Climbing the value chain: Strategies to create a new product development capability in mature SMEs

Increasing productivity gaps and declining manufacturing bases create complex challenges for mature small to medium enterprises (SMEs). One solution advocated by academia is to reposition along the value chain - moving to a position of greater value. The purpose of this paper is to examine strategies used by firms to reposition through creating a new product development (NPD) capability. In doing so, the paper seeks to resolve gaps in extant literature on NPD in mature SMEs. An exploratory approach is taken, analysing in-depth case studies of three mature UK manufacturing SMEs. Four strategic approaches to enable the creation of a NPD capability (strategic alliances, licensing key technologies and ideas, outsourcing and deploying an internal development process) are found. Each may facilitate an SME to reposition but the findings highlight that these strategies are not mutually exclusive as different combinations were employed to accelerate and leverage change. Limited number of case studies constrains wider understanding despite providing richness. The findings highlight four different strategies for repositioning but there may be other routes. Deeper understanding of how to climb the value chain, providing valuable lessons for mature SMEs facing a need to reposition to generate new growth opportunities. The paper provides an understanding of how mature manufacturers utilise different strategies to overcome resource constraints and generate a NPD capability to assist in repositioning. This resolves weaknesses in current literature that so far have not adequately examined the process of shaping a NPD capability and the strategies used to reposition.