The strategic processes of small businesses operating in a turbulent environment: a retail community pharmacy perspective

Abstract

In South Africa, the small business sector has been identified as a sector that is not performing optimally. In a turbulent environment, this type of small business profile is magnified. Therefore, it is important to examine mechanisms through which the performance of this sector can be enhanced. Dynamic capabilities have emerged as a strategic tool of the highest order in terms of firm management and strengthening these capabilities is a key concern for firms that operate in a turbulent environment. Dynamic capabilities are described as the processes required to reconfigure existing resources into new functional competencies. Therefore, this study investigated the strategic processes of small businesses and developed a new strategic model and theory to illustrate and elucidate intervention mechanisms and strategies to strengthen the dynamic capabilities of these small businesses.

Methodology:

The retail community pharmacy sector was chosen as a model sector for this study since it is a sector that comprises mainly of small businesses and it is currently experiencing environmental turbulence. The methodology followed an initial exploratory, qualitative approach followed by a formal, empirical, quantitative approach. The research questionnaire was derived after ensuring that content validity, criterion related validity, construct validity and reliability criteria were met. This questionnaire was administered to a sample of 477 out of a population of 2549 small businesses in the retail community pharmacy sector, using an unrestricted, simple, random, probability sampling approach. As a consequence of having received 130 completed questionnaires, the results obtained in this study were expressed at the 95% confidence level with a confidence interval of 0.08.

Results and Discussion:

From a gap analysis of the level of importance of dynamic capabilities and their extent of implementation, seven dynamic capabilities whose implementation can be enhanced by an alteration of the management importance perception of them, were extracted. These capabilities revolve around staff reward, well-being, empowerment and education and training, as well as the abilities of the small business leadership to sense the environment and opportunities while being sensitive to stakeholder needs. Through a consolidation of the results of the gap analysis, a model for the initiation and the sustaining of innovative resource reconfigurations was developed.

Conclusion:

For the management practice setting, this study�s findings suggest that the dynamic capabilities of small firms operating in a turbulent environment can be enhanced and strengthened by the employment of the model developed by this study. From a management education perspective, this study�s findings also suggest that the employment of specific and focussed management education that revolves around the seven identified processes will enable not only the initiating phase of the proposed model but will also provide a multiplier effect in the model since management capability is also part of the general resource base of the firm. This study thus proposes the use of these management practice and educational approaches to strengthen and enhance the dynamic capabilities of small businesses operating in a turbulent environment.