European Small And Medium Enterprises Research Articles

Impact of leadership styles on employee performance in small and medium enterprises

This study focuses on the relationship between leadership styles and employee performance within the framework of European small and medium enterprises (SMEs). The study conducted interviews with 50 leaders and employees of different SMEs to collect data and reach the findings. The study shows the mixed influence of leadership styles and contextual moderation through qualitative interviews of leaders and employees from various SMEs in Europe. It sheds a spotlight on the various styles of leadership that typify many European SMEs, such that transformational leadership dominates significantly. The sense of dedication and zeal encouraged by charismatic leaders prompts professionals to action. Transactional leadership, however, does facilitate task-oriented accomplishment but it adversely affects employee’s vitality. The lack of common feedback on laissez-faire leadership highlights the essence of flexibility and considering the preferences of team members. Social psychological and other contextual aspects — organizational culture and the SME developmental stage — are, therefore, very important moderators of styles. With transformational leadership, innovative SMEs can thrive; transactional leadership might cause SMEs from regulated industries to grow fat on them. The preferential leadership according to the start-ups and the mature SMEs is different. Its implications for practice point out the importance of coherence with respect to the personality style of the leader concerning the context of the organization and the needs of employees.

How open innovation can help entrepreneurs in sensing and seizing entrepreneurial opportunities in SMEs

PurposeThis study explores how open innovation (OI) can be instrumental for entrepreneurs in sensing and seizing entrepreneurial opportunities in small and medium enterprises (SMEs). This study also illustrates how OI can help SMEs overcome the liability of smallness.Design/methodology/approachThis is exploratory research using an inductive, multiple-case study approach. This study capitalizes on five in-depth case studies of European SMEs to explore a phenomenon using replication logic and provide a robust basis for theory building.FindingsThis study presents a holistic view of the OI process in SMEs and illustrates the crucial role of entrepreneurs. The study provides a better understanding of how OI can help entrepreneurs sense and seize entrepreneurial opportunities by envisioning venture ideas and implementing business model innovation through the management of innovation partners.Originality/valueThe study emphasizes two critical roles of entrepreneurs in implementing OI in SMEs. First, the entrepreneur can be the instigator of strategic change, and second, he/she can orchestrate the innovation network. The findings emphasize that OI helps avoid knowledge corridors at the venture idea stage, leading to a (re)structuring of the business model and the emergence of a network of innovation partners, which should be managed hands-on. This study discusses in detail the two crucial roles of entrepreneurs.

Energy communities for companies: Executives’ preferences for local and renewable energy procurement

Energy communities are a cornerstone of the European energy transition. Small and medium enterprises (SMEs) exhibit a particularly high potential for energy communities due to their energy demand and flexibility volume. However, in contrast to residential consumers, empirical evidence on SMEs' preferences for participating in renewable energy communities is scarce. This study investigates European SMEs' preferences for local and renewable energy procurement in four countries with a choice experiment. Our sample includes decisions by 823 executives for different energy procurement offers with an energy community approach. In the study, in 67% of the choices, SMEs prefer a renewable energy community offer to their current supply option even without a price premium. Cost is the most important factor in SMEs' energy supply decisions. SMEs have marked preferences for local providers, low administration efforts and high interest in demand-side management and peer-to-peer trading. In contrast, SMEs might reject energy procurement models when major time investments are required, or the provider is an international company. Offers that include local companies or electricity providers and provide smart energy management are most likely to win SMEs' consent. The study recommends orienting the business model design of energy communities towards the specific preferences of corporate consumers to leverage their potential. The results suggest that electricity providers are well-accepted players by SMEs as potential providers of energy community solutions. National implementations of the European policy directive are recommended to take into account the role electricity providers can play in the development and operation of energy communities.

Challenges and opportunities for improving energy efficiency in SMEs: learnings from seven European projects

This paper analyses challenges and opportunities for improving energy efficiency in small and medium enterprises (SMEs) by reviewing research design and results out of seven European projects: SPEEDIER, SMEmPower Efficiency, E2Driver, Innoveas, Triple-A, DEESME and ICCEE. These projects aim to improve SMEs’ awareness of energy efficiency and support an effective decision-making-oriented approach to it. Drivers and barriers to energy efficiency improvements in European SMEs of various industrial sectors have been investigated by means of surveys, focused group discussions and interviews. A meta-analysis of the results of the seven EU projects was carried out to discover trends related to energy efficiency in European SMEs; this was supported by the use of a unifying analytic framework that enabled merging and cross-validation of the findings of the seven projects. The analysis indicated, by means of new data collected by the seven projects, that staff training, facilitation of energy audits, development of corporate policy measures and collaboration between SMEs involved in the same supply chain are key mechanisms to improve the uptake of energy efficiency measures in SMEs which has significant potential to achieve higher energy savings and energy cost reductions.

Digital transformation and European small and medium enterprises (SMEs): A comparative study using digital economy and society index data

Digital transformation is profoundly transforming SMEs' business activities, bringing about comparative advantages and associated risks. Previous studies on digital transformation and SMEs focus on technology adoption, innovation, new value creation, and dynamic capabilities. However, it is unclear how digital technology affects SMEs' specific business activities. We study SMEs' customer access, increasing competition, external funding or access to finance, rising input costs, skilled labor shortages, exogenous shocks, global crises, and regulatory issues. This study aims to fill the literature gap by exploring the impact of digital technology, using digital economy and society index (DESI) as proxies for the SME issues. We use DESI and SME data from a survey on European enterprises’ access to finance. We find that digital transformation strengthens SMEs' ability and flexibility to address main business issues. Furthermore, findings reveal that digitally transformed SMEs have fewer concerns about access to new and traditional customers, competition changes, access to finance, increasing input costs, external shocks, and regulatory changes. However, digital transformation also brings risks, such as the shortage of skilled labor and experienced managers and loss of inherent competitiveness. The novelty of our work lies in supplying quantitative knowledge on the link between digital transformation and European SMEs' critical business concerns. These findings substantially increase our understanding of the impact of digital change on European SMEs' business activities.

Open Innovation moves in SMEs: How European SMEs place their bets?

Although Open Innovation (OI) may be a source of opportunities for Small and Medium Enterprises (SMEs), it also represents risks. How SMEs manage the balance between potential benefits and associated risks remains an overlooked topic in the literature. In parallel, recognizing the need for a more fine-grained level of analysis, we introduce the concept of OI moves to disentangle the OI projects of SMEs. An ‘OI move’ is defined as the set of managerial decisions and actions that are executed to reach specific innovation outputs in the framework of a collaboration with a single partner that is conducted as a part of an OI project. An OI move consist of the combination of two building blocks: a) the type of partner chosen to innovate with - ‘who is the SME innovating with’ and b) the exploitation mode - ‘who is exploiting the result’. Using the OI move as the level of the present analysis, we argue that different OI moves have the potential of delivering different benefits, but they also represent different levels of risk. To that end, the aim of our research is to explore how SMEs weigh benefits and risks at the level of OI move.On the basis of a unique data set of 106 in-depth case studies of innovation projects carried out by innovative SMEs located in Europe, 500 OI moves were identified. Clustering the extracted OI moves based on a typology formed by the combination of the type of partners and the exploitation mode revealed: a) benefits sought, b) risks encountered c) the type of partnership chosen.Findings of the study rely on the attention-based view of the firm as it provides an interesting lens through which OI is executed. Three main findings derive from the study. First, an SME initiates an OI move not only on the basis of the potential economic return. Albeit, it is the ‘attention capital’ required to create and capture value that is the SMEs' starting point in considering an OI partnership. Second, we find a ‘paradox’: SMEs tend to practice OI because they lack resources, but it is precisely the lack of resources that makes them reluctant to enter into attention-intensive OI partnerships even if return can be substantial. Third, OI moves involving communities and crowds are a ‘new playing field’ for SMEs. Because of their novelty, SMEs are reluctant to initiate such an OI move even though case-based evidence in our research demonstrates that SMEs using such collaborative forms can be quite successful.

Surviving the COVID‐19 pandemic: The antecedents of success among European SMEs

We research the antecedents of relative success among small and medium enterprises (SMEs) in avoiding temporary or permanent closure during the COVID‐19 pandemic. We investigate the roles of firm‐specific resources and state support policies in influencing SME fortunes, in a sizeable group of European countries covered in the World Bank Enterprise Survey. Using resource dependency, Varieties of Capitalism and Systems theories, we find that innovative capacities, institutional connectedness, governance, and management experience were major antecedents of success across all SMEs. Significant differences in outcomes were found between SMEs operating in old and new EU member states, and non‐EU countries.

How does it pay to be circular in production processes? Eco‐innovativeness and green jobs as moderators of a cost‐efficiency advantage in European small and medium enterprises

AbstractThis study investigates whether circularity in production processes generates a reduction of firms' production costs and the conditions that determine the intensity of this reduction. It explores the role of two moderators for this cost‐efficiency advantage to emerge, namely, eco‐innovativeness (investments dedicated to the adequate implementation of circular practices in current production processes) and green jobs (human resources dedicated to circular practices). Using data on 13,117 small and medium enterprises (SMEs) from the Flash Eurobarometer 2017, a cluster analysis revealed that there is a gradual path towards Circular Economy among European SMEs, with the implementation of increasingly more circular practices. Four ordered probit models confirmed that a higher level of circularity in processes achieved by European SMEs is related to a reduction in their production costs. Moreover, eco‐innovativeness positively moderates this relation. In contrast, the relative share of green jobs in SMEs' workforce mitigates the impact of circularity on production costs. In practice, by engaging in circularity, SMEs can contribute to the United Nations goals for Sustainable Development while reducing production costs; although the level of this reduction depends on how circularity is implemented.

Resource Efficiency and Circular Economy in European SMEs: Investigating the Role of Green Jobs and Skills

This study explored the size and potential of green employment for circular economy (CE) in small and medium enterprises (SMEs) in the European Union, and investigated the role of green jobs and skills for the implementation of CE practices. The data were collected in a Eurobarometer survey, and refer to resource efficiency, green markets, and CE procedures. Lack of environmental expertise is one of the factors that might be perceived as an obstacle when trying to implement resource-efficiency actions. Previous research has shown that, although resource-efficiency practices are adopted by firms in all European countries, there are differences both within and between countries. The analysis of the determinants of green behavior by European SMEs was completed by a study of heterogeneity across firms and within countries with a multilevel latent class model, a hierarchical clustering method. A general important observation is that having no workers dedicated to green jobs is strongly correlated to the probability of adopting resource-efficiency practices, while perceiving the need of extra environmental skills has a positive effect on the intention to implement actions in the future. Other characteristics of the firms play a significant impact on resource efficiency: in general, older and bigger firms, with larger yearly turnover, are more prone to implement actions.

Offshore outsourcing of innovation by SMEs: a 4F perspective of governance

PurposeThis study aims to investigate how contract complexity and relational trust could impact offshore outsourcing innovation (OOI) performance of small and medium enterprises (SMEs). This study further examines the moderating effects of knowledge routines and joint actions on the relationships between contract complexity, as well as relational trust and OOI performance.Design/methodology/approachThe empirical investigation extends transaction cost economics and the relational view of buyer-supplier dyads in the context of offshore outsourcing SMEs. To test the hypotheses, the authors collected and analysed survey data from 200 European manufacturing SMEs that have existing offshore supplier relationships.FindingsThe results suggest that both complex contracts and relational trust as governance structures positively affect SMEs’ OOI performance. Additionally, while both formal knowledge routines and joint actions help strengthen the relationship between complex contracts and OOI, they showed no significant moderating effect on the relationship between relational trust and OOI. Furthermore, based on the results, the authors also develop a governance framework covering four configurations – fit, firm, flexible and fragile (4F).Originality/valueThe 4F governance scenarios – fit, firm, flexible and fragile – introduced in this study emphasise the need for a combination of contract complexity and relational trust mechanisms in OOI relationships. The 4F labelling has rich implications for practitioners on how interfirm outsourcing innovation relationships can be managed based on configurations of contractual and relational governance. The study also adds to the understanding of how SMEs’ specific characteristics (e.g. resource shortcomings and flexibility) may influence their OOI decisions in comparison with large firms.

Factors impacting patent applications in European countries

AbstractThe paper investigates the gap in the number of patent applications by European countries in the period 2010–2018. During the observed period, World Intellectual Property Organization (WIPO) received an average of 1.9 applications per million inhabitants per year from the countries of the Western Balkans (WB‐5), which is as much as 98% less than the average for the whole of Europe. The purpose of the paper is to create a model for increasing the number of patent applications in developing countries, which should lead to a higher number of granted patents. The author analyses variables that have an impact on the number of the patent applications (functional literacy, human development index, university/industry research collaboration, and gross domestic spending on R&D) in the developed (EU‐28) and developing (WB‐5) countries. The WB‐5 firms, especially small and medium enterprises (SMEs), do not use of the opportunities offered by intellectual property (IP) protection. They find the system too costly, complex, and difficult to manage. Based on the results of statistical analyses and conclusions from recent literature that tackles the usage of IP, the author builds a model for increasing the number of patent applications among European SMEs that is based on the support of international business support organizations (BSOs). Moreover, the author recognizes the positive impact of international IP support programmes (such as EU IPR Helpdesk ambassador scheme) on the work of local BSOs that deal with IP rights.

Appraisal of the factors contributing to European small and medium enterprises innovation performance

Small and Medium Enterprises (SMEs) play a vital role in driving job creation and Gross Domestic Product (GDP) growth in all economies worldwide. Their increasing importance also means that they must be innovative enough to survive and be sustainable, improve their productivity and competitiveness. It is pertinent for European SMEs to know the contributing factors driving their innovations, which will enable them to channel their limited resources to ensure they achieve their innovation goals. This paper examined the various factors that stimulate innovations within SMEs. Using the ordinary least squares regression analysis and data from the European Innovation Survey, the authors analyzed 296 European SMEs between 2011 and 2018. The results show that intellectual assets, financial support, firm investment, and human resources all significantly contribute to firm’s sales output across Europe. Conversely, it was found that financial support and innovation linkages were not significant predictors of firms’ innovations. The results are important for SMEs managers who are aiming to be innovative and improve their productivity. The study can serve as a practical guide on how SMEs can ameliorate their innovation potentials and activities. AcknowledgmentThe paper has been prepared with the support of the grant TBU No. IGA/FaME/2020/004 provided by the Internal Grant Agency of the Faculty of Management and Economics of Tomas Bata University in Zlín.

Sustainable business model in food and beverage industry – a case of Western and Central and Eastern European countries

PurposeThe presented study pinpoints transformation of business models of small and medium enterprises (SMEs) in the food and beverage sector depending on their sustainability strategy. This paper makes a novel contribution to understanding various instruments of sustainability implementation in SMEs’ business models operating in the food and beverage industry of well-developed Western European countries versus less-developed Central–Eastern European countries.Design/methodology/approachThe empirical basis is a survey of 770 European SMEs, of which 369 operate in Western European countries (including Great Britain, Germany and Spain) and 401 in Central and Eastern Europe (including Poland, Croatia and Russia). The nonparametric U Mann–Whitney test was used to examine the significance of the differences between the two groups of companies.FindingsThe study empirically confirmed that despite self-declared lack of skills and knowledge in managerial impacts of sustainability, it shapes business models of SME in both country groups in food and drink industry. At the same time, the motivation grounds for business models transformation toward sustainable models vary between mostly economic factors in Eastern Europe and social and cultural factors in Western Europe. The economic factor is formed due to smaller integration into social investments at the SME-level Eastern European countries, while Western European SMEs invest more in a variety of sustainability supporting instruments (R&D, new equipment).Originality/valueThis comparative study is the novel empirical research study on the implementation of sustainability into business models of food and beverage SMEs operating in two groups of Western and Central–Eastern European countries, which has not been previously observed in such a setting.

European SMEs’ value management based on controlling, financial analysis and ratios – empirical study

Small and medium enterprises (SMEs) are a powerful economic force, significant employers, and creators of added value. In the European Union SMEs are the backbone of its economic and innovative potential, and for this reason, economic development and stability of SMEs are critical. The goal of this study is to apply modern controlling to the management of SME value growth using the tools and indicators of financial analysis. This study is based on a detailed analysis of 359 companies from the European Union in order to test 4 hypotheses. The data obtained were subjected to statistical analysis to identify the dependence between the controlling management of a company, tools of financial analysis, innovative potential, level of digitization, internal auditing, and HR communication tools used in the SME. The statistical analysis confirmed a close relationship between the studied variables and created a model for managing the company’s value growth for the study sample of SMEs. Subsequent experimental testing was used to confirm these conclusions, and other important associations were found that are important for successful management of SMEs value growth. The findings obtained are applicable in practice and can be used for a deeper analysis of the issues in question.

Sustainable Business Models of SMEs: Challenges in Yacht Tourism Sector

Despite the high number of active small and medium enterprises (SMEs) in all sectors, current studies have barely developed investigations on the sustainability of their business models so far. The aim of this study was thus to bridge the gap between sustainable business models of SMEs in the service industry, to uncover the challenges that SMEs face when seeking business model reconfiguration toward sustainability. More specifically, the empirical investigation adopted a case study research design in the context of yacht tourism, as one business form among many within the tourism industry and thus within the broader category of the service industry. Interviews were conducted with seven European SMEs, whose business models were analyzed through the lens of the triple bottom line and sustainability challenges in their business models. The results display a varied typology of case studies, where business model components reveal diverse expressions of facing sustainability challenges. The work discusses reported findings with a cross-case comparison among detected business models and outlines a list of propositions for sustainable business models of SMEs. The paper contributes in continuing the discourse on sustainable business models, adopting the perspective of the challenges for SMEs and offers food for thought for managers of SMEs in comparing their own business with the identified business model types.

Small and medium enterprises development in scientific and innovation perspective

Small and Medium Enterprises (SMEs) are critical components for any country. It demands systematic examination based on theory and proves its significance. In our case, finding explanations is required why SMEs are important, about its historical background and what it would deliver in the times to come. As the issue of SMEs is yet to recognize by the respective governments over time, it is inevitable to identify and find way out to address the concerns of the sector. The main objective of the paper is to make an inquiry into the increasing importance of SMEs in Nepal. While analyzing Nepal's SMEs, European SMEs are taken into consideration including other countries in an innovation perspective and technology transfer. Based on the empirical evidence and innovation theory of management propounded by the world-renowned scientists, we have tried to find solutions scientifically related to the weak absorptive capacity of SMEs to go in an innovative way for their advancement and technology transfer in Nepal SME as the role of SMEs is deemed critical for job creation and economic growth. The lessons from European and other developed economies could transform SMEs into more productive ones through innovation and push for the sustenance in the long run. The research shows that defining the SMEs in the Act itself is not sufficient to promote the sector. Rather, the SMEs should be advanced through the adoption of innovation management techniques and technology transfer with facilitation from acknowledgment management and partnership approach to their sustainability. Conclusion: the country needs to adopt a strategy to define the SMEs in a professional manner like other countries; introduction of some rules and regulations to encourage the sector in terms of incentives and finance; introduction of SME Policy to consolidate SMEs, which also needs to focus on technology transfer and knowledge management for adopting innovative approach for the advancement of the sector.

STRENGTHENING OF INNOVATIVENESS AND COMPETITIVENESS OF SMEs WITH EUROPEAN GRANT FUNDS / JAČANJE INOVATIVNOST I KONKURENTNOSTI MALIH I SREDNJIH PREDUZEĆA EVROPSKIM GRANT SREDSTVIMA

Horizont 2020 programme, used by European Union to fund aims from Innovation Union and EUROPE2020 strategies, enables small and medium enterprises (SME) to strengthen their innovativeness capacities and potential with main goal of putting innovation on market. SME Instrument is unique programme for funding of SMEs’ innovative actions aiming to strengthen their presence on global market and increase of competitiveness. Having in mind that in Europe more than 99% companies belong to SME category, and that BiH has paid participation in this programme, this means that domestic SMEs can apply for these funds. During 2014 were submitted over 6000 project proposals, but little over 500 were funded. This is telling us enough on interest of European SMEs for participation, but also about programme as ideal source of funds for realisation of innovative ideas.

Factors Promoting Environmental Responsibility in European SMEs: The Effect on Performance

There is increasing social and political awareness of the importance of developing environmental responsibility at a corporate level. When focusing on issues of responsibility, large companies are frequently perceived to be more responsible for driving climate change and resource depletion. However, small and medium enterprises (SMEs) contribute significantly to the use of resources such as material and energy and produce approximately 64% of the pollution in Europe. Drawing on evidence from “The Eurobarometer 381 Survey on SMEs, Resource Efficiency and Green Markets”, we analyze the environmental responsibility of European SMEs, studying their compliance with environmental legislation and how several factors drive environmental orientation among SMEs. Our sample consists of 3647 SMEs operating in 38 countries. Only around a fifth of the firms go beyond environmental regulations, showing the highest levels of environmental responsibility. We conduct OLS regressions to analyze the factors that affect a positive environmental attitude among European SMEs (internal drivers being more significant than external ones) and then, to observe the positive effect of environmental responsibility and firm’s experience in offering green services/products on performance, although a conjoint effect was not found. Implications for practitioners, academics, and policy-makers are outlined.

The European Commission’s Idea of Small Business Tax Neutrality

The European Commission recently announced a competition policy of what might be called ‘small business tax neutrality’ in several of its state aid rulings. Simply put, states may not grant tax benefits that create a tax advantage to multinational firms in comparison to small and medium enterprises (SMEs). As explained in detail here, the United States (US) is engaged in tax competition yielding a structural advantage in favour of US multinationals against European SME’s including by facilitating the avoidance of European tax, which also notably reduces the foreign tax credit offset upon repatriation of earnings to the US. Also, US tax laws grant US multinationals tax incentives on US earnings including special incentives for R&D and domestic manufacturing which are incremental to the lax enforcement of US tax laws on corporate audits especially with respect to transfer pricing. The anticompetitive effect is that US multinationals enjoy a significant trade advantage against their competitors of all stripes and are able to seize market share from European SME’s (just as also occurred in US domestic markets where SME’s were significantly reduced as competition in the US domestic markets over the past decade). Several policy options are provided herein to reduce the competitive advantage of US multinationals in the respective European markets and particularly with respect to European SMEs.

GO4SEM Recommendations to Support Innovation Links for Entering Global e-Mobility Markets

GO4SEM (Global Opportunities for Small/medium enterprises in Electro-Mobility) aims to support the European small and medium enterprises (SMEs) in assessing emerging global markets by creating a framework that informs and advices on the business opportunities and market requirements for selected countries in Asia and America.The main goal of the EU coordination GO4SEM was two folded: on the one hand it aimed to support the European SMEs for their entry in global emerging e-mobility markets with a focus on Brazil, India and China. On the other hand it also assessed the business opportunities in more mature markets, with a known or renewed interest in e-mobility, such as Japan, South Korea and the USA. The objective was to spread awareness of global market trends and opportunities and to trigger the creation of dedicated professional networks in the field of electric mobility. Moreover, policy advice, e.g. on standardization or education, is given. The project identified specific product-, service- and technology-needs of emerging e-mobility supply chains. As a result a set of guidelines and recommendations were developed, targeting feasible business models for European SMEs aiming to enter the aforementioned value chains on a global platform.This contribution presents first the innovation capabilities of the European SME community with respect to the development of e-mobility. Then based on that analysis and the global market needs, a European action plan is proposed for strengthening the competitive position of EU SMEs. And finally the recommendations towards the European Commission, which would facilitate the entering of European SMEs the global markets, are introduced.