Indian Small And Medium Enterprises Research Articles

The nexus between financing pattern, firm-specific factors, and financial performance: Panel evidence of listed SMEs in India

The study analysed the impact of financing patterns (FPs) on the financial performance of 226 listed small and medium enterprises (SMEs). Firm size, age, liquidity, sales growth (SG), and asset tangibility (AT) are treated as firm-specific control variables. The result indicates that total debt financing (TDF), short-term financing, and trade credit financing have a significant relationship with Return on Asset (ROA), whereas long-term debt financing (LTDF) does not. Further, Return on Equity (ROE) is used to confirm the robustness of the result and demonstrate the same direction of the relationship with financing. Thus, the study provides an illustrative description of relationships and helps in developing an understanding of accessing the future financial needs of SMEs.

Strategy for adoption of information and communication technology in the development of small and medium enterprises in the emerging market

Small and medium enterprises (SMEs) play a crucial part in the Indian economy. However, SMEs in India are currently operating in a highly competitive environment (Rajamani et al., 2022). Information and communication technology (ICT) can be intended in helping SMEs to become more competitive. The aim of this research is to develop a strategy for the adoption of ICT in SMEs of India. In empirical research methodology, variables are identified, through literature review, that impact ICT acceptance in SMEs and based on this a research model is developed. Then hypotheses are formulated on the basis of identified variables and data is gathered to test these hypotheses. The value of the path coefficient has been used to prioritize the identified variables. The key result highlights that seven of the eleven hypotheses for ICT adoption in SMEs are being accepted and, a validated model for ICT adoption in SMEs is developed. The relevance of the study is that the evolved model can be used to predict higher rates of ICT adoption in SMEs, which fuels the expansion of businesses. Thus, different strategies are recommended for entrepreneurs and the government for the adoption of ICT in SMEs in India, which will help in the growth of SMEs.

Adoption of environmental corporate social responsibility (CSR) among small and medium enterprises (SMEs): an examination through behavioral leadership decision-making

Despite studies on CSR, not a single research study has been conducted on leadership behavior for environmental CSR in SMEs. The CSR spending in the environment was skewed towards sectors other than the environment. In this context, this paper addresses the research gap through the Behavioral Reasoning Theory (BRT). Information was gathered through a structured questionnaire from leaders of 353 Indian SMEs. Confirmatory Factor Analysis, and Structural Equation Modelling were employed to process the data. The leadership “value” positively impacted leadership “motives”, and the “motive” positively impacted behavioral leadership “intention” for environmental CSR. The “Reason for” (improved firm performance, competitive advantage, image, and risk mitigation) had a positive association with the value and motive of SME leaders. The “Reason against” (lack of knowledge, personal commitment, and lack of time) is negatively associated with SME leaders’ “value,” “motive” (attitude, subjective norms, and perceived control), and “behavioral intention” for environmental CSR.

Investigating and modeling the circular economy enablers in product development process: net zero as a moderator

PurposeIn the current era, the focus on circular economy (CE) has gained substantial momentum among the research communities across the manufacturing world. It has become the need of the hour to act fast due to the alarming issues of unsustainability such as climate change, global warming, waste generation, environmental pollution, resource scarceness and ecological degradations. This research aims to investigate and model the CE enablers in the product development process related to the moderating effect of net zero.Design/methodology/approachThe significant CE enablers are identified through literature review and expert brainstorming. The Pythagorean fuzzy decision-making trial and evaluation laboratory (PF-DEMATEL) technique has been used to investigate and evaluate the significant CE enablers in product development process. PF-DEMATEL determines the inter-relationship and casual dependency among the selected CE enablers. Indian automobile small and medium enterprises (SMEs) have been considered as a case organization to demonstrate the effectiveness of the proposed method.FindingsThe findings reveal that “Top management support and clear vision towards CE adoption” is the most important enabler and “Artificial intelligence in product value chain” is recognized as the least vital enabler. This research aids the managers, decision-makers, policy planners and workforce to develop and formulating efficient blueprints for the effective adoption of CE in Indian SMEs.Originality/valueThis is the first kind of research that explores CE enablers in product development process for Indian SMEs.

Technological sensing and response capabilities as drivers for radical innovation in the context of apocalyptic uncertainty

This paper introduces a new conceptual model to examine the impact of technological opportunism (technology sensing and response capabilities) on the adoption of incremental and radical technological innovation by small and medium enterprises (SMEs). We tested our hypotheses with data from 228 Indian SMEs using a symmetric method of partial least square structural equation modeling (PLS‐SEM) and the asymmetric method of fuzzy–set qualitative comparative analysis (fsQCA) followed by sensitivity analysis done by an artificial neural network (ANN) modeling. PLS‐SEM results highlighted the roles of technology sensing and response capabilities as key drivers of both incremental and radical product innovations and the strengthening of these relationships by market uncertainty triggered by external events and crises. Apart from this, the results of fsQCA demonstrated multiple configurations of dimensions associated with the adoption of technological innovations by SMEs. This paper extends the current literature by exploring the process by which SMEs may adopt different types of technological innovation. Our findings also have useful implications for SMEs aiming to adopt technological innovations.

Circular Economy a Footstep toward Net Zero Manufacturing: Critical Success Factors Analysis with Case Illustration

Increasing populations and the extravagant consumption of virgin resources are key issues in developing economies these days. The Paris Climate Accords of 2015 have also highlighted the importance of resource conservation and sustainable consumption. Developing economies, which rely on linear practices and traditional resources, require urgent attention regarding such issues. Practices of the circular economy (CE) provide an edge to achieving self-sustainability in materials and energy and lead a guiding path towards net-zero manufacturing. Net-zero manufacturing practices can significantly reduce environmental impact, conserve resources, and contribute to a more sustainable economy. In the current research paper, the authors have studied the critical success factors (CSFs) for implementing the circular economy in Indian small and medium enterprises (SMEs). The authors identified the CSFs through a literature review and expert opinions. To categorize and establish a structural model among the identified CSFs, the authors used Fuzzy Decision-Making Trial and Evaluation Laboratory (DEMATEL) techniques. The model’s robustness and expert bias were checked through predisposition analysis. To verify and validate the findings of the analysis, the authors conducted a case study of an Indian SME using the Strengths, Weaknesses, Opportunities, and Threats (SWOT) methodology. The authors of the current study observed that government policies and regulations on CE, consumer awareness and demand for CE products, economic incentives available for CE products, and new global business opportunities due to CE are the leading cause groups of CSFs. A reduction in energy and waste-related costs, the availability of infrastructure for CE practices, and an improvement in information-sharing transparency among supply chain members are the leading effects of CSFs. The influence graph shows that ‘Govt. policy and regulation on CE’, ‘Consumer awareness and demand for CE products’, ‘Economic incentives available for CE products’, and ‘New global business opportunity due to CE’ have a higher out-degree influence on other factors. From the case study, the authors observed that the strategic implementation of CE practices, green policy, reverse logistics, staff training, and new technology adoption have improved the use of repaired and refurbished materials in the case organization from 1–2% in 2019 to 9–10% in 2023. The findings of the current study imply that management commitment and strategies for building a ‘Green image’, coordination with suppliers, technological upgrades, reverse supply chain practices, workforce skills and training, and customer awareness and demand for CE products are crucial factors in successfully adopting CE and transitioning towards net-zero manufacturing.

Readiness assessment for smart manufacturing system implementation: multiple case of Indian small and medium enterprises

ABSTRACT In recent times, a paradigm shift is observed in the manufacturing domain through the inception of the smart manufacturing (SM) system. Small and medium enterprises (SMEs) in developing countries are striving hard to catch up with this transition. Thus, a need arises to assess their preparedness and subsequently develop an appropriate mechanism for transition. In this context, readiness assessment is a suitable approach that clearly depicts the quantification and qualification of readiness stages through various dimensions. To this effect, this study proposes a generic readiness assessment model with 5 stages, 6 building blocks, and 22 dimensions. Furthermore, the dimensions are ranked using ‘Stepwise Weight Assessment Ratio Analysis (SWARA)’ to understand their influence on overall readiness attainment. The practical viability of the proposed readiness assessment model is tested on five Indian SMEs. Based on the readiness level of each organization, recommendations are made to further improve their preparedness for transformation. Other SMEs can utilize this tool as a self-assessment methodology to check their status and subsequently strategize their policies for future transformation.

Strengthening the HR Capabilities – A Pathway to Strategic Success at SMEs of Punjab

The Indian business sector is hyper-competitive and subject to the  complexities of its environment. Operating in a highly digitalized  and globalized world is not easy. However, by trying to strengthen  its capabilities, a firm can face the challenges of a borderless world  and other external pressures. Of all the internal factors, human  resource (HR) is supreme. It is a firm’s most valuable asset and a  major source for gaining competitive edge. Therefore, understanding  its role in a firm’s strategic success in imperative. The present study  attempted to determine the impact of HR practices on effective  strategy implementation of small and medium enterprises (SMEs)  of Punjab. Data was collected from 157 units through a self administered questionnaire. It was analyzed through mean scores,  frequencies and multiple regression analysis. Results revealed that six  of eight select HR practices had a statistically significant, strong and  positive impact on strategy implementation. HR remuneration and  rewards had the highest impact. The study concluded that adoption  of positive HR practices like attractive remuneration packages, better  training programmes, employee involvement and empowerment, etc.  enhanced effectiveness of strategic actions. The findings are to benefit  several parties and add Indian SME sector evidence to the domain.  

Traceability adoption in dry fish supply chain SMEs in India: exploring awareness, benefits, drivers and barriers

The illegal harvesting of seafood and the mislabelling of dry fish products have become more prominent in recent years. Traceability in the dry fish supply chain deserves research attention, especially among small and medium enterprises (SMEs) in a developing country like India. To implement the traceability system, it is necessary to identify the variables and their inter-relationships that influence traceability in a food supply chain. This research aims to identify the awareness, benefits, drivers, and barriers that affect traceability adoption in the dry fish supply chain. Data were collected from 226 dry fish supply chain stakeholders through a cross-sectional survey (both online and offline) in Kerala and Tamil Nadu, two central maritime states of India. A conceptual model is developed, and the inter-relationship among the factors underlying the traceability implementation is analysed through correlation matrices and multiple regression modelling. The results show that the Indian dry fish stakeholders moderately understand the traceability system. Product safety and quality are identified as the primary benefits of traceability, while quality concerns and food safety regulations are observed as primary drivers. The significant barriers are the cost of a traceability system, lack of a co-ordinator and lack of government support.

An empirical investigation of effect of sustainable and smart supply practices on improving the supply chain organizational performance in SMEs in India

Implementing sustainable and smart supply chain practices have a great impact on the performance of an organization. In today’s globalized and highly industrialized world, sustainability is recognized as one of the highest priorities of all organizations. Evolution of internet-based technologies, digital platforms and big data analytics have paved the way for redesigning supply chains to be smart, agile, and resilient. Therefore, the implementation of practices related to these two concepts is found to improve the supply chain related organizational performance. This research aims to investigate empirically the impact of these two practices on improving the supply chain organizational performance in the Small and Medium Enterprises (SMEs) of India. This research considered the dimensions and the variables related to sustainable supply chain and smart supply chain practices in SMEs in India which were not considered in research contributions prior to this. Therefore, this research becomes a unique contribution to the existing body of knowledge. Empirical analysis was carried out on data from 92 SMEs from Telangana State in India, collected using a questionnaire. The directory of SMEs of Government of Telanagana, India was used to select the cluster sample of SMEs as respondents, based on a criterion using exploratory research methodology. SPSS software was used to test the model. Regression and ANOVA were used for this purpose. Findings of this research reveal significant influence of sustainable and smart supply chain (SC) practices on improving SC organizational performance. Additionally, individually each of these practices also have a direct influence on the performance of SMEs. Obtaining responses from the representatives of SMEs was a challenge and limitation of this research while expanding the scope of this research to different geographical regions and clusters will be a topic for further research. The outcomes and results of this research provide significant contribution to the existing body of knowledge by filling the gaps and value-adding to the researchers, academicians, students, policy makers and industry practitioners.

Productivity improvement using different lean approaches in small and medium enterprises (SMEs)

Small and Medium Enterprises (SMEs) play a crucial role in the Indian economy. To remain competitive in the global market, application of Lean Manufacturing Techniques (LMT) helps SMEs to improve their processes in alignment with customer needs. The purpose of this study is to reduce overall lead time by identification and eliminating non-value added activities (NVA) from the manufacturing system. In this paper, the current manufacturing processes have been thoroughly studied using the principle of work study. Several lean approaches such as- TAKT time computation, Value stream Mapping (VSM), layout optimization, Kanban, Andon etc. have been used to make improvement in line efficiency and hence productivity. The study shows that use of line balancing technique, matches the cycle time with calculated TAKT time. And the efficiency of the line has increased approx 10% and hence balance delay got reduced. Again VSM helps to reduce the lead time of foundry shops by 51 minutes. It is one of the few studies that deal with productivity improvement in Indian SME.

Strengthening the social performance of Indian SMEs in the digital era: a fuzzy DEMATEL analysis of enablers

PurposeIn the modern digital age technologies like Industry 4.0 has revolutionized the manufacturing sector. There are many economic and technological advantages of digitalization. Along with economic benefits, manufacturing enterprises especially small and medium enterprises (SMEs) need to take advantage of digitalization in strengthening their social performance. Observing the importance of social performance of Indian SMEs and availability of limited research in this direction, the current study has done a holistic analysis of social performance enablers.Design/methodology/approachA systematic literature review with a series of personal interviews of experts has been conducted to identify the enablers of social performance and supportive digital technologies. A fuzzy decision-making trial and evaluation laboratory (DEMATEL) approach has been applied to find the degree of influence and interrelation between enablers. Sensitivity analysis is also performed to validate the results obtained.FindingsAuthors observed that policies of corporate and social responsibility, support by top management, awareness of social performance issues, and ethical practices and collaboration amongst supply chain members are leading causing enablers of social performance. Preparedness for the uncertainty of pandemics, improved work conditions and ergonomics, green practices, improvement in global business and improved living standards of employees and their families are leading the effect group of enablers. Further authors also observed that social media, information and communication technologies (ICT), websites, smart surveillance, e-mails and cloud computing are few supportive digital technologies of social performance issues.Research limitations/implicationsSMEs all over the globe are passing through a transition due to digitalization and influence of pandemics. The finding of current study highlights the importance of strategic management of social performance enablers. Since the research is very limited in the social performance area, especially in Indian SMEs, this study makes a notable contribution to the literature too.Originality/valueNovelty of this study is that social performance enablers of Indian SMEs in the digital era have been analysed holistically. The content of this research is the original work of the authors and has not been submitted for any other publication.

The Uptake of Environmental Management System by Small and Medium Enterprises (SMEs) in India

The purpose of this study to scrutinize the drivers that impact the acceptance and execution of EMP in SMEs companies in India. To identify the various enablers exploratory research method was used. A total of 356 senior executives were surveyed from 89 manufacturing organizations located in NCR, India. Based on factor analysis, four factors were identified responsible for the adoption of environmental management actions in Indian SMEs. These factors were the most important enablers for application of management systems in the organization. These finding will be useful for the practitioners, policymakers and academicians to work upon these enablers to promote application of management system for environment in the organization.

Impact of promoters’ ownership and competition on firm’s value: a study of listed SMEs

PurposeThe public listing of small and medium enterprises (SMEs) is a recent phenomenon in India, started in 2012. Such a paradigm shift for SMEs has altered the ownership structure of these firms. In addition, the listing has provided a notable status to SMEs, leading to a shift in exposure to market competition. Literature signifies that these changing dynamics are likely to impact the firm value. This study aims to examine the effects of promoters’ ownership and market competition on the firm value of listed SMEs in India. Ownership concentration (promoters’ ownership) is investigated as the primary proxy for internal governance mechanism, while market competition is investigated as an external form of firm regulation.Design/methodology/approachThree years of panel data from 2018 to 2020 of 80 listed Indian SMEs are used to conduct the analysis. The fixed effects model and cluster robust standard errors captured the detected fixed effects while adjusting for heteroskedasticity and autocorrelation. Besides, moderation analysis is conducted to test if competition regulates the relation between promoters’ ownership and firm value.FindingsPromoters’ ownership does not impact the firm value significantly. However, market competition is significant and negatively drives the firm’s value. So, the market competition provides external regulation and coerces the firms to behave well to conserve the firm value. Finally, competition does not regulate the relationship between ownership effects and firm value. Therefore, the study contrasts the belief that the benefits of internal governance (especially promoters’ ownership) for firms in competitive economies are subject to market competition.Originality/valueThe study establishes the possibility of an integrated approach where internal and external governance mechanisms coexist to drive the firm value and endorses the same. The study is relevant to shareholders, practitioners, lawmakers and academics.

Prioritizing the Challenges Faced in Achieving International Competitiveness by Export-Oriented Indian SMEs: a DEMATEL Approach

The nature of foreign markets, as well as the issues Small and Medium Enterprises (SMEs) face in terms of competitiveness, necessitates this study. The paper aims to analyze the challenges ofexport-oriented Indian SMEs for International Competitiveness. The paper explores challenges and cause-and-effect relations between them using the decision-making trial and evaluation laboratory technique (DEMATEL), and this study will assist in gaining international competitiveness for SMEs. A detailed literature review was conducted to identify various challenges to international competitiveness. Questionnaires were formed for data collection and the DEMATEL method has been employed for developing causal relationships. The findings show that “Less International Experience” and “Insufficient Information” are critical challenges for SMEs in gaining international competitiveness. Challenges were prioritized, along with the cause-and-effect correlations among them, so that decision-makers could focus on overcoming them to gain international Competitiveness. The goal of the study is to help executives recognize the challenges to international competitiveness in their respective businesses. The novelty of this paper lies in its empirical studies in the field of Indian SMEs to employ the DEMATEL method framework as a foundation for finding cause-effect connections across International Competitiveness challenges.

Linking Strategy, Business Model and Firm Performance: Evidence from Indian SMEs

Indian small and medium enterprises (SME) operate in a hyper-competitive environment serving price-sensitive customers. To survive and prosper, they rely on low-cost strategy and business model (BM) efficiency, less frequently associated with SMEs, but critical to SMEs operating in developing countries. In this study, we explore the impact of low-cost strategy on SMEs’ business model (BM) efficiency and examine the mediating effect of BM efficiency between the low-cost strategy and SME performance across mature and young SMEs. Using data from 194 Indian SMEs, our findings indicate that low-cost strategy drives BM efficiency and BM efficiency positively mediates the relationship between low-cost strategy and SME performance among mature SMEs. However, younger SMEs do not benefit significantly from low-cost strategy and BM efficiency. Finally, we discuss the theoretical and practical implications of our study.

Corporate governance and financial performance: evidence from listed SMEs in India

PurposeCorporate governance across small and medium enterprises (SMEs) is undergoing unremitting changes, primarily due to the listing of SMEs on SME exchanges. The changing aspects of governance may influence the financial performance of SMEs. This paper examines how corporate governance influences the financial performance of listed SMEs in the context of developing economies like India. Ownership concentration (promoters' holding) and information disclosures measure corporate governance in this examination.Design/methodology/approachThe sample for this study includes 88 listed SMEs from the Bombay Stock Exchange (BSE) SME platform in India. The data are collected for the period between 2018 and 2020. The study employs panel data analysis. The fixed effects model, coupled with the computation of cluster robust standard errors, is used to test the relationship between variables.FindingsThe results demonstrate that ownership concentration is not significantly related to financial performance. Further, information disclosures are inversely significant for financial performance. The results show that agency problems and information asymmetry plague the sampled firms. Further, the results of the study are indicative of inefficiencies in the governance structures of SMEs. Thus, it is evident that listed SMEs fail to reap the benefits of corporate governance.Practical implicationsThe study's findings should enlighten SME owners and managers on the benefits of corporate governance for SMEs. This is a pressing need at current times as the listing of SMEs is shifting the landscape of SME governance. Today, all firms, including SMEs, are expected to adopt and maintain near internationally benchmarked corporate governance standards. Secondly, the study's implications on how the ownership and information disclosures can be used to influence the financial outcomes of SMEs will benefit the overall business ecosystem. The policyholders and academics can use this study to boost the regulations and research in line with each other.Originality/valueReforming monitoring mechanisms of firm activities and restructuring disclosure practices are essential for SMEs to produce better financial outcomes. The true benefits of corporate governance cannot be realized without attention to financial performance. The study is relevant to practitioners, lawmakers and academics to advance corporate governance for SMEs.

Cloud adoption in Indian SMEs – an empirical analysis

PurposeThis study aims to empirically validate the determinants of cloud adoption in small and medium enterprises (SMEs) in India and examine its impact on their economic performance.Design/methodology/approachAn integrated theoretical model interplaying technological, organizational and environmental aspects were applied for analyzing the variation in factors. Using data from 317 Indian SMEs, we have applied confirmatory factor analysis and structural equation modeling to test the hypotheses.FindingsThe results demonstrated that perceived usefulness, perceived ease of use, technology readiness, top management support and trust were the influencing drivers of cloud adoption in SMEs in India. Compared to previous studies, we did not find compatibility and competitive pressure as significant, suggesting that there was no single set of factors influencing technology adoption. Economic performance achieved by reduced transaction costs formed the basis of favorable adoption.Research limitations/implicationsThe integrated model can provide space for new dimensions based on the category and geography of the SMEs. The paper does not address the supply-chain perspective of cloud adoption.Practical implicationsThe study directs the firm owners to visualize business logic by creating a digital ecosystem. Further, the model guides the stakeholders, including cloud service providers, to contribute to the economic proficiency of the SMEs.Originality/valueThe paper empirically validates a model integrating both the drivers and consequences of cloud computing adoption as a unique study. Findings indicate that the usage of metrics such as return on investment and system efficiency form a part of the technology system approach.

Evaluation of key factors for industry 4.0 technologies adoption in small and medium enterprises (SMEs): an emerging economy context

PurposeIndustry 4.0 (I4.0) not only turns traditional industrial activities upside down but also demonstrates its potential to enhance industrial competitiveness and productivity. In this context, technological advancement and I4.0 is a strategy to be pursued. This study aims to consider different I4.0 technologies by analysing Indian small and medium enterprises (SMEs).Design/methodology/approachKey factors and promising I4.0 technologies were selected using literature analysis and experts’ panel. The appropriate I4.0 technology for Indian SMEs is recommended using the fuzzy complex proportional assessment (COPRAS) method.FindingsResults reveal that ability to expand IT infrastructure, change in the organization’s structure and the capacity to analyse key performance indicators as three crucial key factors in I4.0 implementation. In particular, the smart factory is identified as a better I4.0 for Indian SMEs.Originality/valueThis work has analysed Indian SMEs, but it is appropriate for other developing economies with limited technical resources, financial resources and inadequate skill sets. This work identifies a gap in the current literature, and the findings proposed by this work are oriented to assist decision makers, industrial managers and practitioners in selecting I4.0 technology and enhancing the industrial infrastructure. At the same time, cooperation between the government and industrial community is required to develop programmes for imparting the knowledge of I4.0 among SMEs. The framework used in this study will arm the industrial management in adopting I4.0.

Deployment of Interpretive Structural Modeling in Barriers to Industry 4.0: A Case of Small and Medium Enterprises

Small and medium enterprises (SMEs) are vital contributors and significant drivers of any manufacturing sector. The Industry 4.0 (I 4.0) revolution has made the global economy highly competitive and automated, requiring Indian SMEs to adapt more quickly. Therefore, this study aimed to identify the barriers to implementing I 4.0, simplifying the complex interrelationship among such barriers with the help of a suitable model, categorizing them as independent and dependent ones, and, ultimately, leveling the same drivers, autonomous linkages, and dependent forces. The present investigation thoroughly examined the existing literature and summarized the list of barriers into fifteen significant barriers to the smooth establishment of Industry 4.0 in India. The identified barriers were analyzed with the help of Interpretive Structural Modeling (ISM) Diagraph and Cross-Impact Matrix Multiplication Applied to Classification (MICMAC) analysis. This study was able to explore the interrelationship among these barriers. The study has found found a lack of support from stakeholders, and insufficient managerial support emerged as a major factor neglected by Indian SMEs. However, uncertainty in the predicted demand for products, the lack of an alternate solution to the technological breakdown, and doubt about the sustainability of Industry 4.0 (relating to its potential to lead to unemployment in society, etc.) are significant contingent barriers. These barriers can impact the other strategic choices related to the successful implementation of Industry 4.0. This study’s observations can help decision-makers make strategic decisions to manage the barriers affecting Industry 4.0 in Indian SMEs. This research revealed a scope that can be extended to other South Asian and developing nations. The results of the present work can be further studied with structural equation modeling (SEM) and multiple regression analysis (MRA).