Steering through tough times? Insights into the strategy-formation of small firms to adapt to demographic challenges
Journal article, Peer reviewed
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Original versionInternational Journal of Globalisation and Small Business. 2019, 10 (2), 163-186. 10.1504/IJGSB.2019.097931
Market transformations induced by demographic change pose a challenge to the strategy-formation of small firms, because the effects of demographic change on firms are complex and partly non-predictable, and will only be slowly evolving over time. Hence, adaptation to change in business environments characterised by demographic challenges, such as population ageing and decline, can be considered as an entrepreneurial task, which requires both the monitoring of changes based upon information management, and flexibility and learning. Considering demographic change as a context of market crisis and turbulences, this article explores the strategic adaptation of small firms in Germany. Conceptually, the paper is informed by various perspectives on the strategy-formation of small firms in dynamically changing environments. Empirically, qualitative case study analysis is presented in combination with a postal survey, thus covering firms in different German regions affected by demographic change. Using this mixed-method design, the article provides insights into the strategic responses of firms to demographic change particularly in the field of local sales markets. It finds that market leadership is the most important adaptive strategy along with market expansion, gradual divestment and/or local business networking. The study also emphasises the firms’ approach to adaptive strategy-formation that is associated with foresight and information management, on the one hand, and learning and risk-taking, on the other. More generally, it confirms the validity of the strategy-as-process perspective and conceptualises strategic adaptation to demographic change as a process that is marked by the awareness and perception of market changes, requires proactivity to respond to these changes and results in firm-specific patterns of strategic adaptation.