Purpose – The purpose of this paper is to jointly analyse external adjustment (environment‐strategy) and internal adjustment (strategy‐structure), and their influence on firm performance in a set of small and medium enterprises (SMEs) of a European‐Mediterranean region in order to check whether models mainly validated in US firms are applied in this context. Design/methodology/approach – Following a quantitative methodological approach, a survey was applied to a sample of 91 SMEs of Alicante (Spain) from different industries in order to contrast nine hypotheses. Various statistical procedures were used, such as cluster analysis and analysis of variance (ANOVA). Moreover, external and internal adjustment indices have been created. Findings – Findings show that traditional theoretical models are not exactly applicable in a context of European‐Mediterranean SMEs. Cost leadership strategy is not associated with a favourable environment, and innovation differentiation strategy is not associated with organic structures. The relationship between adjustment and performance is partially confirmed. Research limitations/implications – The caveats normally associated with survey methods apply, as do those related to the use of cross‐sectional and managerial perceptions data. Besides, the findings are limited to SMEs. Practical implications – Implications for SME managers regarding the fit between environment, strategy, structure and its effect on performance are addressed. The results can serve as guidelines that will help managers in the formulation and adoption of their strategies. Originality/value – The interest of this paper is that two issues often treated separately are now jointly analysed: internal and external adjustments. Moreover, it supplies empirical evidence of these issues in a European‐Mediterranean region, in which no similar studies have been carried out until now.
EuroMed Journal of Business – Emerald Publishing
Published: Jul 18, 2008
Keywords: Competitive strategy; Organizational structures; Business performance; Spain