Tuuli Kivihuhta Strategy implementation in an IT microenterprise A qualitative case study Vaasa 2025 School of Management Master’s Thesis in Economics and Business Administration Strategic Business Development 2 UNIVERSITY OF VAASA School of Management Author: Tuuli Kivihuhta Title of the Thesis: Strategy implementation in an IT microenterprise : A qualitative case study Degree: Master of Science in Economics and Business Administration Programme: Strategic Business Development Supervisor: Rumy Narayan Year: 2025 Pages: 91 ABSTRACT: Strategy implementation is widely recognized as one of the most complex phases of strategic management, as it requires turning abstract intentions into concrete action. Although strategy implementation has gained growing scholarly attention, microenterprises remain insufficiently examined as a distinct context, despite representing the majority of European firms. Their resource constraints, informal structures, and overlapping roles create distinct conditions for translating strategic goals into everyday practice, particularly in the rapidly changing and project-driven IT sector. This study examines how strategy is implemented in a Finnish IT microenterprise following its first formal strategic planning process. It focuses on how strategic intentions are interpreted, adapted, and enacted in everyday decision-making in a small organization where all members are co-owners. The study addresses the following question: How is strategy implemented in an IT microenterprise after a formal strategic planning process? The research adopts a qualitative single-case design. The empirical material consists of six semi-structured interviews with internal members and consultants, complemented by internal documentation. The data were analyzed using thematic analysis within an abductive research approach. The theoretical framework integrates effectuation, digital bricolage, dynamic capabilities, and sensemaking, providing the analytical lens to understand how strategy is enacted through everyday practices in a resource-constrained microenterprise context. The findings show that strategy implementation unfolded as a participatory and practice- driven process, where strategic goals were clarified through shared reflection and embedded in existing tools and work practices. Rather than progressing through a linear execution phase, implementation evolved through continuous prioritization, adaptive experimentation, and situated decision-making. While the small size of the organization enabled fast responses, it also exposed the process to capacity limitations and shifting demands. Progress was supported by creative use of available resources, and the strategy increasingly guided development work by structuring decisions on new initiatives. Overall, strategy implementation emerged as an adaptive and continuous process integrated into everyday work. The study contributes to strategy implementation research by demonstrating how strategic action in microenterprises is driven by everyday practices, resourceful experimentation, and shared interpretation rather than formal structures or linear planning. It offers a multidimensional explanation of how strategy becomes sustained over time in resource- constrained environments. For practitioners, the findings show that strategic progress in small firms can be supported through lightweight coordination and reflective, participatory practices rather than reliance on complex systems. KEYWORDS: microenterprises, strategy work, strategic planning, information technology, decision making, small and medium-sized enterprises 3 VAASAN YLIOPISTO Johtamisen yksikkö Tekijä: Tuuli Kivihuhta Tutkielman nimi: Strategy implementation in an IT microenterprise : A qualitative case study Tutkinto: Master of Science in Economics and Business Administration Koulutusohjelma: Strategic Business Development Työn ohjaaja: Rumy Narayan Valmistumisvuosi: 2025 Sivumäärä: 91 TIIVISTELMÄ: Strategian toimeenpanoa pidetään yhtenä strategisen johtamisen haastavimmista vaiheista, sillä se edellyttää abstraktien strategisten tavoitteiden muuttamista konkreettiseksi toiminnaksi. Strategian toimeenpanoon keskittyvä tutkimus on lisääntynyt, mutta mikroyrityksiä tarkastellaan edelleen harvoin tutkimuksissa omana kontekstinaan, vaikka ne muodostavat valtaosan eurooppalaisista yrityksistä. Tämä tutkimus tarkastelee, kuinka strategiaa viedään käytäntöön suomalaisessa IT-alan mikroyrityksessä sen ensimmäisen muodollisen strategiaprosessin jälkeen. Tutkimuksessa keskitytään siihen, kuinka strategisia aikomuksia tulkitaan, mukautetaan ja viedään käytäntöön mikroyrityksessä, jonka kaikki jäsenet ovat myös omistajia. Tutkimuskysymys on: Kuinka strategiaa toteutetaan IT-mikroyrityksessä muodollisen strategiaprosessin jälkeen? Tutkimus on toteutettu laadullisena tapaustutkimuksena. Empiirinen aineisto koostuu kuudesta puolistrukturoidusta haastattelusta, joista neljässä haastateltiin tapausyrityksen jäseniä ja kahdessa konsultteja yrityksestä, joka tuki case-yrityksen strategiaprosessia. Aineisto analysoitiin temaattisesti abduktiivista tutkimusotetta hyödyntäen. Teoreettinen viitekehys yhdistää effectuation-teorian, digital bricolage-käsitteen, dynaamisten kyvykkyyksien teorian sekä sensemaking-teorian tarjoten analyysille useita toisiaan täydentäviä näkökulmia. Tulokset osoittavat, että strategian toimeenpano eteni case-yrityksessä osallistavana ja käytännönläheisenä prosessina, jossa strategisia tavoitteita selkeytettiin yhdessä ja liitettiin osaksi arjen työtä luovasti hyödyntämällä olemassa olevia työkaluja ja toimintatapoja. Toimeenpano ei edennyt lineaarisesti, vaan kehittyi jatkuvan priorisoinnin, mukautuvan kokeilemisen ja kontekstisidonnaisen päätöksenteon kautta. Pieni organisaatiokoko toi toimintaan ketteryyttä, mutta altisti prosessin myös työkuorman vaihteluille ja resurssirajoitteille. Strategia alkoi vähitellen ohjata kehittämistyötä tarjoamalla rakenteen uusien aloitteiden arvioinnille ja ajoittamiselle. Tutkimus täydentää strategian toimeenpanon tutkimusta tuomalla esiin, että mikroyritysten strategisessa toiminnassa korostuvat arjen tekeminen, kokeileminen ja yhteiset tulkinnat muodollisten prosessien ja lineaarisen suunnittelun sijaan. Tutkimus tarjoaa moniulotteisen tulkinnan siitä, miten strategia vakiintuu ajan myötä osaksi arjen toimintaa resurssirajoitteisissa olosuhteissa. Käytännön toimijoille tutkimus tarjoaa ymmärrystä siitä, miten pienissä yrityksissä strategista edistymistä voidaan tukea yksinkertaisilla koordinaatio- ja toimintatavoilla sekä reflektoivalla ja osallistavalla työskentelyllä monimutkaisten järjestelmien sijaan. AVAINSANAT: microenterprises, strategy work, strategic planning, information technology, decision making, small and medium-sized enterprises 4 Contents 1 Introduction 6 2 Theoretical background 8 2.1 Strategy implementation as a research topic 9 2.1.1 The phases of strategic management process 10 2.1.2 Development of strategy implementation research 12 2.1.3 Challenges in strategy implementation 14 2.2 Strategy implementation in SMEs and microenterprises 16 2.2.1 Implementation conditions in SMEs and microenterprises 16 2.2.2 Implementation dynamics in IT microenterprises 18 2.3 Theoretical framework for strategy implementation 20 2.3.1 Effectuation theory 22 2.3.2 Digital bricolage 24 2.3.3 Dynamic capabilities (micro-level) 26 2.3.4 Sensemaking theory 30 2.4 Research gap and contribution 33 3 Methodology 36 3.1 Research approach 36 3.2 Case company 37 3.3 Data collection 38 3.4 Data analysis 39 3.5 The assessment of the quality of the data 41 4 Findings 43 4.1 Strategy work in microenterprises: external perspective 43 4.1.1 Strategy formulation 45 4.1.2 Strategy implementation and adaptation 47 4.1.3 Strategy work in the case company: consultant’s perspective 50 4.2 Strategy work in the case company: internal perspective 52 4.2.1 Participatory process 53 5 4.2.2 Clarifying the strategy 55 4.2.3 Everyday implementation 57 4.2.4 Strategy and development 60 4.3 Summary of the key findings and the revised framework 62 5 Discussion 67 5.1 Theoretical contributions 67 5.2 Managerial implications 70 5.3 Limitations and suggestions for future research 72 References 75 Appendices 86 Appendix 1. Semi-structured interview questions for consultants 86 Appendix 2. Semi-structured interview questions for the case company 88 Appendix 3. List of interviewees 91 Figures Figure 1. Theoretical framework of the thesis 34 Figure 2. Revised framework of the thesis 65 6 1 Introduction Strategy implementation is widely recognized as one of the most complex and critical phases of the strategic management process, as it often determines whether strategic goals are successfully achieved (Hrebiniak, 2006). It has been suggested that up to 90% of strategies may fail during implementation, rather than due to flaws in their initial planning (Kaplan & Norton, 2008). While early research primarily focused on strategy formulation, subsequent studies have increasingly addressed the practical challenges and conditions that influence the success of implementation (Noble, 1999; Aaltonen & Ikävalko, 2002; Mantere & Vaara, 2008). These challenges are particularly evident in microenterprises, which account for over 90 % of European firms (European Commission, 2020). With fewer than ten employees, they are typically characterized by centralized decision-making, informal structures, and limited resources (Beaver, 2002; Hudson et al., 2001). In knowledge- intensive sectors such as information technology (IT), rapid technological change and reliance on specialized expertise further shape how strategy is enacted in day-to-day work (Levy & Powell, 2005). Despite the widespread presence of microenterprises, research has tended to treat SMEs as a homogeneous category, leaving limited understanding of how strategy is actually implemented in microenterprises, especially those operating in fast-changing, knowledge-intensive environments (Kelliher & Reinl, 2009; Mazzarol, 2005). This study addresses this gap by examining how strategy is implemented in a Finnish IT microenterprise following its first formal strategic planning process. The case offers a relevant setting for understanding how strategic intentions are interpreted, adapted, and enacted in a small, resource-constrained, and low-formality organization in which all members are also co-owners. The study draws on four complementary perspectives – effectuation, digital bricolage, dynamic capabilities (DC), and sensemaking – to capture both the action-oriented and 7 interpretive aspects of strategy implementation. Taken together, these perspectives provide a multidimensional view of how strategy unfolds in everyday work. This study seeks to answer the following research question: How is strategy implemented in an IT microenterprise after a formal strategic planning process? To address this question, a qualitative single-case study design was adopted. Empirical material consists of six semi-structured interviews – four with the co-owners of the case company and two with consultants from the firm involved in its strategy work – as well as relevant internal documents. The analysis followed thematic analysis (Braun & Clarke, 2006) within an abductive research approach (Dubois & Gadde, 2002; Timmermans & Tavory, 2012). This study contributes to the literature in three ways. First, it extends strategy implementation research by examining microenterprises as a distinct organizational context within the broader SME category. Second, it provides practice-oriented insight into how strategic plans are translated into concrete routines, priorities, and decisions in a resource-constrained environment. Third, it brings together internal and external perspectives, offering both case-specific and experience-based insights into strategizing in microenterprises. The structure of the thesis is as follows: Chapter 2 reviews the relevant literature and develops the theoretical framework that informs the analysis. Chapter 3 describes the research methodology, including the case study design, data collection, and analysis procedures. Chapter 4 presents the empirical findings, while Chapter 5 integrates the results with the theoretical discussion and presents implications, limitations, and directions for future research. 8 2 Theoretical background Strategy implementation remains a complex and significant domain within strategic management. Although research in this field has expanded over the past decades, the majority of existing work has focused on large organizations or approached smaller firms as a homogeneous group. However, the processes through which strategies are implemented in smaller firms – particularly microenterprises – are shaped by different logics, dynamics, and constraints than those embedded in mainstream strategy models (Beaver, 2002; Hudson et al., 2001; Kelliher & Reinl, 2009). Microenterprises, by definition small in size and often informally structured, typically operate without formal hierarchies or complex organizational infrastructure. These structural conditions limit the applicability of strategy models that assume well- defined organizational roles, formalized support functions, and a clear separation between planning and implementation activities (Kearney et al., 2019; Mazzarol, 2005). In the IT sector, firms face additional demands related to adaptability, technical expertise, and project-based operations, which further shape how strategy is put into practice (Levy & Powell, 2005; Thong, 1999). These combined structural and sectoral features indicate the need for a context-sensitive and practice-oriented perspective on strategy implementation in microenterprises – especially in settings where formal strategy development meets the everyday realities of informal structures and limited resources. To examine how strategy is implemented in the everyday operations of an IT microenterprise, this literature review builds on existing research on strategy implementation, outlines the structural and strategic characteristics of SMEs and microenterprises, and introduces four complementary theoretical perspectives – effectuation, digital bricolage, dynamic capabilities, and sensemaking. Together, these perspectives provide the analytical foundation for examining how strategic intentions are interpreted and enacted in resource-constrained and informally structured organizational contexts. 9 This chapter provides the conceptual foundation for the study by reviewing existing research on strategy implementation, identifying the specific characteristics of small firms and microenterprises, and presenting the theoretical lenses that inform the analysis. 2.1 Strategy implementation as a research topic Strategy implementation is widely recognized as a critical dimension of strategic management, yet it continues to pose challenges in both theory and practice (Hrebiniak, 2006; Noble, 1999). While strategy formulation has traditionally attracted considerable academic and managerial attention, numerous studies suggest that the success of a strategy often depends on how effectively it is implemented rather than on the quality of the strategic plan itself (Hrebiniak, 2006; Speculand, 2009). Given that failures of implementation explain much of the gap between intended and realized strategies, strategy implementation requires closer examination from both scholars and practitioners. The literature on strategy implementation is broad and multidimensional. Scholars have approached the phenomenon from multiple angles, including leadership and communication, organizational processes, and practice-oriented perspectives (Noble, 1999; Mantere & Vaara, 2008). This diversity reflects the fact that implementation is not a singular, standardized activity but a situated, socially constructed process shaped by structures, resources, everyday practices, and shared meanings. At the same time, the fragmented nature of the literature indicates that combining different perspectives can offer a more comprehensive understanding of how strategies are carried out in organizations. Over the past decades, implementation has gradually shifted from being regarded as a less prominent phase in the strategy process to being recognized as a distinct area of research (Floyd & Wooldridge, 1992; Whittington, 2006). This evolution highlights that 10 understanding strategy requires attention not only to how strategies are formulated, but also to how they unfold in practice through everyday actions and interactions. Accordingly, implementation is now increasingly examined as an ongoing process shaped by organizational routines and prevailing conditions (Hrebiniak, 2006), as well as the interpretive agency of those involved (Mantere & Vaara, 2008). Section 2.1.1 describes the strategic management process and highlights how formulation and implementation are both connected and distinct. Section 2.1.2 examines the development of research on implementation, while Section 2.1.3 discusses key challenges that commonly affect strategy implementation in organizations. 2.1.1 The phases of strategic management process The strategic management process has traditionally been presented as comprising two main phases: strategy formulation and strategy implementation. Whereas formulation emphasizes the design of goals, plans, and resource allocations, implementation translates these intentions into concrete organizational activities (Hrebiniak, 2006; Kaplan & Norton, 2008). In this traditional two-phase view, a carefully crafted strategy is assumed to precede its execution. In practice, greater emphasis has typically been placed on formulation than on implementation. Subsequent research has shown that while planning is important, the majority of strategies fail not because of weaknesses in formulation but because of difficulties in implementation (Aaltonen & Ikävalko, 2002; Noble, 1999). Therefore, implementation is not only critical but also often the most vulnerable part of the process. At the same time, the relationship between formulation and implementation is more complex than a simple linear process. Mintzberg (1994) argued that viewing strategy primarily as a rational planning activity has significant limitations, as real-world strategies rarely unfold exactly as intended. Instead of strictly following a predetermined plan, strategies often emerge from the interaction of deliberate and 11 emergent elements, as planned initiatives meet unexpected opportunities and constraints. Later, Mintzberg, Ahlstrand, and Lampel (1998) further elaborated on this tension by categorizing strategy research into distinct schools of thought, distinguishing between those that emphasize design and control and those that highlight learning and adaptation. These perspectives challenge the assumption that implementation is merely the straightforward execution of prior plans. A process perspective sees strategy as a continuous cycle in which formulation and implementation are interdependent and shape each other over time (Sminia, 2009). This dynamic view recognizes that organizations must constantly adjust strategic intentions in light of new information, shifting conditions, and the interpretations of those involved. Similarly, Whittington (2006) emphasized that strategy is not limited to a planning phase but enacted through practices that extend across multiple organizational levels. This process perspective also highlights the importance of organizational actors, whose involvement complicates the distinction between formulation and implementation. The involvement of different organizational actors weakens the distinction between formulation and implementation. According to Floyd and Wooldridge (1992), middle managers act as mediators between executive goals and everyday operations, actively contributing to both formulation and implementation. Implementation is rarely a straightforward extension of planning. Even in hierarchical firms, it requires negotiation, adaptation, and sensemaking across levels. This complexity becomes particularly evident in microenterprises, where minimal formal structures result in the same individuals frequently taking part in both planning and execution. In summary, while the strategic management process is often presented as comprising distinct phases, research increasingly highlights the interdependence and fluidity between formulation and implementation. Plans provide direction, but implementation is shaped by how strategies are interpreted and adjusted in the course 12 of everyday work practices. Within strategy research, this interdependence has resulted in greater focus on processes and practices rather than viewing implementation as a separate stage. This dynamic is particularly evident in microenterprises, where strategic planning and implementation are often carried out by the same individuals. 2.1.2 Development of strategy implementation research Early contributions to the field tended to portray implementation as a technical and linear extension of planning, in which strategic choices were expected to be implemented through established structures and control mechanisms (Hrebiniak, 2006). At the same time, implementation research was not fully coherent. Noble (1999) highlighted its fragmented and multidimensional nature, noting that implementation cannot be simplified to a single standardized activity. From the 1990s onwards, greater emphasis was placed on the organizational and behavioral dimensions of implementation. During this period, scholars such as Floyd and Wooldridge (1992) challenged purely structural perspectives and showed how organizational members contribute actively to implementation. Similarly, Zbaracki and Bergen (2010) demonstrated that routines, while typically designed to promote strategic stability, may be continuously negotiated and reinterpreted under pressure. Overall, these insights highlight that implementation involves navigating internal dynamics, evolving routines, and shifting organizational priorities – rather than merely executing predefined plans. However, while these perspectives emphasize the role of agency, they often neglect the structural and contextual constraints that are particularly notable in small firms. Subsequent research explored how strategic intentions are interpreted and enacted in context-specific practices. Rouleau (2005) showed how sensemaking and sensegiving influence the translation of strategy in everyday managerial practices, while Mantere and Vaara (2008) analyzed how discourse and power relations shape participation in 13 strategic activities. These studies shifted attention toward the cultural and linguistic dimensions of implementation and the ways in which strategy becomes meaningful in organizational contexts. In parallel with these interpretive perspectives, practice-oriented research emphasized the integration of strategizing into everyday organizational contexts. Whittington (2006) approached implementation within a practice-oriented view of strategy rather than as a separate phase. He emphasized that it unfolds through norms, routines, and social interactions across organizational levels. More recent contributions, including Sminia (2009), have reinforced this view by conceptualizing implementation as an ongoing activity of organizing rather than a distinct phase in the strategy process. Together, these studies emphasize that implementation is not a technical phase that follows planning but a socially embedded and continuously unfolding process. At the same time, they reveal an ongoing tension: structural and technical perspectives often diminish individual agency, whereas interpretive approaches risk neglecting the structural and resource-based constraints that shape what organizations can realistically achieve. These interpretive and practice-oriented developments laid the foundation for what later became known as the strategy-as-practice (SAP) perspective, which examines strategizing as situated, social, and materially embedded activity. Vaara and Whittington (2012) synthesized this evolution by reviewing the development of SAP research and outlining its core agenda for the field. Their analysis highlighted how SAP literature has shifted the focus from linear and purely cognitive approaches to implementation towards the social, historical, and practice-based contexts in which strategizing unfolds. By articulating key themes such as the role of everyday practices, the situated nature of strategizing, and the embeddedness of strategy in broader organizational and societal contexts, they helped clarify and strengthen SAP’s position within contemporary strategy research. 14 In summary, research has progressed from structural and linear views toward more refined perspectives that recognize the behavioral, interpretive, and processual dimensions of strategy implementation. Overall, these developments reflect a shift from viewing implementation as a technical phase of executing predetermined plans toward understanding it as a socially embedded and contextually shaped process. This evolution has also opened up opportunities to connect interpretive and practice- oriented approaches with perspectives that examine how strategic action unfolds under conditions of uncertainty and resource constraints. More recent research has increasingly drawn on entrepreneurial, resource-oriented, and capability-based perspectives to deepen understanding of how small firms enact strategy in practice. These emerging streams of research highlight the value of integrating multiple theoretical perspectives to capture both the situated, interpretive nature of strategizing and the resourceful, action-oriented ways in which small firms navigate uncertainty. Such integration provides a more comprehensive foundation for analyzing how strategies are implemented in contexts characterized by limited resources, informal structures, and dynamic environments. 2.1.3 Challenges in strategy implementation While careful strategy formulation is essential, research has shown that many strategies fail during implementation rather than due to shortcomings in planning (Hrebiniak, 2006; Kaplan & Norton, 2008). Difficulties in execution can compromise even well-formulated strategies, highlighting the importance of identifying barriers that prevent strategies from being put into practice as intended. One of the most enduring organizational challenges is ineffective communication. Without a shared understanding of goals and priorities, strategies may remain abstract or disconnected from day-to-day activities (Heide et al., 2002). Kaplan and Norton (2008) argue that unless strategic objectives are clearly translated into concrete actions, they may be neglected due to the demands of daily operations. Similarly, Sull (2007) argues that implementation gaps often arise from strategic objectives that are 15 too vaguely defined or too numerous, resulting in organizational inertia rather than progress. Another critical dimension is participation. If employees are not engaged in the implementation process, they may feel excluded or disconnected from the strategic goals and their relevance to everyday work. This increases the risk of resistance or misinterpretation (Mantere & Vaara, 2008; Rouleau, 2005). According to Beer and Eisenstat (2000), a lack of open dialogue and collaboration across departments can diminish implementation efforts by enabling so-called "silent killers" – deeply rooted organizational routines and political dynamics that prevent strategic change. Structural and contextual constraints also present barriers. Rigid hierarchies, limited resources, and misaligned incentives can prevent effective execution, particularly in smaller firms (Aaltonen & Ikävalko, 2002; Hrebiniak, 2006). In such environments, strategic initiatives can be overshadowed by the urgency of daily operations. Furthermore, implementation is rarely a neutral or purely procedural process. As Mantere (2008) emphasizes, people make sense of strategy in ways that reflect how they see their role and their perceived ability to influence outcomes. As a result, people do not simply follow strategy as written; they interpret and apply it through the lens of their everyday experiences. To summarize, challenges in strategy implementation exist at both organizational and individual levels, and these barriers interact in ways that make implementation demanding in both practical terms and in its social and political dimensions. In microenterprises, these challenges are often intensified by scarce resources, overlapping roles, and informal structures. As a result, effective implementation depends especially on clarity, engagement, and adaptability in everyday work, where strategy is continuously interpreted and enacted in practice. 16 2.2 Strategy implementation in SMEs and microenterprises Strategy implementation is strongly influenced by organizational context, underscoring the need to examine the conditions under which it unfolds. Small and medium-sized enterprises (SMEs), and especially microenterprises, represent a critical setting, as their structures, resource constraints, and strategic practices differ considerably from those of larger firms. Since most conventional models of strategic management have been developed with large organizations in mind, their applicability to smaller firms remains limited. Accordingly, this section first outlines the organizational conditions that shape strategy implementation in SMEs and microenterprises and then examines IT microenterprises as a specific and dynamic sectoral context. 2.2.1 Implementation conditions in SMEs and microenterprises Small and medium-sized enterprises (SMEs) are typically defined based on quantitative criteria, such as number of employees, annual turnover, and balance sheet total. In the European Union, a firm is classified as an SME if it employs fewer than 250 people and has either a turnover of less than €50 million or a balance sheet total of less than €43 million (European Commission, 2020). However, size-based definitions alone do not fully capture the diversity and internal dynamics of SMEs. Early work by Bolton (1971) already emphasized the importance of considering qualitative characteristics in understanding the SME context. Compared to larger firms, SMEs tend to have flatter structures, centralized decision- making, and more informal communication (Storey, 1994). These features support responsiveness and agility, enabling rapid adaptation to changing conditions. At the same time, they can limit formal planning, reduce role specialization, and restrict the use of structured management systems (Beaver, 2002). Limited financial, human, and technological resources are also typical, often constraining not only strategic planning but also the implementation of goals that require coordinated and sustained efforts across the firm (Beaver, 2002; European Commission, 2020). 17 Microenterprises represent the smallest category within SMEs and are defined as firms with fewer than ten employees and an annual turnover or balance sheet total not exceeding €2 million (European Commission, 2020). Although formally grouped within the SME category, microenterprises differ significantly from small and medium-sized firms in how resource limitations, organizational simplicity, and individual agency shape their everyday operations and strategy work. Unlike larger SMEs, microenterprises typically lack middle management and formalized support roles (Hudson et al., 2001; Kelliher & Reinl, 2009). Strategic and operational responsibilities are often carried out by the owner-manager alone, resulting in high dependence on individual skills and judgment (Kearney et al., 2007). Strategy formulation and implementation are rarely separate phases; instead, strategy often develops through daily problem-solving and short-term adaptations (Kearney et al., 2019). Mazzarol (2005) highlights how strategic behavior in microenterprises is shaped more by opportunity recognition and resource pragmatism than by formal planning. While this allows flexibility, it also makes implementation outcomes vulnerable to capacity constraints and coordination gaps. In both SMEs and microenterprises, limited resources affect the feasibility and form of strategic implementation – but the effects are more pronounced in microenterprises. The absence of managerial depth and structured systems increases the importance of interpersonal trust, shared understanding, and real-time decision-making. Coordination is typically based on informal mechanisms and personal relationships, which support agility but may limit scalability and increase dependency on key individuals (Kelliher & Reinl, 2009). For microenterprises, strategy implementation is not a discrete or formal phase but a continuous process embedded in everyday work (Kearney et al., 2019; Mazzarol, 2005). Owner-managers play a central role in translating strategic intentions into action, often without formal documentation or delegated structures (Kelliher & Reinl, 18 2009; Kearney et al., 2007). This makes microenterprises both adaptable and fragile – capable of rapid change but sensitive to disruptions in personnel, routines, or external pressures (Beaver, 2002; Kelliher & Reinl, 2009). Because conventional strategy models assume more structured resources and planned execution, they may not fully reflect the realities of microenterprises. As Kearney et al. (2019) argue, alternative conceptual frameworks are needed to understand strategy in firms with informal structures and personalized practices. Microenterprise strategy tends to be emergent, intuitive, and closely interwoven with daily operations. Recent research also highlights how microenterprises can pursue broader societal goals. For example, Pardo Martínez and Cotte Poveda (2022) analyzed 120 microenterprises in an emerging economy and found that many adopted sustainability-oriented strategies despite significant constraints. Their findings suggest that very small firms may integrate social and environmental concerns into strategic behavior, especially when embedded in local contexts. Taken together, these observations suggest that SMEs – and especially microenterprises – require context-sensitive approaches to understand strategy implementation. Their small scale, informal routines, and centralized leadership shape not only what strategies are feasible, but also how they are enacted in daily work. While flexibility and responsiveness are important strengths, they also come with limitations that traditional models often overlook. Recognizing microenterprises as a distinct group within SME research helps clarify how structure, resources, and agency interact in shaping strategic action. 2.2.2 Implementation dynamics in IT microenterprises Microenterprises in the information technology (IT) sector operate in a fast-paced and knowledge-intensive environment that places high demands on adaptability and continuous learning. The sector is shaped by rapid technological change, project-based 19 work, and complex client needs, all of which influence how strategy is implemented in practice (Levy & Powell, 2005). For IT microenterprises, limited resources and managerial capacity add to these challenges – widely recognized as constraints to strategic implementation in microenterprises (Kelliher & Reinl, 2009; Mazzarol, 2005). Many IT microenterprises develop customized software or digital services for business or public sector clients. Strategy is often carried out through client projects, where implementation becomes part of the everyday work of solving problems and fulfilling client requirements. In IT microenterprises, the absence of formal systems means that strategy is often implemented through the decisions of key individuals during day-to- day technical and client work (Kearney et al., 2019; Mazzarol, 2005). This highlights how implementation is shaped not only by structural features, but also by personal engagement and interpretation. Individuals in IT microenterprises frequently act simultaneously as technical experts and as contributors to strategic decision-making. Thong (1999) has noted that in small technology firms, the decision to adopt new systems is significantly influenced by the innovativeness and expertise in information systems of key individuals, rather than by formalized structures. This emphasizes the role of personal expertise and agency in shaping how strategic tools and systems are utilized in practice. Operational pressures in the IT sector, such as short project cycles and client deadlines, may also push long-term strategy to the background. This can create tension between strategic intentions and immediate client demands, especially when the firm does not have enough resources or time available for strategic planning (Kelliher & Reinl, 2009). However, the same conditions can also support agile implementation. The small size of the organization, together with flat hierarchies and technical skills, may enable rapid adaptation and continuous alignment of strategic and operational goals (Levy & Powell, 2005). In some cases, information technology may support strategic decision- making in small firms by improving access to relevant information and enhancing 20 managerial insight (Arendt, 2008). Moreover, digital platforms and ecosystems can extend the strategic capacity of IT microenterprises by providing access to scalable tools, services, and markets beyond the firm’s internal resources (Nambisan, 2017). Such enabling conditions partly mitigate the structural and resource constraints that otherwise shape strategy implementation in these firms. In sum, IT microenterprises operate in a context where strategy is closely connected to technical work and project delivery. Implementation is shaped both by structural limitations and by the interpretive practices of key individuals, unfolding in a highly dynamic and resource-constrained environment. These contextual dynamics reinforce earlier insights that strategy implementation cannot be limited to a linear phase of executing predetermined plans, but instead unfolds through ongoing negotiation, adaptation, and sensemaking in everyday practices. 2.3 Theoretical framework for strategy implementation To better understand strategy implementation in the IT microenterprise context, the analysis draws on four complementary theoretical perspectives: effectuation, digital bricolage, dynamic capabilities, and sensemaking. Together, these perspectives capture both the action- and resource-oriented as well as the interpretive dimensions of strategizing, providing a comprehensive framework for analyzing how strategies are enacted under conditions of uncertainty and constraint. The combination of these four perspectives is based on how their underlying ideas support and complement one another. Effectuation and digital bricolage offer logics of action for navigating uncertainty and working with limited resources, while dynamic capabilities introduce a long-term orientation to strategic renewal through routines and reconfiguration. Sensemaking, in turn, provides an integrative interpretive dimension that helps explain how strategic actions gain meaning and are coordinated in practice. Rather than approaching these as isolated theories, the framework 21 highlights their interaction in shaping microenterprise strategizing as both a practical and meaning-making activity. Each perspective offers a distinct yet interconnected lens for examining strategy implementation. Effectuation focuses on how actors make decisions by leveraging available means in uncertain contexts. Digital bricolage builds on this by examining how small firms creatively recombine digital tools, routines, and relationships to progress despite constraints. Dynamic capabilities extend the analysis to deliberate capability development and strategic renewal over time. Sensemaking complements these perspectives by illuminating how individuals interpret strategic intentions and align their actions accordingly in everyday work. The strategy-as-practice (SAP) perspective serves as a broader conceptual framework that integrates these four theoretical perspectives, rather than serving as a separate analytical lens. SAP conceptualizes strategizing as situated, social, and practice-based activity (Whittington, 2006; Jarzabkowski, 2005) and highlights the micro-level practices through which strategic intentions are interpreted and enacted. Recent SAP research has moved beyond a narrow focus on discursive and social dimensions to explore the material, embodied, and performative aspects of strategizing. Whittington and Mantere (2015) furthered this research agenda by emphasizing how strategizing involves emotions, bodily engagement, and situated action, thereby extending the focus beyond language and interaction. Extending this line of research, Jarzabkowski, Bednarek, and Cabantous (2023) developed an integrative synthesis that brings attention to the material and performative dimensions of strategy work. Their analysis demonstrates how strategizing emerges through the interaction of people, artifacts, and physical spaces, highlighting the complex socio-material configurations through which strategic activity unfolds. 22 2.3.1 Effectuation theory Effectuation theory was originally developed to explain entrepreneurial decision- making under uncertainty, but it also offers useful perspectives for understanding how strategies are shaped and implemented in small and resource-constrained firms. The concept of effectuation was first introduced as an alternative to causation by Sarasvathy (2001). Whereas causation assumes that entrepreneurs set clear objectives and then identify the means to achieve them, effectuation emphasizes flexible, means- driven approaches. It begins with the resources, knowledge, and networks at hand and focuses on what can be achieved with them. This shift highlights four central principles: starting with available means rather than predefined goals, prioritizing affordable loss over expected returns, forming partnerships through stakeholder commitments, and leveraging contingencies rather than avoiding them. These principles reflect a broader logic of action over prediction, where entrepreneurs proceed by taking action based on what they can do with their current means, rather than trying to forecast or control future outcomes (Sarasvathy, 2001). Together, these principles represent a practical and adaptive logic of action that contrasts with the predictive, planning-oriented logic of causation. Later research has shown that small and medium-sized enterprises (SMEs) rarely rely solely on either causation or effectuation but instead combine them in diverse ways. Yu et al. (2024), for instance, demonstrated through a configurational analysis of SMEs that performance outcomes are frequently linked to hybrid strategies, where effectual and causal principles reinforce one another. This resonates with the idea that while formalized planning provides structure, adaptive improvisation enables responsiveness to uncertainty. Similar findings were presented by Smolka et al. (2018), who argued that the simultaneous use of both logics can create synergies, improving firm performance beyond what either logic could achieve alone. Complementing these insights, Berends et al. (2014) demonstrated how small firms combine the two logics across innovation processes, relying more on effectuation in the exploratory phases and gradually adopting causation as projects develop. This perspective supports the 23 view that effectuation complements rather than replaces causation, particularly in dynamic environments where flexibility and planning must coexist. Recent empirical work has also highlighted how effectuation is enacted in everyday practice. Koller et al. (2025) developed a situational judgment test (SJT) to assess how strongly entrepreneurs rely on effectual heuristics. Their results indicated that effectuation often operates not as abstract principles but as concrete “rules of thumb” that guide decision-making in real time. For instance, entrepreneurs may quickly evaluate whether a project is feasible given existing resources or whether engaging a client as a partner can help mitigate risks. This heuristic perspective is especially relevant for IT microenterprises, where project work demands frequent improvisation, quick adjustments, and the leveraging of existing technical expertise. In such settings, effectuation can be understood less as a formal framework and more as a pragmatic mode of reasoning that enables strategy to be implemented with limited resources. Despite its appeal, effectuation theory has attracted criticism. One line of critique has come from Kitching and Rouse (2020), who argued that the theory risks overemphasizing one mode of entrepreneurial logic, thereby overlooking the diversity of approaches that entrepreneurs actually employ. Many small firms continue to depend on goal-setting and systematic planning, meaning that effectuation alone cannot fully explain their behavior. Kitching and Rouse also highlighted the risk of post hoc rationalization: entrepreneurial decisions are often interpreted as effectual only retrospectively, which makes it difficult to determine whether the theory can be reliably tested in empirical research. These critiques caution against portraying effectuation as universally applicable and emphasize that causal elements continue to shape entrepreneurial practice – a point that remains relevant also for microenterprises, especially when they adopt more formal approaches to strategy. Finally, research suggests that effectuation is not only relevant for opportunity creation and growth but also for adaptation and retrenchment. Boonchoo (2025) 24 shows how SMEs employ effectuation when withdrawing from international markets, using existing resources and partnerships to manage exits strategically. This broadens the scope of effectuation and highlights its value in navigating strategic shifts through the reconfiguration of resources. For IT microenterprises, this perspective is especially relevant, as they often face resource constraints and must adapt their strategies under pressure. In sum, effectuation theory enriches the understanding of microenterprise strategy implementation by emphasizing adaptability, resource-driven action, and stakeholder engagement. Empirical evidence increasingly shows that effectuation works best when combined with causal logic, particularly in resource-constrained environments. At the same time, critical perspectives remind us that effectuation is not universally explanatory and must be integrated with other strategic approaches. This balanced view provides a foundation for examining how IT microenterprises enact strategy through both improvisation and structure. 2.3.2 Digital bricolage The concept of bricolage illustrates how individuals or firms creatively combine and repurpose the resources at hand to respond to emerging challenges (Baker & Nelson, 2005; Duymedjian & Rüling, 2010). Unlike formal planning or resource acquisition strategies, bricolage emphasizes doing more with less by flexibly adapting existing tools, routines, and networks to address emergent challenges. In the context of microenterprises, this approach can be essential for managing uncertainty and scarcity. Bricolage is also increasingly relevant in digital contexts, where firms must continuously adapt to new technologies without the resources or infrastructure typical of larger firms (Garud & Karnøe, 2003). As such, it connects the logic of effectuation, where action is based on means rather than goals, with the realities of digital strategy implementation in IT microenterprises. 25 Empirical studies have shown that bricolage plays a vital role in helping small firms survive and grow, particularly in resource-constrained environments. Senyard et al. (2014) found that resource-constrained startups that practiced bricolage were more likely to demonstrate innovative behavior, particularly when adapting to unfamiliar environments. Similarly, Baier-Fuentes et al. (2023) showed that bricolage played a critical role in the organizational resilience of owner-managed SMEs during the COVID- 19 pandemic. Their study illustrates how firms can stay operational and adapt under pressure by relying on existing relationships and making pragmatic use of available resources. Such findings suggest that bricolage is not merely a coping mechanism but can be a proactive and strategic response to disruption. The concepts of bricolage and effectuation are closely related. Both emphasize action over prediction, experimenting within the local context, and making use of existing resources. However, bricolage focuses more directly on recombining material and social elements – such as tools, artifacts, and relationships – in creative ways to address immediate needs or problems (Duymedjian & Rüling, 2010; Welter et al., 2016). Welter et al. (2016) argue that bricolage and effectuation complement each other, particularly in opportunity creation. While effectuation provides the guiding logic for action under uncertainty, bricolage represents the concrete means through which this logic is enacted. In the context of IT microenterprises, this means that strategic intentions are often implemented not through formal planning and investments, but through everyday adjustments and reconfigurations of digital tools, workflows, and client interactions. As digital technologies become increasingly widespread, the concept of digital bricolage has emerged to capture how small firms improvise with digital resources under constraints. Karanasios et al. (2025) investigate how microenterprises in low- resource settings approach digitalization not through strategic IT investments but by creatively recombining free, low-cost, or legacy digital tools. Their study identifies the limits of such bricolage – particularly when digital fragmentation and lack of 26 integration limit scalability – but also highlights its value as a foundation toward more formalized digital strategies. Digital bricolage, in this sense, becomes both a survival mechanism and a starting point for strategic development. The broader digital transformation literature reflects similar themes. For instance, Li et al. (2018) highlight the role of entrepreneurial capabilities in navigating digital transformation in SMEs, emphasizing the importance of flexible resource coordination. Romero and Mammadov (2025) conceptualize SME digitalization as an innovation process shaped by interconnected internal and external factors – including resource constraints, institutional pressures, and customer expectations. Meier et al. (2025) expand on this by proposing an updated view of competitiveness in SMEs, where digital transformation is achieved gradually through learning, experimentation, and capability development rather than large-scale change programs. Together, these studies suggest that digital transformation in small firms is less about radical reinvention and more about adaptive bricolage – fragmented, contextual, and often invisible in formal strategic plans. In summary, bricolage provides a valuable lens for understanding how microenterprises approach digital strategy implementation under conditions of constraint. It draws attention to improvisational action, contextual decision-making, and the repurposing of available digital tools and collaborative relationships. In the context of IT microenterprises, where formal planning is often limited and digital tools evolve rapidly, digital bricolage can be both a necessity and a capability. The practice- based, emergent nature of bricolage also forms a foundation for the following section, which explores how such informal practices may evolve into more structured, repeatable dynamic capabilities. 2.3.3 Dynamic capabilities (micro-level) Dynamic capabilities (DC) have become a central framework for understanding how firms adapt and renew their strategic direction in changing environments. Rooted in 27 the resource-based view (RBV), DC theory offers a refined lens for analyzing how competitive advantage is built and maintained over time. RBV, as formalized by Barney (1991), argued that firms can achieve sustained competitive advantage only if they possess resources that are valuable, rare, inimitable, and non-substitutable (VRIN). While RBV identifies the types of resources that can support sustained advantage, it offers limited insight into how such resources are developed or adapted in practice, especially under changing conditions. Teece, Pisano and Shuen (1997) addressed this gap by shifting the analytical focus from static resource possession to the processes through which firms actively renew and transform their capabilities over time. Teece, Pisano and Shuen (1997) emphasized that dynamic capabilities enable firms to purposefully adapt, integrate, and renew their competences to stay aligned with evolving market and technological conditions. Building on this foundation, Eisenhardt and Martin (2000) argued that dynamic capabilities are not rare or inimitable assets, but rather identifiable, learnable, and repeatable processes. They highlighted that dynamic capabilities are shaped by the market context: in moderately dynamic environments they often take the form of structured, well-understood routines, while in high-velocity markets they are more experiential and evolve rapidly. From this perspective, routines, knowledge, and organizational experience play a key role in fostering strategic flexibility. Teece (2007) later expanded the concept by framing dynamic capabilities as sensing, seizing and transforming activities, offering a structured view of how firms identify opportunities, and adapt over time. While DC theory has become a prominent framework for explaining strategic adaptation, it has also faced criticism. Arend and Bromiley (2009) argued that the concept suffers from vagueness and limited empirical testability, with many studies restating general management principles rather than offering distinctive theoretical insights. Similarly, Barreto (2010) asserted that the unclear definition of dynamic capabilities makes it difficult to distinguish them from ordinary processes. These critiques suggest that classical, organization-level perspectives on dynamic capabilities 28 may not sufficiently capture the mechanisms through which capabilities emerge and evolve, as they tend to remain highly abstract. In response, more recent research has turned towards microfoundations to provide greater conceptual clarity and empirical applicability. Microfoundational research examines the individual and relational mechanisms that underlie organizational capabilities. Felin, Foss, Heimeriks and Madsen (2012) argued that dynamic capabilities are fundamentally grounded in the actions, processes, and structures of individuals, which in turn shape how routines emerge and evolve over time. This perspective is particularly relevant in smaller firms, where organizational layers are flat and change is often driven by key individuals rather than formalized structures. Barney and Felin (2013) further emphasized the role of motivation, agency and individual decision-making as core elements of capability development. From this perspective, dynamic capabilities are best understood not as fixed organizational patterns, but rather as phenomena rooted in the intentions and actions of individuals. Routines play a key role in connecting micro-level actions to organizational outcomes. Salvato and Rerup (2011) argued that routines are not merely stabilizing mechanisms but can serve as sources of adaptability when they are mindfully performed and modified. This interpretation views routines as a dynamic bridge between structure and agency, where individuals can adapt established patterns to respond to changing circumstances. Helfat and Peteraf (2015) complemented this view by highlighting managerial cognitive capabilities as key microfoundations of dynamic capabilities. Managerial cognitive capabilities, such as sensing changes in the environment, interpreting strategic signals, and formulating alternative courses of action, are particularly important in microenterprises, where strategic decisions are typically concentrated in the hands of a few individuals. Taken together, these microfoundational perspectives provide a more nuanced understanding of how dynamic capabilities are enacted in practice. 29 The relevance of microfoundations becomes even more pronounced in microenterprises, where limited structural complexity and resource scarcity shape how strategic renewal takes place. Rather than relying on formalized structures, these firms often depend on the tacit knowledge and experience-based insights of owner- managers when developing and leveraging capabilities. Kelliher and Reinl (2009) found that limited managerial capacity and informal management practices further intensify this reliance, making capability development more personalized and context- dependent than in larger organizations. Mazzarol (2005) similarly emphasized the role of embedded entrepreneurial practices and adaptive behaviors in shaping strategic responses in small firms. More recently, Polge, Fourcade and Spence (2025) have provided empirical support for this perspective, demonstrating how dynamic capabilities can be enacted even in the smallest firms through a combination of improvisation, learning, and embedded routines. Together, these dynamics highlight why DC theory provides a useful lens for examining strategic adaptation in microenterprise contexts. The industry context further influences how dynamic capabilities emerge and operate. In IT microenterprises, the rapid pace of technological change and the knowledge- intensive nature of the work create distinct demands for sensing, seizing, and transforming activities. Held, Heubeck and Meckl (2025) demonstrated that dynamic capabilities enable SMEs to develop digital leadership and foster a digital culture by supporting organizational learning, experimentation, and employee involvement. This is particularly relevant for IT microenterprises, where strategic renewal often depends on rapid technological integration and experimentation driven by a small number of key individuals. In such settings, dynamic capabilities are not only a source of competitive advantage but also a practical necessity for maintaining core operations and responding to rapidly evolving technological conditions. At the same time, applying dynamic capabilities theory in microenterprise settings can also pose challenges. The framework was originally developed with larger firms in 30 mind, which typically have more formalized processes and greater organizational capacity for strategic renewal. As Arend and Bromiley (2009) and others have noted, many of the assumptions underlying DC theory reflect the structures and processes of larger organizations. This contrasts with the everyday realities of microenterprises, such as operational constraints, informal decision-making, and personalized management practices, which may limit the applicability of classical DC models unless they are integrated with more practice-based perspectives. In summary, dynamic capabilities offer a useful framework for understanding how microenterprises respond to the challenges of strategic renewal in dynamic environments. The theory builds on and extends the resource-based view by focusing on how firms develop and reconfigure their resource base through sensing, seizing and transforming activities. A microfoundational perspective adds further depth by highlighting the individual, cognitive and routine-based mechanisms through which capabilities emerge, particularly in small firms with limited formal structures. In IT microenterprises, these mechanisms are shaped by the rapid pace of technological change and the central role of key individuals in enabling adaptation. Although the dynamic capabilities framework has been criticized for its lack of conceptual clarity and limited empirical testability, its integration with complementary approaches – such as effectuation and digital bricolage – can provide a more grounded and context-sensitive understanding of strategic renewal. Together, these perspectives help explain how even resource-constrained firms may gradually develop more structured capabilities, especially when supported by shared sensemaking within the organization. 2.3.4 Sensemaking theory As introduced by Weick (1995), sensemaking refers to the process through which individuals interpret uncertain situations and construct meanings that guide their actions. In contrast to rationalist perspectives, which assume that objectives are clear and information is complete, sensemaking emphasizes how organizational members create shared understandings in uncertain and dynamic contexts. From this 31 perspective, strategy implementation is not the mere execution of predetermined plans, but rather an ongoing process in which individuals continuously interpret strategic intentions and translate them into practical action. Building on this, Weick, Sutcliffe, and Obstfeld (2005) further developed the concept, defining sensemaking as the activity through which people “structure the unknown.” They emphasized three closely connected aspects: the retrospective nature of interpretation, the social dimension of constructing meaning, and the action-oriented character of sensemaking. Together, these aspects suggest that people make sense of events by looking back at what has already happened, by negotiating meanings through interaction with others, and by acting upon these interpretations in ways that influence organizational realities over time. Sandberg and Tsoukas (2015) later proposed that these aspects can be understood as three interrelated dimensions – cognitive, social, and pragmatic – which together explain how sensemaking links interpretation with concrete action. Complementing these perspectives, Maitlis and Christianson (2014) have emphasized that sensemaking involves not only cognitive but also emotional and collective processes, situated in specific social contexts. Their review of the field shows how sensemaking research has evolved to highlight the emotional and contextual dimensions of interpretation alongside its cognitive and social aspects. In strategy research, this interpretive perspective has been applied to explain how actors translate abstract ideas into practices in their local contexts. Rouleau (2005), for example, demonstrated how managers in the fashion industry translated broad strategic objectives into concrete actions through everyday conversations, narratives, and micro-level practices. Her study illustrates how strategy becomes embedded in daily work through discursive and interpretive activities rather than through top-down directives. Similarly, Mantere (2008) analyzed the role of organizational actors in strategy processes, emphasizing that participation depends on how individuals make 32 sense of their expected roles. He found that employees’ interpretations influence both their ability and their willingness to engage in strategic activity, which in turn shapes implementation outcomes. This demonstrates that strategic agency is not given but constructed through sensemaking practices. Whittington (2006) positioned these interpretive activities within the broader strategy- as-practice perspective, arguing that strategy emerges through the dynamic interaction between practitioners, practices, and praxis. From this view, sensemaking is a key mechanism that connects strategic intentions with everyday practices, highlighting the inherently social and contextual nature of strategizing. Within this thesis, the strategy-as-practice (SAP) perspective provides an integrative lens for examining how strategizing unfolds through situated, social, and practice-based activities. Sensemaking is positioned within this perspective as a key mechanism that links strategic intentions to everyday practices, while effectuation, digital bricolage, and dynamic capabilities offer complementary explanations for how strategic action is enabled under conditions of uncertainty and resource constraints. The sensemaking perspective is particularly relevant for microenterprises, where formal systems and levels of management are either minimal or absent. In such settings, strategy implementation relies heavily on how individuals interpret strategic intentions in the context of technical tasks and client-related work, and on how these interpretations are shared within a small group. Cornelissen (2012) demonstrated that role expectations, social accountability, and interpersonal dynamics strongly shape how actors interpret strategic priorities and coordinate their actions. This highlights that sensemaking is not a neutral or purely cognitive process but one embedded in social relationships and role structures, which are especially significant in small firms. From this perspective, strategy is understood as something that is continuously negotiated and enacted through everyday interactions rather than as the execution of formal plans. 33 In this thesis, sensemaking is used as a complementary theoretical lens that connects the interpretive processes of organizational actors with the strategic mechanisms described in the literature on effectuation, digital bricolage, and dynamic capabilities. Together, these perspectives provide a comprehensive foundation for examining strategy implementation in IT microenterprises, where strategizing is embedded in interconnected technical, client, and managerial work. 2.4 Research gap and contribution Although the field of strategy implementation has expanded in recent years, microenterprises have received relatively little focused attention. Much of the existing research treats SMEs as a single group, which overlooks the distinctive characteristics of microenterprises, such as their limited resources, informal structures, and overlapping roles (Beaver, 2002; Kelliher & Reinl, 2009). As a result, insights drawn from studies on larger SMEs are not fully applicable to microenterprise dynamics (Hudson et al., 2001; Kraus et al., 2008). Within this broader research gap, the IT sector has long been considered a particularly relevant but underexplored context, due to its fast pace of change, project-based operations, and reliance on knowledge-intensive resources (Levy & Powell, 2005; Thong, 1999). While prior studies acknowledge these contextual challenges, relatively little is known about how strategy implementation unfolds in IT microenterprises, where strategic work is closely embedded in daily technical and client tasks. Another underexplored area concerns the role of external consultants. Existing literature rarely examines how strategies that have been formally developed in collaboration with consultants are later applied in microenterprises, even though such collaborations are becoming increasingly common (Mantere, 2008; O’Regan & Ghobadian, 2005). This raises important questions about how externally facilitated 34 planning processes are translated into routine practices in firms with minimal formal structures and scarce resources. This study addresses these gaps by focusing on strategy implementation in a Finnish IT microenterprise that recently completed its first formal strategic planning process in collaboration with external consultants. The contribution of the thesis is multifaceted. First, it extends the understanding of strategy implementation in microenterprises by examining how strategic intentions are interpreted and enacted in everyday work under conditions of limited resources and informal structures. Second, it adds to the literature by integrating four complementary perspectives – effectuation, digital bricolage, dynamic capabilities, and sensemaking – within an analytical framework. Figure 1. Theoretical framework of the thesis The proposed framework (Figure 1) brings these perspectives together by illustrating how effectuation and digital bricolage function as action-oriented logics that enable 35 progress despite constraints, while dynamic capabilities provide a longer-term view on renewal through routines and reconfiguration. Sensemaking, shown as a surrounding dimension, cuts across all three and shapes how individuals interpret strategic aims and coordinate action in uncertain and resource-constrained settings. The directional arrows in the Figure 1 highlight how effectual and bricolage-based actions may cumulatively contribute to the development of dynamic capabilities over time. Although these logics are not synonymous, they can act as building blocks that foster experiential learning and resource reconfiguration – processes that underpin dynamic capability development (Teece, Pisano, & Shuen, 1997; Baker & Nelson, 2005). This relationship reflects the idea that even in highly constrained environments, strategic renewal can emerge from bottom-up actions and situated experimentation. Together, these contributions provide both conceptual and empirical insights into a context that has received little focused academic attention, thereby directly addressing the identified research gaps. 36 3 Methodology This chapter presents the research design and describes the methodological choices of the study. The aim is to examine how strategy is implemented in the everyday operations of an IT microenterprise following a formal strategic planning process. The study adopts a qualitative, interpretive single-case design to provide a detailed and contextually grounded understanding of strategic practices. Through this design, the study examines how organizational actors interpret and enact strategy in their daily work within the structural and resource conditions of a microenterprise. This chapter presents the research approach, introduces the case company, and describes the methods of data collection and analysis, as well as the procedures used to ensure data quality and trustworthiness. Together, these methodological choices form a clear and coherent foundation for the study. 3.1 Research approach This study adopts a qualitative single-case study approach to examine how strategy is implemented in an IT microenterprise following a formal strategic planning process. A qualitative research design is well suited to the exploratory and context-sensitive nature of the research question, which focuses on meanings, practices, and situated processes rather than on testing predefined hypotheses. Qualitative methods are particularly appropriate for studying how strategic practices unfold in real-life contexts and how individuals make sense of and enact strategy in their daily work (Eriksson & Kovalainen, 2015; Mantere & Vaara, 2008; Rouleau, 2005; Weick, 1995). This study adopts an interpretive perspective, emphasizing that strategy implementation is a socially embedded process shaped by interaction, interpretation, and organizational context. This aligns with the theoretical framework of the thesis, which combines effectuation, digital bricolage, dynamic capabilities, and sensemaking to understand strategy implementation in resource-constrained microenterprises. An 37 interpretive approach is particularly suited to exploring how organizational actors construct, negotiate, and enact strategic meanings within their everyday work contexts (Eriksson & Kovalainen, 2015; Rouleau, 2005). The interpretive approach enables the researcher to capture multiple viewpoints and gain a deeper understanding of how strategy is understood and enacted in everyday work. A single-case design enables an in-depth and holistic understanding of the phenomenon in its real-life context. According to Yin (2018), case studies are particularly suitable when the boundaries between the phenomenon and its context are blurred. Similarly, Eisenhardt (1989) emphasizes that the value of the case study approach in enabling analytical rather than statistical generalization. The selected case company, Index IT, provides a unique opportunity to examine strategy implementation in a microenterprise that has recently completed its first formal strategic planning process. By focusing on one strategically selected case, the study aims to generate rich empirical insights and offer a deeper understanding of strategy implementation in microenterprises, an area that remains relatively underexplored. 3.2 Case company The selected case company, Index IT, is a Finnish IT service provider founded in 1993. The company operates in a niche segment of the IT industry, specializing in documentation technologies. Index IT employs four people and has an annual turnover of approximately €700,000. Its operations are based in Finland, and the company has a long history of delivering specialized IT services to both private and public sector clients. Recently, Index IT has refined its strategic focus. The company’s client base has traditionally consisted mainly of public sector organizations, but it has decided to strengthen its presence in private-sector markets to support balanced growth and reduce dependency on any single customer segment. Its documentation technologies also have strong application potential in manufacturing and industrial firms, which 38 further motivates this expansion. For a microenterprise with limited resources, such diversification requires careful prioritization to ensure sustainable development. This need for prioritization played a key role in the company’s decision to initiate a more structured approach to strategy work. To support this development, Index IT engaged in its first formal strategic planning process, with the aim of setting a clear direction for the coming years. This case therefore offers a relevant and timely opportunity to examine how an IT microenterprise implements strategy after formal planning, particularly in a niche field where strategic choices are closely linked to resource constraints and specialization. 3.3 Data collection The empirical data for this study were collected through semi-structured interviews, which are well suited for qualitative case studies that aim to understand complex organizational processes (Eriksson & Kovalainen, 2015). This method allows for an in- depth exploration of participants’ perspectives while maintaining a consistent structure across interviews. Semi-structured interviews are particularly appropriate for examining strategy implementation in a microenterprise context, as they enable the researcher to capture both shared and individual interpretations of strategic practices (Mantere & Vaara, 2008; Rouleau, 2005). The interviewees included all four co-owners of the case company, including the CEO, as well as two representatives from the consultancy that supported the firm during the strategic planning phase. In addition to reflecting on the specific case, the consultancy representatives were invited to share their broader experiences with strategy processes in small firms and microenterprises, providing contextual insight into strategy implementation beyond the case company. This selection was designed to capture multiple perspectives on the strategy implementation process, both from within the organization and from an external viewpoint. The interviews were guided by 39 key themes from the theoretical framework, while allowing space for follow-up questions and clarifications. The interviews were conducted online via Microsoft Teams during October 2025. Each interview lasted no longer than one and a half hours. All interviews were recorded with the participants’ consent. Participation was voluntary, and informed consent was secured from all interviewees prior to the interviews. Confidentiality and anonymity were ensured by removing personal identifiers from the transcripts and by presenting the findings at a general level. The interview protocol was designed to cover key aspects of strategy implementation in the case company, while also allowing participants to elaborate on issues they consider important. This balance between structure and flexibility helped generate rich, contextually grounded data relevant to the research questions. In addition to interviews, internal documents and strategy-related materials provided by the case company were used to contextualize the findings and support data triangulation, as recommended in case study research (Yin, 2018). 3.4 Data analysis The data were analyzed using thematic analysis (Braun & Clarke, 2006), a flexible method well suited for identifying patterns and themes within qualitative data. The purpose of the analysis is to interpret the interview data in relation to the theoretical framework on strategy implementation and microenterprises, while remaining open to emerging themes. Rather than aiming to build new theory, the analysis focuses on producing a contextually grounded interpretation of how strategic plans are implemented in an IT microenterprise. The analysis follows a deductive-inductive logic within an abductive research approach, moving through several cycles between theory and data (Dubois & Gadde, 2002; Timmermans & Tavory, 2012). 40 All interviews were recorded and subsequently transcribed using Microsoft Teams’ automatic transcription tool, with the consent of the interviewees. The automatically generated transcripts were reviewed alongside the original audio recordings to correct possible inaccuracies or spelling errors. The transcription and review process was carried out alongside the data collection to allow for the clarification of any potential uncertainties while the interviews were still recent. Since the interviews were conducted in Finnish and the thesis is written in English, relevant quotations were translated before being presented in the findings chapter. The translations aim to preserve the original meaning and tone as closely as possible. The analysis followed the general principles of qualitative data analysis as outlined by Saunders et al. (2023). The transcripts were first read carefully to ensure familiarity with the material, after which initial coding was conducted. This first, deductive stage was guided by the study’s theoretical framework, which focuses on strategy implementation, microenterprise characteristics, and the role of effectuation, digital bricolage, sensemaking, and dynamic capabilities. At the same time, the analysis remained open to inductively derived themes that were not fully anticipated by the framework. Coding and theme development were carried out manually using spreadsheets to systematically organize and refine the data. To capture different perspectives, the data were first examined within interviewee groups (e.g., CEO, co-owners, external consultants) and then integrated to form a comprehensive view of the strategy implementation process. Internal strategic documents were also used to provide contextual background and support triangulation (Yin, 2018). Finally, the themes were refined and organized to answer the research questions and to highlight key patterns and contextual dynamics relevant to strategy implementation in microenterprises. Selected quotations from the interviews are presented in the findings chapter to illustrate the themes and to support the transparency and 41 credibility of the analysis (Pratt, 2009). The results of this analysis are presented in Chapter 4. 3.5 The assessment of the quality of the data The quality of the data in this study is ensured through careful planning of data collection, transparent analytical procedures, and systematic documentation of the research process. According to Saunders et al. (2023), the quality of qualitative data depends on the attention given to data collection, recording, and analysis. In case study research, it is especially important to ensure data quality because the conclusions are based on a detailed understanding of the specific context and phenomenon (Yin, 2018). Several steps were taken during data collection to support the reliability and validity of the material. The interview process was designed to capture multiple perspectives related to strategy implementation within the case company. All interviews were recorded, transcribed, and reviewed for accuracy. Transcription was carried out alongside data collection to allow for the clarification of any unclear points immediately. Semi-structured interviews provided a structured way to address key themes while also leaving space for unexpected issues to emerge, adding depth and credibility to the data. The quality of the data is also supported through systematic analysis. The data were analyzed using thematic analysis based on Braun and Clarke’s (2006) framework, which provides a clear process for identifying and interpreting patterns. All steps of the analysis were documented to make the process transparent and dependable. Following Yin’s (2018) guidelines for case studies, an audit trail was kept to record how the data were collected and analyzed. Finally, the presentation of the results highlights the link between the data and the researcher’s interpretations. Selected quotations are used to show how the themes 42 are grounded in the material (Pratt, 2009). This helps to make the analysis more transparent and allows readers to evaluate the interpretations. The overall trustworthiness of the study is enhanced by ensuring credibility, dependability, and transparency throughout data collection and analysis (cf. Lincoln & Guba, 1985; Shenton, 2004). 43 4 Findings This chapter presents the empirical findings of the study, which explores how strategy implementation unfolds in a microenterprise context. The findings are drawn from a strategy process carried out at Index IT, a Finnish microenterprise operating in the IT sector. The case offers a focused setting for examining how strategic thinking and action are shaped under conditions of limited resources, informality, and overlapping roles. As all four members are also co-owners and actively involved in decision-making, their perspectives provide insight into how strategy work is integrated into the everyday operations of a small and tightly knit organization. The empirical material consists of six semi-structured interviews: two with external consultants and four with internal members of Index IT. One of the consultants had directly facilitated the strategy process at Index IT, while both also offered broader reflections on strategy work in microenterprises. The participants are anonymized as Consultant 1-2 and Member 1-4 throughout the chapter. Their reflections form the basis for understanding how strategic goals were formulated, clarified, implemented, and followed up within the company. The chapter is structured into three sections. Section 4.1 discusses the consultants’ views, offering an external perspective on strategy work in microenterprises. Section 4.2 presents the internal members’ experiences of how the strategy process unfolded at Index IT. Finally, Section 4.3 summarizes the key findings and integrates them with the theoretical framework introduced in Chapter 2, resulting in a revised model that captures how effectuation, digital bricolage, dynamic capabilities, and sensemaking interact in practice. 4.1 Strategy work in microenterprises: external perspective This section presents findings from two consultant interviews, offering an external perspective on how strategy work typically takes place in microenterprises. The 44 interviews offer contextual insight into how microenterprises approach strategy formulation and implementation in practice, helping to frame the subsequent case analysis. Both consultants work at a Finnish consulting firm specializing in strategy, leadership development, and growth support for SMEs. Consultant 1 has worked at this consulting firm for around five years. He focuses on strategy projects with SMEs, including the strategy process of Index Information Technologies – the case company examined in this thesis. Before joining this consulting firm, he worked in strategy consulting for larger organizations, including publicly listed and state-owned companies. Earlier in his career, he also gained experience in business development, corporate acquisitions, and trend analysis in the industrial sector. Consultant 2 has worked as an entrepreneur for about twenty years, having managed three companies in different industries. For the past six years, he has worked as a consultant focusing primarily on microenterprises. As he explained, strategy has been an integral part of nearly all his assignments – even when the original focus was on something else. Over the years, he estimates having worked on strategic development together with thousands of small firms. The consultants were selected because of their extensive experience working with microenterprises, as well as the firsthand experience of consultant 1, who was directly involved in the case company’s strategy work. Their insights offer a comparative understanding of how microenterprises typically manage strategic processes, the challenges they face, and the conditions that support success. Section 4.1.1 first examines how strategies are formulated, while section 4.1.2 explores how they are implemented and adapted in everyday practice. Section 4.1.3 then focuses more specifically on how consultant 1 experienced the strategy process at Index IT, providing a detailed external perspective on the case company’s strategic development. 45 4.1.1 Strategy formulation The interviews indicate that strategy work in microenterprises is generally practical, flexible, and less formal than in larger organizations. Rather than following a fixed planning cycle, strategic ideas often evolve from practical problem-solving and day-to- day work, as described especially by consultant 2, who noted that many microenterprises make clear strategic choices without ever formalizing them in writing. Consultant 1 noted that small firms rarely have systematic tools or data to support decision-making and instead rely on experience and informal discussion. Because few firms have systematic data, strategic reasoning tends to rely strongly on intuition and the entrepreneur’s personal judgment. In both cases, strategic and operational considerations appear closely intertwined in the microenterprise context. Both consultants described strategy formulation as a process shaped by dialogue and participation. Consultant 2 noted that strategy often takes form through collective discussions rather than formal planning, while both observed that it cannot be developed effectively by the owner-manager alone, as its success depends on whether others have understood and accepted the direction. Consultant 2 remarked that “when people talk together about what they want to achieve, it becomes more real for them,” and consultant 1 mentioned that even brief discussions with the whole team can make strategy feel more tangible and shared. The consultants also discussed how informality and openness, while encouraging engagement, may create challenges for consistency. Consultant 1 noted that the flexible and sometimes spontaneous way of making decisions allows small firms to react quickly but can make it easy to lose long-term focus. “They can change direction very fast, which is great,” he said, “but sometimes there is no continuity between one decision and the next.” Consultant 2 described a comparable situation: “Small companies often have many good ideas, but the ideas are scattered. They need help turning them into a coherent direction.” 46 Resource constraints were another recurring topic. Consultant 1 observed that small firms rarely have systematic tools or data to support decision-making, relying instead on accumulated experience and informal discussion. Consultant 2 similarly noted that everyday work leaves little time for structured analysis, so companies rely on what is already available – particularly their existing skills, networks, and client experiences. Consultant 2 remarked that “the strategy usually evolves from what they already do well,” and consultant 1 expressed a similar view, describing it as “making the best out of what you have at hand.” In many cases, strategy exists implicitly, guiding everyday decisions even if it has never been written down. Together, their accounts reflect an approach where entrepreneurs build strategy incrementally and pragmatically, drawing on what is close at hand. Both consultants underlined the importance of reflection. Because microenterprises are often occupied with daily operations, strategic thinking tends to surface only when an external trigger – such as a facilitated discussion – encourages them to pause and reflect. Consultant 1 explained that his role is partly to create space for this reflection: when he joins a project, it is often the first time the client firm actually stops to talk about where they are going. Consultant 2 likewise noted that many entrepreneurs think strategically as they work, but mostly in their own heads, and rarely share those thoughts with others. As he described it, entrepreneurs often think strategically on their own, but these thoughts remain unshared until a facilitated setting brings them into collective discussion. Facilitated discussions, he said, help them “move from intuition to shared understanding.” Both described their consulting role as facilitating rather than instructing, involving listening, clarifying, and guiding. Supporting reflection and discussion was seen as a key part of their work. Consultant 1 noted that he often uses structured tools or visual elements to help make ideas more concrete for the firm. Consultant 2, in turn, described relying on open and exploratory discussions that help participants articulate what matters most to them. They both saw their role as helping companies recognize 47 and express ideas that already exist within the organization. As consultant 1 explained, they do not give clients a ready-made strategy but help them articulate the one that already exists in their actions. Finally, both consultants noted that strategy work in microenterprises should remain light and practical. For these firms, keeping strategy work light is not just a preference but often a necessity: too much structure can distance people from their daily work, while too little makes it difficult to stay focused. Consultant 1 explained that if the process becomes too formal, people tend to disengage – they need to feel that strategy relates to their everyday work. Consultant 2 noted that even minimal structure, such as defining three main goals, can make a noticeable difference, as it helps people measure their progress without taking away their sense of freedom. In summary, the consultants portrayed strategy formulation in microenterprises as dialogue-driven, emergent, and grounded in everyday practice. Strategic ideas appear to develop gradually through reflection and interaction, shaped by the resource limitations, informality, and immediacy characteristic of microenterprise contexts. 4.1.2 Strategy implementation and adaptation When moving from planning to implementation, strategy work in microenterprises remains strongly shaped by pragmatism and informality. Compared to larger organizations, which often have established systems and formal processes for implementation, small firms operate with greater flexibility and faster response times. Consultant 2 noted that “in larger organizations, strategy implementation is more systematic but much more rigid. In small firms and microenterprises, decision-making is concentrated, so they can react quickly, and the strategy or its implementation can be redirected, for instance by piloting new approaches, if the focus changes.” However, both consultants emphasized that such agility often comes at the expense of consistency and systematic follow-through. Consultant 2 observed that “in small firms, around 90 percent of strategic work never reaches implementation. Many 48 entrepreneurs eventually realize that everyday operations have started to drive the business, rather than the other way around.” Both consultants identified similar conditions for effective implementation. They stressed that strategies should remain simple, concrete, and realistic in order to be actionable. Consultant 1 explained that “there must be clear responsibilities, measurable indicators, and plans that are actually followed.” Similarly, consultant 2 emphasized that “the strategy must be clear and understandable – not too complex. It should translate into practical actions assigned to people who also have the resources to carry them out.” In microenterprises, where individuals often juggle multiple roles, dividing responsibilities and linking goals to realistic timeframes were seen as essential for maintaining progress. At the same time, the consultants pointed to recurring barriers that hinder implementation. Both described how everyday work can easily push strategic priorities aside. Consultant 1 summarized that “daily work takes over, and operational projects push strategic goals aside.” Consultant 2 shared a similar view, noting that limited time, opportunistic decision-making, and lack of focus are frequent obstacles. According to him, “many microenterprises live from hand to mouth – they grab any tempting project, even if it doesn’t fit the strategy. That kind of opportunistic thinking may help in the short term, but in the long run it fragments direction.” Human factors, such as resistance to change or uncertainty about new methods, were also seen as common challenges. Consultant 2 noted that some entrepreneurs hesitate to adopt unfamiliar technologies or tools, such as AI-based solutions, which can slow down renewal. Consultant 1 likewise mentioned that in very small teams, the departure of a single key person may require rethinking the overall direction. Both consultants portrayed their role in strategy implementation as primarily supportive and facilitative rather than directive. Rather than providing ready-made answers, they help firms maintain focus and translate plans into concrete routines. Consultant 1 described his approach as “coaching rather than instructing,” focusing on 49 helping firms “take the strategy into everyday practice.” Similarly, consultant 2 stated that “the main help is often making the entrepreneur realize that day-to-day work has started to drive the business too much. An external view helps restore focus and clarify the strategy.” Their insights suggest that effective consulting in this context involves maintaining accountability, clarifying priorities, and providing psychological support. As consultant 2 put it, “the consultant can help turn the strategy into a concrete path, clarify the steps, set a timeline, and offer mental support.” Regular follow-up was identified by both consultants as a decisive factor for keeping the strategy alive. Consultant 1 explained that “if it’s reviewed regularly, say in monthly meetings, it stays on people’s minds.” Both consultants also noted that their firm offers an “implementation support” service, where clients are met periodically to discuss progress and obstacles. As consultant 2 added, “my job is not only to support but sometimes to give a small push – to remind that things don’t happen on their own.” Both considered such structured follow-up, whether through a formal service or informal routines, particularly beneficial for maintaining strategic momentum, even though only a small number of firms make it a regular practice. They emphasized that routine reflection and external encouragement help prevent the strategy from fading into the background once the planning phase ends. Adaptation and flexibility were recurring themes across both interviews. Consultant 1 stressed that “once the strategic plan is ready, it must not remain static. It should be reviewed regularly and adjusted if something doesn’t work.” Likewise, consultant 2 highlighted how microenterprises must be able to respond rapidly to external changes: “if competitors can now achieve in three days what used to take six months, you have to adapt.” Both consultants framed strategy implementation not as a fixed process but as an ongoing cycle of learning, adjustment, and alignment with shifting