Interstices and Relative Impregnable Base in Penrose Effect: In the Process of Building Theory on Growth of Entrepreneur Managed Small Firms

Abstract

Inseparability of entrepreneurs and strategy of small firms is a unique phenomenon. This Paper is on growth strategy of small firms in Indian auto component industry advancing Penrose’ Theory - The Theory of the Growth of the Firms. Narration of concepts - interstice and impregnable base to explain uniqueness and specialisation with the image and interpretation of future growth by the entrepreneurs. Small firms are managed by the entrepreneurs; they are also the solo strategists. Their strategic decisions are guided by the motives and attributes of the entrepreneurs. They form an image about the opportunities available in the environment for growth of their firms. The Paper presents theoretical explanation on growth of small firms relevant in developing economies focusing on resource-capability -knowledge based view. Small firms not only provide employment opportunities to the locals but also play a major role in improving efficiency of supply chain of large firms. The process of growth is guided by the choices of impregnable base the entrepreneurs make. This also guides strategy design competency building and developing people. Small business makes choice to remain within the interstices or to compete with the large firms. They may choose to break the boundaries of the interstices redefine the impregnable base or redefine the impregnable base while remaining in the interstices. Deployment of the means is strongly guided by the growth aspiration of the entrepreneurs. Those desiring to remain within the interstices consider options to develop processes, and improve the expertise or to replicate the available expertise at various opportune locations.