Medium-sized Manufacturing Firms Research Articles

Trust and SME short-term financial policy. European evidence

PurposeDoes societal trust influence short-term financial management? Recent papers uncover the importance of societal trust for financial management in specific countries and large firms. Our paper aims to provide a comprehensive analysis of the impact of societal trust on short-term financial policies of SMEs, namely working capital management and cash holdings.Design/methodology/approachWe rely on a sample of 14,711 privately owned medium-sized manufacturing firms from 26 European countries with a sample period between 2014 and 2020. For estimation, we use pooled OLS and hierarchical linear models and control for several firm-specific and country-specific known determinants of short-term financial management. Moreover, our results are robust to the specific measurement of trust, financial constraints, and corruption.FindingsWe show a positive relationship between trust and working capital requirements investment and a negative relationship between trust and the level of cash holdings. Moreover, we show that trust attenuates the negative impact of being a financially constrained firm and the positive impact of national perceptions of corruption. Finally, in higher trustworthy environments, firms operate with relatively higher inventories and relatively lower trade credit granted and obtained.Research limitations/implicationsResults suggest that policies supporting societal trust may also foster business development and that when dealing with clients or suppliers from different trustworthy environments, firms may have to adapt their business models to incorporate trust differences between business environments.Originality/valueFirstly, the comprehensive analysis of the impact of trust on working capital management and cash holdings while controlling for different firm-level and country-level known determinants of short-term financial management. Secondly, it addresses a European sample of unquoted, medium-sized firms. Thirdly, it studies the combined effect of trust and financial constraints and trust and corruption.

The role of social media in product innovation: a survey of small and medium-sized manufacturing firms

PurposePrevious studies investigating the effects of using social media in the innovation processes of small and medium-sized enterprises (SMEs) yield mixed results, and the conditions for achieving innovation benefits from social media are unclear. The present study seeks to contribute to the understanding of this topic.Design/methodology/approachWith a basis in the literature on open innovation and SMEs, this study develops a model that explains the role of social media in product innovation processes where technological focus and abilities are converted into product innovations. The model is tested through a survey of 305 Danish manufacturing SMEs.FindingsFindings show that SMEs with higher technological orientation (TO) are more inclined to use social media in their product innovation processes and that social media use explains 22.4 percent of the relationship between TO and product innovation performance. On the other hand, the data did not support the assumption that SMEs with high TO achieve higher product innovation benefits than low TO SMEs for similar levels of social media use.Practical implicationsThe results suggest that SMEs with lower levels of TO could increase their product innovation performance through increased use of social media in their innovation processes.Originality/valueThe study provides new knowledge on the role of social media in SMEs’ product innovation processes. As the level of TO increases, the use of social media in the innovation process becomes an increasingly important mechanism for deriving the full innovation potential from technological focus and abilities.

Level of Adoption and Use of Knowledge Management Practices in Supply Chains

Business competition nowadays involves entire supply chains (SCs) rather than individual firms, and companies, with appropriate ways, need to coordinate and co-manage knowledge resources, activities, and innovative efforts in collaboration with their partners for improved competitiveness. Knowledge management (KM) practices and their adoption in single firms to manage inter-firm relationships can be of great help, but the current studies on this aspect are very fragmented. There is still insufficient knowledge of what practices are adopted to manage knowledge and how intensely these are used in inter-firm relationships and especially in supply chains. This study contributes to filling this gap by measuring the level of adoption and intensity of use of KM practices in companies. Also, it provides a comparison between their use at the intra- and inter-firm level. A survey of a sample of European large- and medium-sized manufacturing firms was used. A descriptive statistical analysis and a correlation analysis were performed. The study confirms that KM practices are used in companies, but with a varied level of adoption and intensity of use among firms. Especially, it resulted that KM is less used at an inter-firm level, and there is a relatively higher variation among firms in the inter-firm use rather than the internal context. On the other hand, the correlation analysis revealed that the more intensely firms used KM internally, the more likely they will intensely employ them to manage knowledge in SC relationships. The usefulness of the study lies in the fact that improving the awareness of business managers and consultants, both at firm and inter-firm, can facilitate introduction and development of KM programs.

Strategic Sustainability and Operational Initiatives in Small- and Medium-Sized Manufacturers: An Empirical Analysis

We explored the moderating impacts of product modularity and supply chain visibility for sustainability and operational initiatives, which entails a dramatic rethinking and reorganization of the production processes of manufacturing enterprises. Moderating effects of product modularity and supply chain visibility on links among supply chain pressure, technological pressure, sustainable practices, operational performance, and sustainability performance were included. A conceptual model was developed following the resource-based view and dynamic capability theories. Well-designed questionnaires collected data, and the total sample size for data analysis was 490 responses from small- and medium-sized manufacturing firms in Pakistan. Structural equation modeling was used to examine the proposed hypothesis. The first finding revealed that operational performance and sustainable performance both improve when companies implement sustainable practices. The second finding drawn from the data was that supply chain pressure and technological pressure have a positive effect on sustainable practices. The major finding of this work was grounded in the product modularity perspective, we argue that the relations among supply chain pressure, technological pressure, sustainable practices, operational performance, and sustainability performance are affected and moderated. The moderating effect of supply chain visibility existed and it has a positive moderating effect for the relationships from sustainable practices toward operational and sustainability performance. Surprisingly, moderating impact of visibility on relations from supply chain pressure and technological pressure towards sustainable practices was not significant.

Centering Work: Integration and Diffusion of Workforce Development Within the U.S. Manufacturing Extension Network

As the U.S. economy rebounds from the COVID-19 pandemic, strategies that promote long-term transformation toward quality jobs will be critical. This includes workplace-improving interventions that enable employers to upgrade existing jobs, often while enhancing their own competitive position. This article focuses on the U.S. Manufacturing Extension Partnership (MEP), a national network of federally funded centers that support small- and medium-sized manufacturing firms. The authors document the range of workforce- and workplace-enhancing strategies that MEP centers have adopted since the network's inception in the mid-1990s. While workforce development is unevenly implemented across today's MEP network, leading centers within it are devising transformative strategies that shape underlying business practices in ways that can improve the quality of frontline manufacturing jobs. The pandemic recovery, along with federal commitments to reenergize domestic supply chains, presents an opportunity to establish National Institute of Standards and Technology (NIST)-MEP as a national workforce development leader, while also strengthening localized institutional partnerships to center that effort on inclusive economic development and recovery.

The impact of working capital management on the profitability of firms in selected industries in the Republic of Croatia

The aim of the paper is to detect the impact of working capital management (WCM) on the profitability of Croatian firms which belong to manufacturing, trade, and information and communication industries. The time frame of interest is from 2008 to 2015, and the final sample consists of 19.355 firms, i.e. 116.002 firm-year observations. The data sources are the databases of the Financial Agency and Croatian Bureau of Statistics. In order to test research hypothesis, among other methods, panel regression analysis is used. The study results show that, after controlling for firm characteristics and macroeconomic conditions, aggressive WCM has a significantly positive effect on the profitability of small firms from selected industries and for medium-sized manufacturing firms. Moreover, the results imply the existence of a significantly convex quadratic dependence and overall downward trend, marked by the increasing marginal returns of profitability with the extension of working capital cycles. The latter indicates that a more aggressive strategy significantly increases the profitability of firms at increasing rate. In other words, the managers of those firms should strive to shorten the working capital cycles in order to increase profitability. The limitations of the research are: the impossibility of spatial and temporal generalization of identified results, limited possibility of explaining identified directions and the significance of the influence of observed indicators of variables, as well as detection of reasons for agreement or contradiction with previous research results, unavailability of certain data, and omission of potentially significant variables and/or their alternative indicators. Scientific contribution can be summarized as follows: a comprehensive and systematic review of previous research; in addition to dominant linear impact testing, testing of nonlinear quadratic relation between the observed variables, which, is beginning to appear in the relevant literature and, accordingly, is generally poorly represented in all the previous studies, and has not been conducted in the Republic of Croatia; respectable spatial and temporal coverage; the expansion of coverage from listed and large firms to private firms and small and medium-sized firms.

CEO environmentally specific transformational leadership and firm proactive environmental strategy: roles of TMT green commitment and regulative pressure

PurposeThis research aims to focus on the environmentally specific transformational leadership (ETFL) of a chief executive officer (CEO) and aims to examine the effect of CEOs' ETFL on firm's proactive environmental strategies (PESs), by indicating the top management team's (TMT) green commitment as a mediator and regulative pressure as a moderator to understand the relation.Design/methodology/approachThis study used multisource data from 170 small-to medium-sized manufacturing firms in China.FindingsThe results indicated that CEOs' ETFL was positively related to the TMT's green commitment, which, in turn, enhanced the firm's PESs. Moreover, regulative pressure strengthened the direct effect of CEOs' ETFL on their TMTs' green commitment and the indirect effect of CEOs' ETFL on the firm's PESs via TMTs' green commitment.Originality/valueThe tested importance of regulative pressure as an external condition that strengthens the effectiveness of CEOs' ETFL offers new theoretical insights to advance the literature on PESs.

Structural Relationship Between Environmental Uncertainty, Organizational Agility, and Business Performance in SMMEs

Despite that small and medium-sized manufacturing firms have been playing a role to promote economic growth and development in national industries, the management activities of small and medium-sized manufacturing firms are restricted by numerous internal and external environmental factors and are facing diverse challenges. Therefore, this study empirically verified the structural relationships among environmental uncertainty, organizational agility, and business performance recognized by small and medium-sized manufacturing firms. According to the results of this study, it can be said to be important to identify the characteristics of the uncertain management environment and secure and strengthen agile organizational capabilities to respond to the foregoing in order to secure competitive advantages and achieve sustainable growth of small and medium-sized manufacturing firms in the rapidly changing business environment.

A Spherical Fuzzy Multi-Criteria Decision-Making Model for Industry 4.0 Performance Measurement

In recent years, efficient processes have become increasingly important because of high-level competition in the production industry. The concept of Industry 4.0 is a relatively new and effective method for managing production processes. Because the Industry 4.0 implementation process includes connections between objects, humans, and systems, it is quite difficult to evaluate and measure the performance. At this stage, performance criteria can be applied. However, linguistic evaluation of criteria makes the problem too complicated to solve. The purpose of this paper is to present a novel fuzzy performance measurement model for Industry 4.0 in small and medium-sized manufacturing firms. A hybrid spherical fuzzy analytic hierarchy process (SF-AHP)—weighted score methodology (WSM) is proposed for the performance measurement and scoring process. In the application part of this paper, the propounded methodology was applied to five companies. The results of this study can be used as a reference for experts in the performance measurement of the Industry 4.0 process.

Logistics Management and Marketing Performance of Small and Medium-Sized Manufacturing Firms

This study explored logistics management and marketing performance of small and medium-sized manufacturing firms. It aimed to assess the influence of order processing, transportation, inventory and warehouse management on the marketing performance of small and medium-sized manufacturing firms. As a cross-sectional study, primary data were obtained from 216 operators and personnel of small and medium-sized manufacturing firms using a structured questionnaire. The research instrument was validated through face and content validity method, while reliability was confirmed through Cronbach’s alpha method. The hypotheses developed for the study were tested using multiple linear regression. Consequently, the study revealed that order processing management, transportation management, inventory management and warehouse management had significant positive influences on the marketing performance of small and medium-sized manufacturing firms. Therefore, the study concluded that logistics management has a significant positive influence on marketing performance in the context of small and medium-sized manufacturing firms. Practical implications and a future research agenda were presented in light of the limitations of this study.

China's Dual Innovation Economy: Evidence from Large and Medium-Sized Chinese Manufacturing Firms

China's Dual Innovation Economy: Evidence from Large and Medium-Sized Chinese Manufacturing Firms

Flood risk reduction and climate change adaptation of manufacturing firms: Global knowledge gaps and lessons from Ho Chi Minh City

Flooding places continuous stress on small- and medium-sized enterprises (SMEs) particularly in developing and transition economies that depend on their firms’ performance, but may have not fully developed flood protection infrastructure. Yet, detailed knowledge about whether and how firms take adaptation action against flood hazards, including potential adaptation barriers, is surprisingly thin. We respond to this gap by offering an empirical analysis of small- and medium-sized manufacturing firms in Ho Chi Minh City (HCMC), one of the front lines of future environmental risk. Drawing on qualitative interviews, our study has two main aims: first, to understand if adaptive action occurs more intensively among firms that previously faced high direct impacts, and second, to shed light on other internal firm characteristics as well as external conditions that determine firm decisions to undertake flood adaptation measures. We find that the majority of firms cope reactively to prevent severe flooding effects. Interestingly, experience with past events, including those of high impact, do not directly lead to long-term strategic adaptation. A lack of business capabilities and financial capacity, combined with insufficient support systems, largely hamper proactive adaptation. This leads to increased risks and self-reinforcing effects, which quickly endanger the future business viability of firms. Future research on adaptation to climate change should seek to improve understanding of adaptive capacities among SMEs, which are quite different from those of large international corporations.

Knowledge utilisation in Chinese medium-sized manufacturing firms – an exploration under the backcloth of quality improvement

Purpose This paper aims to report findings of up-to-date insights to fill the knowledge gap of lack of theoretical and practical understandings of how knowledge is used in medium-sized enterprises (MEs) for ensuring their performance excellence, healthy survival and growth, particularly using the contextual background of quality improvement as the standing point to concretise the research content and research participants’ mind-set for data collection. Design/methodology/approach The empirical data were attained by conducting first a multiple-case study and thereafter a structured interview. Insights were obtained through analysing the collected data and triangulating the findings with the contention from the extant literature where available. Findings A set of approaches for effective quality improvement knowledge (QIK) utilisation in MEs have been identified and attested, as well as prioritised for a clear guidance on their application by practical businesses. Originality/value As a pioneering study on the particularly focussed issue, namely, a current knowledge gap – QIK utilisation in MEs, theoretically the research contributes to the enrichment of the current KM and QI literature with a primary focus on knowledge utilisation in MEs. Practically its findings provide insightful guidance to practice on the approaches of QIK utilisation.

Does marketing analytics capability boost firms' competitive marketing performance in data-rich business environment?

PurposeFew well-documented studies have explained the importance of researching firms' marketing analytics capability (FMAC). In spite of its significance, there is scant attention to conceptualising and empirically investigating FMAC and its consequences in a data-driven business context. Thus, this study aims to develop and test a conceptual model that relates FMAC and its repercussions in the data-rich business environment.Design/methodology/approachThis study analysed the data from 250 managers amongst large and medium-sized manufacturing and service-intensive firms. Furthermore, this research performed an empirical study by using operationalised questionnaire survey method to verify the hypotheses and reach its theoretical and managerial implications. Structural equation modelling with maximum-likelihood estimation method was applied to verify the validity of the proposed research model.FindingsMultivariate analysis results show that FMAC significantly influences firms' competitive marketing performance (FCMP) with the presence of holistic marketing decision-making (HMDM) as a mediator. Moreover, adoption of artificial intelligence (AAI) enhances the relationship of FMAC-HMDM and FMAC-FCMP linkages.Practical implicationsThis study analyses how FMAC can enhance FCMP and contributes to resource-based views and technological capability theories. From a managerial perspective, guidelines are provided for marketers to adopt advance technologies, such as AI, to optimise FMAC and HMDM to achieve competitive marketing performance.Originality/valueBelieving that “how to be competitive in marketing performance under data-rich-environment”, this research is the first to use the data of a firm manager to facilitate the understanding of FMAC, which provides a new direction for improving marketing performance. In addition, HMDM and AAI are also proposed for firms to optimise FCMP.

Recovery and exit of zombie firms in Portugal

The resources sunk in zombie firms have risen over the last two decades, hampering productivity growth in developed economies. In this paper, we examine the recovery and exit of zombie firms among small- and medium-sized enterprises (SME), as well as the determinants of these transitions. To our knowledge, this is the first study on the determinants of the probability of a zombie recovering or exiting in a European context. The study also contributes to the discussion of the definition of zombie firms. Based on a panel of Portuguese manufacturing and services firms covering the 2004–2017 period, we do find a widespread presence of zombies. As expected, they are relatively less productive than non-zombies, while the probability of transition into recovery and exit is relatively low, which we interpret as evidence in favour of the presence of high barriers to firm mobility. In turn, the regression results show that downsizing and restructuring, as well as debt restructuring, are crucial in enhancing recovery of zombie firms. These are non-trivial results from the perspective of managers and policy makers. We performed several exercises using alternative definitions of zombie firms and estimation techniques and found that our findings are robust.Plain English Summary A 1% decline in the share of highly indebted and unprofitable firms (i.e. zombies) is estimated to increase the average labour productivity by 3.1 percent. Recovery of zombies in particular can be enhanced by downsizing and restructuring. Based on a very large panel of Portuguese small- and medium-sized manufacturing and services firms, covering the 2004–2017 period, we do find a widespread presence of zombie firms. Moreover, the chance of these firms to recover or exit is relatively low, an evidence of the presence of high barriers to firm mobility and resource misallocation. Our results have important managerial and policy implications: (1) a coordinated and holistic restructuring strategy (technological, operational and debt-related) is crucial to increase the likelihood of recovery of weak companies; (2) governments should formulate an adequate institutional framework in order to strengthen the selection of zombie firms, namely by designing more reallocation-friendly insolvency regimes and discouraging creditors to refinance unviable firms.

The Effects of Smart Factory Operational Strategies and System Management on the Innovative Performance of Small- and Medium-Sized Manufacturing Firms

This study aims to determine the effects of smart factory system management and operational strategies on the innovative performance of small- and medium-sized manufacturing firms. To this end, we administered an empirical survey to 222 hands-on workers who operate smart factories in small- and medium-sized Korean firms. The collected data were analyzed using structural equation modeling and the results showed that the enterprise resource planning (ERP), quality management, ethical management, and productivity management systems had positive effects on innovative performance. The effect of operational strategies on innovative performance was not verified. Consequently, small- and medium-sized firms should focus on establishing ERP systems, which lead to system establishment, standardization of work processes, CEO support and attention, and increase user recognition levels for raising innovative performance.

Performance implications of combining innovation and internationalization for Korean small- and medium-sized manufacturing firms: an exploration–exploitation perspective

While previous studies on firms’ innovation and internationalization have focused on the causal relationship between the two strategies, less is known on whether they are complements or substitutes for enhancing small and medium-sized enterprise (SME) performance. We introduce an exploration–exploitation perspective on the two strategies and examine how the relative weight of explorative versus exploitative innovation and of international versus domestic market scope affect performance, individually and in concert. Analyzing data from 579 South Korean manufacturing SMEs, we find that firms should balance explorative and exploitative orientation within and across the innovation and market scope domains to enhance financial performance. These findings are in contrast to results from previous studies on large companies and Western country firms and suggest that SMEs from newly industrialized Asian countries need to closely align their innovation and internationalization strategies to mitigate the liabilities of foreignness and smallness.

China's dual innovation economy: Evidence from large and medium-sized Chinese manufacturing firms

China's dual innovation economy: Evidence from large and medium-sized Chinese manufacturing firms

PRZESTRZENNE ROZMIESZCZENIE SEKTORA ŚREDNICH PRZEDSIĘBIORSTW W WĘGIERSKIEJ HIERARCHII MIEJSKIEJ

The present study investigates the spatial distribution of the medium-sized enterprise sector inthe Hungarian urban network. This tier of the enterprise network has been relatively neglected in comparison with large foreign-owned firms, but deserves a look due to its promising role in the regional development and development policy. Our previous research on medium-sized enterprises becomes particularly relevant when we consider that the dominant development model of post-socialist industry, based on the attraction of Foreign Direct Investment, is showing limits under the new economic crisis; and that the further increase in regional competitiveness necessitates stronger support for the development of domestic enterprises in both developed and underdeveloped regions. However, the development dilemmas of mid-sized enterprises have not been sufficiently considered in the previous decades, even though their position between larger (mostly foreign-owned) companies and small, capital-poor enterprises gives them significant development potential. Their contribution to domestic capital accumulation, ability to formulate independent competitive strategies, and the role in shaping the local or regional business environment deserves scrutiny. According to our preliminary assumption, the status of medium-sized enterprises in the urban hierarchy is shaped first and foremost by the population number of cities, since the proximity of human resources and markets is a significant locational factor for medium-sized manufacturing firms. The study gives an overview of the evolution of the number of medium-sized enterprises and the average number of their employees in Hungarian cities since 2000, based on data published by the Hungarian Academy of Sciences CERS Databank and the Central Statistical Office. Structured interviews were conducted to detect the disparities at the level of urban regions, with a particular emphasis on Baranya County and the City of Pécs. The results demonstrate that entrepreneurial traditions and entrepreneurial visions are evaluated as important locational advantages by domestically owned medium-sized enterprises.

Implementing energy efficiency measures: do other production resources matter? A broad study in Slovenian manufacturing small and medium-sized enterprises

Literature has largely investigated barriers to energy efficiency in industrial firms. Recently, research is looking at the non-energy benefits accompanying the adoption of energy efficiency measures that may contribute to overcoming these barriers. In our study we take an innovative perspective by specifically exploring the relationships between energy efficiency measures and other production resources, being assessed by their importance and capability of firms to manage them efficiently. By analysing 10% of Slovenian small and medium-sized manufacturing firms, our exploratory findings show that decision-makers carefully look at the multiple effects (either positive or negative) energy efficiency measures may have on a number of other production resources, particularly on those closer to the production (shop floor). Additionally, companies seem to struggle in efficiently managing the most important production resources, thus suggesting that energy efficiency measures should be looked in close consideration to other resources, which represents a new barrier to energy efficiency not accounted by previous research. Further, we could not detect significant differences between clusters of small versus medium-sized firms and energy intensive versus non-energy intensive ones, differently from previous research that was emphasizing the larger perception of barriers in smaller and less energy intensive firms. Our findings may challenge the discussion over incentive schemes for energy efficiency measures by promoting those with the largest (positive) implications for other production resources.