DIFFERENCES IN LARGE AND SMALL FIRM RESPONSES TO ENVIRONMENTAL CONTEXT - STRATEGIC IMPLICATIONS FROM A COMPARATIVE-ANALYSIS OF BUSINESS FORMATIONS

Despite growing recognition of some strategic advantages held by small firms, little comparative research has been performed on the advantag es and disadvantages accruing to firm size. In order to delineate the differential responses of small and large businesses to their environm ental context, we perform a comparative analysis of the impact of indu stry structural characteristics on the formation of large and small bu sinesses in a large sample of U.S. manufacturing industries from 1977 to 1987. The results suggest that small business possess certain resou rces that allow them to overcome some barriers which create greater di fficulties for their larger counterparts, as well as allow small busin esses to exploit certain industry opportunities more readily than larg er ones. (C) 1998 John Wiley & Sons, Ltd.