Theorizing ‘Variegated Bonding as SME Diversification Strategy’ to Extend Business from Traditional to Emergent Sectors

Abstract

Few studies on diversification strategies address small and medium-sized enterprises (SMEs) and how they differ from large firms. Although related diversifications tend to be the approach for SME diversifications, we need to know more about unrelated diversifications by SMEs. This study focuses on the process of SME unrelated diversification and conduct ethnographic case study on a family business SME from Kyrgyzstan. The inductive process study offers variegated bonding as a possible process of SME diversification. The process consists of the three steps: appetizing, baby-stepping and reconstructing identity. This study extends the extant literature on SME diversification and investigates how the organizational aspiration of identity reconstructions could lead to the focal organization’s entry to an unrelated sector and establishing connectivity between its core and emergent sector organization that eventually alters its identity.