Orientation and action: SME responses to customers and competitors in an international competitive business context

This paper investigates strategic orientations toward three key parties (customers, domestic competitors, and foreign competitors) and considers how each pressures small- and medium-sized enterprises (SMEs) to reduce costs and innovate. We surveyed 2792 SMEs from 30 countries, about their business environment and firm innovation. Results indicate that SMEs are selective in responding to pressures from customers, and when they do respond, SMEs do so on their own terms. Further, SMEs differentiate their responses to competitive pressure based on whether pressure arises from foreign or domestic sources. Our study adds to the behavioral perspective of the market orientation literature by focusing on how customers and competitors drive SME behaviors aimed at achieving positional market advantages.