7. Conclusions
This paper seeks to contribute to the development of the literature on factors that influence small firms EP through a robust empirical study. The central context of this research is on SMEs, which constitute the vast majority of firms in Portugal, as in most word economies. Understanding the effects of decisions made by management in selecting strategic orientations is crucial and highly relevant to both theory and practice. Moreover, our intent is also to contribute to the ongoing scholarly conversation on the value of intangibles as strategic resources to SMEs.
Small traditional firms represent a very important part of the economic system in many European countries. Their significant contribution to the gross domestic product (GDP), national exports and job creation makes them an important policy target (Zucchella and Siano, 2014). In fact, and according to ATP, this industry in 2016 accounted for 20 per cent of industrial employment, 9 per cent of GDP and 10 per cent of Portuguese industrial exports.
We can only speculate that the Portuguese textile industry faces considerable challenges, not only regarding the economic crisis in international markets, which restricts access to resources, but also concerning consumption patterns. Furthermore, international competitiveness does not allow SMEs to develop a competitive strategy based on differentiation, changing thus their business model paradigm. Indeed, mature industries are characterized by increased competition and price deflation due to overcapacity (Parrish et al., 2006). As reported by the ATP (2014), globalization pressures, such as textile trade liberalization, have considerably affected the industry. The textile sector is being subjected to strong pressures in a fast-changing business environment due to market volatility and strong competition world-wide. The key success factors of the industry are related primarily with not only cost (labour, energy and transport) but also with geographical location (flexibility, responsiveness and proximity service), knowledge (know-how, experience, technical expertise, research and development and networking) and recognition (tradition, brands and quality). Therefore, we acknowledge that the sector is developing strong differentiation factors. Firms in these mature markets must look for ways to stay competitive and develop strategies that enable them to differentiate themselves from other firms.
