Competitor Knowledge among Small firms: A Pilot Examination of Fast Growing Northern Ireland Companies

Abstract

NOLA HEWITT-DUNDAS, BRENDAN McFerran and Stephen Roper are with the Northern Ireland Economic Research Centre, Belfast, Northern Ireland. It has been demonstrated that those companies which take into account the performance of competitors in the development of their business strategy are considerably more likely to succeed than those which do not account for their competitors' performance. However, if a company is developing a strategic plan and therein accounting for the performance of competitors it is essential that the extent of competitor knowledge is accurate otherwise the company will have a distorted perception of its own relative position within the market and thus formulate a strategy with misguided and often unobtainable objectives. This paper presents the key findings of a project to evaluate the accuracy of information which firms held regarding their competitors and the likely contribution of this information to strategic development. The results of the project demonstrated that only between 50 and 60 per cent of the firms were capable of providing measures of size and efficiency. Of the estimates that were made only 45 per cenit were of reasonable accuracy, suggesting that the sample firms were able to make reasonably accurate assessments of around one-fifth of all competitors' data items. As these firms had performed better than most United Kingdom small firms over the 1991-93 period this would suggest that the comparisons reported within the project were likely to have over-estimated the competitor knowledge of the general population of small firms. If this finding was confirmed by a larger study it would imply that a significant information gap exists in the market knowledge of small firms and therefore is an issue which should be addressed by development agencies.

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