The sustainability of growth in small‐ and medium‐sized enterprises

This paper explores the factors that determine the sustainability of growth in small‐ and medium‐sized enterprises (SMEs). Previous research has shown that SME growth may be the consequence of the strategic choices of entrepreneurs or the structural characteristics of the external environment. This research investigates the dynamic between these two “conflicting” explanations. Two in‐depth longitudinal case studies are presented of SMEs in the wholesale sector. For SME managers, this research suggests that the first key managerial choice is “where to compete” but that this is followed by other key choices concerning “how to compete” and it is in the combination of these that sustained growth is found. Moreover, there may be circumstances when an innovative decision about “where to compete” endows the creative first mover with the opportunity to both drive growth and to be the prime beneficiary of market growth.