How small firms adapt in resource-limited contexts: A mix of adaptive forms

Adaptation in small firms is commonly associated with overcoming resource constraints (Borocki et al., 2019). An ‘adaptive form’ is defined as the unique strategies and positions that a company takes in response to difficult external circumstances and resource limitations (Luokkanen and Rabetino, 2005; Vergne and Depeyre, 2016). In the strategic management and entrepreneurship literature, it is considered a reasonable approach for confronting dynamic environment challenges and has been loosely represented by concepts such as strategic posture (Hagen et al, 2017) strategy typology (Miles and Snow, 1986), entrepreneurial orientation (Lumpkin and Dess, 1996), Porter’s competitive strategies (Porter, 1996), resilience (Van Der Vegt et al., 2015), traditional risk management perspectives (Mithani, 2020), and hybrid strategy (Alnoor et al., 2022). However, there is a challenge with existing conceptualisations of organisational adaptation as they are diverse and do not focus on specific firm types. Most importantly, the concept fails to acknowledge how the firm adapts with limited resources. Firm adaptation should be contextually constructed to address all relevant resource challenges in a unique and interdisciplinary approach. The case study will examine adaptive forms in the context of small businesses with limited resources. RYS is a small, family-run meat-processing business established 61 years ago in rural Shropshire. The business has evolved from being a sole trader into an established limited company; specialised in retail butchery, offering a diverse range of meat-processing products with an emphasis on (i) natural ingredients and locally sourced supplies and (ii) personalised service and attention to individual customer needs. However, like many small businesses, RYS has been experiencing key resource constraints: outdated machinery and equipment, gaps in the skilled workforce, and limited financial resources. The external challenges in the past five years adversely affected access to and availability of needed resources and directly influenced various aspects of the business operations, rendering it necessary for RYS to find ways to overcome the obstacles and adapt. Our case analysis of RYS indicates that the rural small business has been a dynamic adaptor with a hybrid approach to adaptation strategies, i.e. product diversification, reactive form, resource optimisation, and strategic form, in coping with different resource challenges, that led to improved business performance. Despite the challenges with reactive adaptations, the evidence suggests that the hybrid form of adaptation is central to the survival of small firms (that continuously cope with limited resource challenges) in adverse times and to their growth prospects in the long run.