ABSTRACT. Few articles have been published that specifi-
cally deal with how to support strategic analysis and man-
agement in small-medium sized enterprises (SMEs). In the last
decade, however, literature on strategic management has paid
considerable attention to the resource-based theory, which
seems to fit well the needs of owners and executives of SMEs.
The objective of this article is twofold: (i) to present a
resource-based view of an SME’s sustainable competitive
advantage; (ii) to propose an approach to strategy analysis
based on such a view.
The literature on management of small-medium
sized enterprises (SMEs) includes many articles
dealing with strategic planning, most of which
report empirical studies aimed at:
• showing the presence or the absence of strategic
analysis and planning practices in SMEs (e.g.,
Sexton and Van Auken, 1985; Shuman et al.,
• demonstrating the effectiveness of such prac-
tices in terms of positive impact on a com-
pany’s performance (e.g., Aram and Cowen,
1990; Orpen, 1994; Bracker et al., 1988;
Schwenk and Shrader, 1993; Lyles et al., 1993;
Risseeuw and Masurel, 1994; Piest, 1994;
Olson and Bokor, 1995).
In contrast, little attention has been paid to how
to support the entrepreneurial and managerial team
in strategy analysis (e.g., Quinn, 1980; Ansoff,
1984; Curtis, 1993).
In the last decade, literature on strategic mana-
gement has paid considerable attention to the
resource-based theory (e.g., Grant, 1991; Collis
and Montgomery, 1995; Barney, 1991; Mahoney
and Pandian, 1992; Amit and Shoemaker, 1993;
Sanchez et al., 1995; Peteraf, 1993), which seems
to fit well the needs of owners and executives of
The objective of this article, which is supported
by empirical research based on 14 case studies, is
• to present a resource-based view of an SME’s
sustainable competitive advantage;
• to propose an approach to strategy analysis
based on such a view.
This article is divided into three major sections.
The first briefly reports some basic concepts of the
resource-based theory. In the second section a
resource-based view of a SME’s sustainable com-
petitive advantage is proposed. Finally, the third
section describes the suggested approach to
strategic analysis, using an example case derived
from the empirical research.
1. The resource-based theory
According to the resource-based theory, which has
its roots in economic theory (e.g., Penrose, 1959)
and early strategy theory (Selznick, 1957; Ansoff,
1965; Andrews, 1971), the long-term competi-
tiveness of a company depends on its endowment
resources that differentiate it from its competi-
tors, that are durable and, that are difficult to
imitate and substitute (e.g., Grant, 1991; Peteraf,
1993; Collis and Montgomery, 1995; Mahoney
and Pandian, 1992; Barney, 1991; Prahalad and
A Resource-Based Approach
to Strategy Analysis in
Small-Medium Sized Enterprises
Small Business Economics 12: 233–248, 1999.
1999 Kluwer Academic Publishers. Printed in the Netherlands.
Final version accepted on August 26, 1998
Department of Economics and Production
Politecnico di Milano
Piazza L. Da Vinci, 32-20133 Milano, Italy