports). We looked for different strategic postures (shaping, adapting or options). We

forwarded a cover letter, setting up the content and purpose of our research, to each CEO

of our sample. This was followed two weeks later with a phoning in order to obtain an

appointment.

The third step consisted in deep interview of executives of selected companies (2 hours or

more). We used our analytical framework to study 45 projects in 12 companies as

followed:

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Table 2: Interviewees within the industrial chain.

3. Findings: Here we relate the results of our study of 45 innovative projects in 12 technical textiles

companies.

3.1 Innovative projects:

The first phase of our analysis focuses on products that each SME manager spoke about.

First, we examine the 45 products regarding which technologies companies used and what

know-how they mobilized. Second, we look at the nature of problems companies solved

and with whom.

3.1.1 New products positioning and SMEs main position:

When positioning each company's projects on figure 1.1, we note a large variety of

situations. Products of all companies but company 5 are positioned in more than one

quadrant.

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Unique

know-

how

Shared

know-

how

Complex

technology

Simple

technology

Company 7

Company 1

Company 12

Company 6

Company 10

Company 4

Company 8

Company 11

Company 5

Company 9

Company 2

Company 3

Figure 2: New products and companies positioning regarding the technology and the know-how.

Unique know- how

Shared know- how

Complex technology

Simplee technology

Comp2/ 2 Comp5/ 2

Comp2/ 4

Comp2/ 3

Comp2/ 1

Comp5/ 1

Comp5/ 3

Comp7/ 3

Comp7/ 2 Comp7/ 1

Comp3/ 4

Comp3/ 3

Comp3/ 5 Comp3/ 2 Comp3/ 1 Comp9/ 1 Comp9/ 2 Comp9/ 3

Comp1/ 6

Comp1/ 2

Comp1/ 4

Comp1/ 5

Comp1/ 3

Comp1/ 1 Comp12/ 1

Comp12/ 3 Comp12/ 2

Comp12/ 4

Comp6/ 1

Comp6/ 3 Comp6/ 2

Comp10/ 1 Comp10/ 2

Comp4/ 1

Comp4/ 2 Comp4/ 4

Comp4/ 3

Comp8/ 2 Comp8/ 3 Comp8/ 1

Comp11/ 3 Comp11/ 2

Comp11/ 4

Comp11/ 1

9 PRODUCTS

20 PRODUCTS

6 PRODUCTS

10 PRODUCTS

Comp7/ 4

Legend: Company N°/ product N°

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The combination of simple technology and shared know-how seems to be a real

uncompetitive trap. Four companies have the majority of the discussed projects in this

quadrant. Entry barriers are low which attracts competitors and especially producers from

low cost countries. To face competition, thus companies diversify the portfolio, preserve

monopoly in raw materials or make economies of scale. Reputation is also an important

asset that can serve to hinder entries. But, all of them actually want to escape from this

position. They are carrying out two strategies with this end: acquiring more exclusive

know-how or using more sophisticated techniques in order to diversify their portfolio or

produce more specialized items.

Companies who use complex technology but have shared know-how with competitors are

more preserved. Technology complexity prevents high competition while their know-how is

more or less unshared and allows them to stay competitive.

The more comfortable position seems to be using complex technology and having unique

know-how. All of the companies in this position try to preserve it by developing innovations

(products, processes and even uses) in specific niches. Lead users and end users take

always part in the innovation process or problem solving. Products are expansive and are

distributed on specific channels. Design, manufacturing and network competences are

critical for these SMEs.

Companies, using simple technology and having unique know-how, carry out incremental

innovations and try to price optimally. Leaders are first to move or keep exclusive

techniques secret to protect themselves from imitation. They always look for new ideas

allowing them having a monopoly during a given period. Some of companies in this

position try to exit while the others prefer to foster their position.

At the level of the whole company, the majority of the companies declared having unique

know-how and 29 from the 45 quoted products have been developed on the basis of

unshared skills and knowledge indeed. However, one company can declare having unique

know-how though listed products are based on shared know-how. We suppose that when

managers speak about unique know-how it is at the level of the company. It could be

organisational or technical know-how enabling the company to design innovative solutions

even if competitors can acquire the same know-how. We can also suppose that companies,

moving to niches to face competition, acquire more specific know-how. Surprisingly, many

products are based on complex technologies though companies declared using simple

ones. We suppose that managers have spoken about ‘flagship products’ while the rest of

the portfolio consists in common products or that ‘by dint of using’ their technologies,

companies forget their complexity.

3.1.2 Innovation process:

Once we discussed the profile of products and SMEs positions, we consider how they build

them based on figure 1.2. We would expect that when a company has a unique know-how,

problem solving would be organized internally for familiar problems. For new ones, it can

be organized internally or externally, depending on the availability of resources to solve the

problem in the company's environment. Also, we would expect that when a company has a

shared know-how, problem solving can be organized internally or externally whichever the

type of problem. We expect that the complexity of the technology will be the major driver.

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But, in fact, firms with a unique know-how, solve their familiar problems, by relying on

external partners to a vast majority, whichever the complexity of the technology. For new

problems, the situation is more diverse. Some SMEs interact with external entities to

identify the problem to solve (with clients), to test solutions (by consultants) or to ask for

specific inputs (from suppliers). They are able to invent solution and/or produce analytical

design internally. Others SMEs have lower capabilities and have to find competences

elsewhere and develop thus network capability. The higher proportion of collaborative

projects in this case can be explained by the market orientation and the necessity to

interact with clients. We suppose also that SMEs move perhaps towards new markets and

face new problems to solve.

Figure 3: problem-solving approaches.

Unique know- how

Shared know- how

Complex technology

Simplee technology

Comp2/

2 Comp5/ 2

Comp2/ 4 Comp2/ 3

Comp2/ 1

Comp5/

1

Comp5/

3

Comp7/

3

Comp7/ 2 Comp7/ 1

Comp3/ 4

Comp3/ 3 Comp3/ 5 Comp3/ 2 Comp3

/ 1 Comp9

/ 1

Comp9/ 2 Comp9/ 3 Comp1/

6 Comp1/

2

Comp1/ 4

Comp1/

5

Comp1/ 3

Comp1/

1 Comp12/ 1

Comp12/ 3 Comp12/ 2

Comp12/ 4

Comp6/

1

Comp6/ 3 Comp6/

2 Comp10/ 1

Comp10/ 2

Comp4/

1

Comp4/

2 Comp4/ 4

Comp4/ 3

Comp8/

2 Comp8/ 3 Comp8/ 1

Comp11/ 3 Comp11/ 2

Comp11/ 4

Comp11/ 1

9 PPRODUCTS

20 PRODUCTS

6 PPRODUCTS

10PRODUCTS

Comp7/ 4

Legend: Company N°/ product N°

Comp2/ 2

Comp5/ 2 Comp2/ 4 Comp2/ 3 Comp2/ 1

Comp5/ 1

Comp5/ 3

Comp7/ 3

Comp7/ 2 Comp7/ 1

Comp3/ 4

Comp3/ 3

Comp3/ 5 Comp3/ 2

Comp3/ 1

Comp9/ 1

Comp9/ 2 Comp9/ 3

Comp1/ 6

Comp1/ 2 Comp1/ 4 Comp1/ 5

Comp1/ 3 Comp1/ 1 Comp12/ 1 Comp12/ 3 Comp12/ 2

Comp12/ 4

Comp6/ 1

Comp6/ 3

Comp6/ 2 Comp10/ 1 Comp10/ 2

Comp4/ 1

Comp4/ 2

Comp4/ 4

Comp4/ 3

Comp8/ 2

Comp8/ 3

Comp8/ 1 Comp11/ 3

Comp11/ 2

Comp11/ 4

Comp11/ 1

9 PRODUCTS

7 PRODUCTS

17 PRODUCTS

12 PRODUCTS

Collaborative approach

Novel problems

Familiar problems

Individual approach

Comp7/ 4

Legend: Company N°/ product N°

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3.2 Portfolio: diversified, differentiated, specialised or

dominant designs.

Once we understand how SMEs carry out innovative projects, we try to typify various

portfolios by examining the content of SMEs portfolios of our sample; we identify four kinds

of portfolio:

- Diversified portfolio in SMEs using simple technology but having unshared know-how.

This portfolio contains incremental innovations for various markets.

- Differentiated portfolio in SMEs using complex technology but have not unique know-how.

They develop new applications for niches to differ from the leader.

- Specialised portfolio in SMEs using complex or simple technology but shared their know-

how with competitors. The portfolio includes incremental innovations for specific niches.

- Portfolio of dominant designs for SMEs that they lead their market. The portfolio contains

radical innovations for specific niches.

It is worth noticing that innovative projects, quoted above, benefited from previous

experiences and from interspillover learning in many cases. It aims to improve previous

products and activities thanks to what companies learned by solving new problems or

setting up new activities2. Also, we observe that some SMEs develop new products by

using only their current production technology while other explore new ones.

4. Discussion:

By comparing what companies declare about their current and intended strategic postures

and the way they develop products and build their portfolio, we identify 4 various

configurations as following (for more details see appendix 4):

2 Interspillover learning is a concept developed by Ouchi and Watanabe (2008).

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Figure 4: Shaping processes of strategic postures.

So, the study validates our first hypothesis as the innovation pattern (how the innovative

projects are carried out) of an SME gives arise to a particular portfolio and then to a

particular strategic posture.

Many companies of our sample are aiming to change their main position mainly to hinder

competition while others prefer to foster their current competitive position. However, not

all companies are able to trigger the process to change strategically their main position.

Regarding our second hypothesis, our study shows that there are companies that are able

to maintain or change their main position strategically. To do so, they take a strategic

decision to set up minor positions (achieve innovative projects) with the same production

technology or new one. Managers know what is their objective and how to achieve it and

they take strategic decision with that in mind. Unlike this first category, some Companies

want to change their main position but are unable to do so mainly because their minor

positions are set up with the same production technology. Finally, there are companies

who change their main position but not strategically because they don’t have unshared

know-how to do so. Thus, they change along with opportunities. Here a figure to illustrate

these cases:

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Figure 5: Innovative projects shaping versus. fostering major positioning.

In this paper, our main argument is that because of limited resources, small firms behave

differently. Our study of SMEs in French technical textile industry confirms that. Compared

with Courtney’s shaping strategies; interviewees mainly ‘introduce fundamental product,

service, or business system innovations into the market’. However, the only way for

shaping seems to be positioning in niches whatever the orientation is (techno versus.

market). To shape the future, all SMEs focus on specific niches and want to develop

innovative products, processes or technologies within them. Some of them try to build

technological barriers to preserve their innovation rent for a given period.

The adapting strategies in our sample correspond to Courtney ones. Some companies try

to ‘hedging against future market uncertainty’ by diversifying their products portfolio or

distribution channels. Others Probe ‘through continuous experimentation’ of products,

processes or treatments as well as technological watch. Again, adapting strategies for

SMEs is achieved on niches. Finally, there are no obvious options strategies in this

industry. We suppose that limited resources prevent SMEs to ‘run after many hares’.

Thus, as Winch and Bianchi (2006) pointed out, the adoption of a deep-niche strategy it is

likely to be greater and greater importance in small and very small firms. We can conclude

that either in high-tech or in mature industries, this focus on niches arises from limited

resources and presence on market of SMEs.

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The analysis of portfolios shows that SMEs manage to implement their strategic planning

despite their limited resources. Managers are quite able to identify their current position,

opportunities and threats and to define required strategy. Once the strategy defined,

managers (may be thanks to small size) set up necessary internal organization or

reorganization and partnerships. With few exceptions, companies develop new products to

achieve their stated strategy and to shift from one position to another.

it is worth noticing that the technical textiles industry is a B to B one; which can explain

the high interdependency of industrialists, strong interactions with users and the co-

development trend. Scholars assert that co-development and even co-opetition are a

relevant strategy for SMEs as they face the same challenges, possess relevant resources

and capabilities to cooperate and have ‘high market commonality’ as well as similar

resources. Gnyawali and Park (2009) argue that co-opetition creates common benefits and

preserves private benefits. However, they focus on high-tech industry and our study shows

that the co-development and co-opetition in mature industry aim instead to preserve

common know-how and private competitiveness.

Finally, our study enlightens an obvious trend of co-development in technical textile

industry and this for two main reasons. On one hand, the extinction of much industrial

know-how, as specialized companies dye, pushes the majority of companies to co-develop

products and processes with their suppliers, sub-contractors or competitors to preserve

quality and performances. A bigger interdependency dominates the industry as

downstream companies need upstream ones to survive and grow. On the other hand, the

pluridisciplinary nature of innovation justifies the co-development; which corresponds to

concepts as co-opetition or open innovation. Beyond classical products testing by external

offices, companies must solve complex problems that they do not master entirely, use

unfamiliar technologies and cover more and more areas.

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Conclusion:

Our study contributes to show that SMEs postures for managing uncertainty are different

to certain extent. Therefore, concepts and toolkits of strategic management that scholars

and consultants develop on the basis of large companies are questionable. Our study

shows also that strategies differ regarding orientation toward technology or market. The

sample small size makes our study an exploratory one and we cannot generalize our

conclusions. Future surveys must be achieved with larger sample to verify our findings and

to foster our analytical framework.

The other contribution of the study is the analytical framework that we developed which,

explicates how SMEs build their strategic postures. This framework could be a strategic tool

for SMEs to check whether their innovative projects are strategically relevant to maintain

the same position/path or to change them and thus their competitiveness or not. Indeed,

strategic tools exist for large companies but are often not meant for SMEs and are thus

then often irrelevant. The ability to offer such a tool requires its validation theoretically and

empirically.

Also, future research must concern also other industries as uncertainties can affect

differently them and give arise to different responses. Technological uncertainty may affect

more SMEs in high-tech industries while those operating in mature industries cope with

uncertainty coming form competition. Responses also differ as SMEs carry out market and

budget planning, strengthen human resources and so on.

It was interesting to find one R&D company in technical textile industry that cross-fertilizes

textile and non textile technologies to develop new applications. The R&D Company’s CEO

speaks about bringing missing elements in the innovation process to technical textiles

industrialists. He chooses this industry because it provides many innovation opportunities.

His objective is to develop innovations that will be dominant designs. His business model

bases on a network of subcontractors that manufacture products designed by the

company, on integration with producers for small batches and on creation of technological

barriers. The existence of this R&D Company that brings new technologies in this industry

gives rise to some questions: why this company appears in the industry? Can this company

be a ‘shaping agent’? Does it provide options to producers with optimal costs? Further

comparative studies can answer these questions.

In addition, our study shows that the co-development and co-opetition in technical textiles

industry aim to preserve common know-how and private competitiveness. It is question of

survive. So, does the difference come from the dichotomy dynamic (high-tech) industries

and mature medium or low tech industries?

Finally, we observed that companies don’t use obligatory tools that public authorities

create for them. For instance, there is a specific cluster for the technical textiles funded

and supported by public authorities, which is not yet operational. However, many

industrialists are member of CLUBTEX that allows them to achieve technological watch,

networking, etc. Are these tools inappropriate for industrialists are small? Are fashionable

concepts as clusters or open innovation, which shape public policies, misleading? Future

research on the subject should address this issue.

18

Reference:

Barnir, A. and Smith, K.A. (2002). ‘Interfirm Alliances in the Small Business: the Role of Social Networks’. Journal of Small Business Management, Vol. 40 Issue 3, pp.219-232. Copeland, T. and Weiner, J. (1990), ‘Proactive management of Uncertainty’. McKinsey Quarterly, Issue 4, p133-152. Courtney, H. (2001), ‘20/20 foresight: crafting strategy in an uncertain world’. Boston: Harvard Business School Press. Courtney, H., Kirkland, J. and Viguerie, P. (1997), ‘Strategy under uncertainty’. Harvard Business Review, Nov/Dec97, Vol. 75 Issue 6, p67-79. http://www.ncbi.nlm.nih.gov/pubmed/10174798 Accessed 4 January 2009. Dilts, J. C. and Prough, G. E. (1989). ‘Strategic Options for Environmental Management: A Comparative Study of Small vs. Large Enterprises’. Journal of Small Business Management, Vol. 27 Issue 3, p31-38.

Gnyawali, D.R. and Park, B-J. (2009), ‘Co-opetition and Technological Innovation in Small and Medium-Sized Enterprises: A Multilevel Conceptual Model. Journal of Small Business Management, Vol. 47 Issue 3, pp.308-330. Matthews, C.H. and Scott, S.G. (1995), ‘Uncertainty and Planning in Small and Entrepreneurial Firms: An Empirical Assessment’. Journal of Small Business Management, Vol. 33 Issue 4, pp.34-52, McGrath, R.G and MacMillan, I.C. (2000), ‘The Entrepreneurial Mindset: Strategies for Continuously Creating Opportunity in an Age of Uncertainty’. Harvard Business School Press. http://books.google.fr/books?hl=fr&lr=&id=we7-g9YGbgC&oi=fnd&pg=PA1&ots=tX0Zm5Mgg2&sig=7yX-d0r3dlF-bnZjLFP3Iiek5QQ. Accessed 20 January 2009. Milliken, F. J. (1987), ‘Three Types of Perceived Uncertainty About the Environment: State, Effect, and Response Uncertainty’. Academy of Management Review, Vol. 12 Issue 1, p133-143.

DGE, Direction générale des entreprises, ministère de l'Economie, des Finances et de l'Industrie (2006), ‘Textiles techniques, le futur se tisse en France’. Brochure.http://www.industrie.gouv.fr/biblioth/docu/dossiers/sect/textileF.pdf Accessed December 2008. Morris, M.H., Koçak, A. and Özer, A. (2007). ‘Coopetition as a Small Business Strategy: Implications for Performance’. Journal of Small Business Strategy, Vol.18 Issue1, pp.35-55. Ouchi, N. and Watanabe, C. (2008), ‘An Analysis of High Profitability Mechanism by Means of Dynamism between Technological Diversification, Learning and Functionality Development’, in Sherif, M.H. and Khalil, T. (Eds.), Management of Technology Innovation and Value Creation. World Scientific Publishing. pp.55-72. Porter, M.E. (1980). ‘Competitive strategy: techniques for analyzing industries and competitors’. New York: Free Press. Shrader, C.B., Mulford, C. L. and Blackburn, V. L. (1989), ‘Strategic and Operational Planning, Uncertainty, and Performance in Small Firms’. Journal of Small Business Management, Vol. 27 Issue 4, p45-60. Wernerfelt, B. and Karnani, A. (1984), ‘Competitive Strategy Under Uncertainty’. Academy of Management Proceedings, pp.42-46. Winch, G.W and Bianchi, C. (2006). ‘Drivers and dynamic processes for SMEs going global’. http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/2710130106.html Accessed January 2009.

19

Appendix 1: Products profile regarding technology in use and company know-

how.

Unique

know-

how

Shared

know-

how

Complex

technology

Simple

technology

Comp2/2

Comp5/2

Comp2/4

Comp2/3

Comp2/1

Comp5/1

Comp5/3

Comp7/3

Comp7/2Comp7/1

Comp3/4

Comp3/3

Comp3/5Comp3/2

Comp3/1Comp9/1

Comp9/2Comp9/3

Comp1/6

Comp1/2

Comp1/4

Comp1/5

Comp1/3

Comp1/1

Comp12/1

Comp12/3

Comp12/2

Comp12/4

Comp6/1

Comp6/3Comp6/2

Comp10/1

Comp10/2

Comp4/1

Comp4/2Comp4/4

Comp4/3

Comp8/2Comp8/3 Comp8/1

Comp11/3

Comp11/2

Comp11/4

Comp11/1

9 PRODUCTS

20

PRODUCTS

6 PRODUCTS

10

PRODUCTS

Comp7/4

Legend: Company N¡/produc t N¡

Appendix 2: SMEs and products regarding technology in use and company know-

how.

Unique

know-

how

Shared

know-

how

Complex

technology

Simple

technology

Company 7

Company 1

Company 12

Company 6

Company 10

Company 4

Company 8

Company 11

Company 5

Company 9

Company 2

Company 3

Appendix 3: Innovation process for the 45 projects.

Unique know- how

Shared know- how

Complex technology

Simple technology

Comp2/ 2 Comp5/ 2

Comp2/ 4 Comp2/ 3

Comp2/ 1

Comp5/ 1

Comp5/ 3

Comp7/ 3

Comp7/ 2 Comp7/ 1

Comp3/ 4

Comp3/ 3 Comp3/ 5 Comp3/ 2 Comp3/ 1 Comp9/ 1 Comp9/ 2 Comp9/ 3

Comp1/ 6 Comp1/ 2

Comp1/ 4

Comp1/ 5

Comp1/ 3

Comp1/ 1 Comp12/ 1

Comp12/ 3 Comp12/ 2

Comp12/ 4

Comp6/ 1

Comp6/ 3 Comp6/ 2

Comp10/ 1 Comp10/ 2

Comp41

Comp4/ 2 Comp4/ 4

Comp4/ 3

Comp8/ 2 Comp8/ 3 Comp8/ 1

Comp11/ 3 Comp11/ 2

Comp11/ 4

Comp11/ 1

9

20 PRODUCTS

6 PRODUCTS

10 PRODUCTS

Comp7/ 4

Legend: Company N°/ product N°

20

Appendix 4: products development, portfolio and strategic postures of SMEs.

Company

Innovative

projects: Products

development

Portfolio Strategic posture

Company 1

Opportunities to set

up various

production

technologies that

shaped company’s

major positioning

Specialized

portfolio benefiting

from interspillover

learning when new

problems are

solved

Unshared

technological

know-how

Market-adapter

toward market-

shaper but minor

positions are not

set up in new

technological

areas.

Company 3

Opportunities to set

up various

production

technologies that

shaped company’s

major positioning

Specialised

portfolio benefiting

from interspillover

learning when new

problems are

solved

Unshared

technological

know-how

Market-adapter

toward market-

shaper as the

company decided

to set up a new

production

technology

Unique know- how

Shared know- how

Complex technology

Simple technology

Comp2/ 2 Comp5/ 2

Comp2/ 4

Comp2/ 3

Comp2/ 1

Comp5/ 1

Comp5/ 3

Comp7/ 3

Comp7/ 2 Comp7/ 1

Comp3/ 4

Comp3/ 3

Comp3/ 5 Comp3/ 2 Comp3/ 1 Comp9/ 1 Comp9/ 2 Comp9/ 3

Comp1/ 6

Comp1/ 2

Comp1/ 4

Comp1/ 5

Comp1/ 3

Comp1/ 1 Comp12/ 1

Comp12/ 3 Comp12/ 2

Comp12/ 4

Comp6/ 1

Comp6/ 3 Comp6/ 2

Comp10/ 1 Comp10/ 2

Comp4/ 1

Comp4/ 2 Comp4/ 4

Comp4/ 3

Comp8/ 2 Comp8/ 3 Comp8/ 1

Comp11/ 3 Comp11/ 2

Comp11/ 4

Comp11/ 1

9 PRODUCTS

20 PRODUCTS

6 PRODUCTS

10 PRODUCTS

Comp7/ 4

Legend: Company N°/ product N°

Comp22

Comp5/ 2 Comp2/ 4 Comp2/ 3 Comp2/ 1

Comp5/ 1

Comp5/ 3

Comp7/ 3

Comp7/ 2 Comp7/ 1

Comp3/ 4

Comp3/ 3

Comp3/ 5 Comp3/ 2

Comp3/ 1

Comp9/ 1

Comp9/ 2 Comp9/ 3

Comp1/ 6

Comp1/ 2 Comp1/ 4 Comp1/ 5

Comp1/ 3 Comp1/ 1 Comp12/ 1 Comp12/ 3 Comp12/ 2

Comp12/ 4

Comp6/ 1

Comp6/ 3

Comp6/ 2 Comp10/ 1 Comp10/ 2

Comp4/ 1

Comp4/ 2

Comp4/ 4

Comp4/ 3

Comp8/ 2

Comp8/ 3

Comp8/ 1 Comp11/ 3

Comp11/ 2

Comp11/ 4

Comp11/ 1

9 PRODUCTS

7 PRODUCTS

17 PRODUCTS

12 PRODUCTS

Collaborative approach

Novel problems

Familiar problems

Individual approach

Comp7/ 4

Legend: Company N°/ product N°

21

Company 4

Products

development with

current production

technology as well

as with new

technologies

Collaborative

innovation at long

run

Diversified

portfolio:

traditional products

to shape the

market + new

products as

strategic tools to

shape the new

major positioning

Unshared

technological

know-how

Market-shaper

toward techno-

shaper

Company 5

New uses with new

production

technologies

fostering current

major positioning

Portfolio of

dominant designs

thanks to

continuous

innovations and

interspillover

learning

Unshared

technological

know-how

Techno-shaper

Company 6

Products

development with

current production

technology

fostering current

major positioning

Specialised

portfolio along with

market

opportunities

Shared

technological

know-how

Market-adapter

toward market-

shaper but minor

positions are not

set up in new

technological

areas.

Company 7

Products

development with

current production

technology as well

as with new ones

fostering current

major positioning

Specialised

portfolio along with

market

opportunities

Shared

technological

know-how

Market-adapter

Company 8

Products

development in few

niches regarding

clients

specifications with

current production

technology

Diversified portfolio

with Standard

products benefiting

from interspillover

learning from

niches

Unshared

technological

know-how

Market-shaper

Company 9

Products

development in few

niches regarding

Specialised

portfolio benefiting

from interspillover

Market-adapter

22

clients

specifications with

current production

technology

learning from

niches

Unshared

technological

know-how

Company 10

Products

development with

current production

technology as well

as with new ones

fostering current

major positioning

Specialised

portfolio along with

clients demand

Shared

technological

know-how

Market-adapter

Company 11

Products

development with

current production

technology

fostering current

major positioning

Diversified portfolio

along with clients

demand

Shared

technological

know-how

Market-adapter

toward market-

shaper but minor

positions are not

set up in new

technological

areas.

Company 12

Products

development with

current production

technology

fostering current

major positioning

Diversified portfolio

along with clients

demand

Unshared

technological

know-how

Market-shaper