Managing competitive pressures in the globalisation era: the case of tooling and machining in Pennsylvania

Abstract

The globalisation process has foisted unexpected competitive pressures on firms across the globe. The nature of competitive pressures and firms' responses to those pressures vary across countries, regions, sectors and firm size. While there is a robust literature on the strategies used by large firms to manage competitive pressures, it is unclear how competitive pressures affect small and microenterprises (SMEs) and their strategic response to the challenges posed by globalisation. Using qualitative and quantitative evidence gathered from over 100 SMEs during a 10-year period, this paper provides insight into how small manufacturing firms in the United States respond to competitive pressures. The paper reveals that the responses have been mixed and that a majority of SMEs do not have strategic toolkits for managing competitive pressures. Using logit regressions, the paper identifies firm age and size as the most significant determinants of the ability of SMEs to survive adverse competitive shocks.