Interorganizational and Collective Strategies in Small Firms: Environmental Effects and Performance

Abstract

This study provides evidence that collective strategy is prevalent in small firms in fragmented industries. COMPUSTAT data were combined with afield survey of small manufacturingfirms to test hypotheses concerning the relative frequencies of various collective strategies, the effects of environmental variables on collective activity, and the contribution of collective behavior to firm performance. Results indicate that agglomerate and organic collective strategies are the most frequently employed, and that munificent environments were positively associated with collective behavior and performance. Complex environments were negatively associated with collective strategy and no effect was found for volatile environments. The study also discusses methodological issues concerning the use of the COMPUSTAT database, and the usual practice of omitting cases with missing financial information.