Performance Of Small To Medium‐sized Enterprises Research Articles

Key factors influencing the export performance of SMEs in Rwanda: evidence from the non-traditional export sector

Purpose This study aims to develop and empirically test a model that describes the factors influencing a firm’s export performance; a model that can be adopted by future export researchers, policymakers and practitioners. Specifically, this study aimed to identify the main factors affecting the export performance of manufacturing small- to medium-sized enterprises (SMEs) in Rwanda and determine the extent of influence of each identified factor on export performance. Design/methodology/approach The research design combines both exploratory research and causal research designs to test the proposed model. Interview guide and survey questionnaires were used to collect the raw data. The collected quantitative data were analysed using the structural equation modelling technique with the Analysis of Moment Structures software. Findings The findings revealed that all the factors identified, namely, organisational, entrepreneurial and industrial, and market factors had a significant positive impact on the export performance of SMEs. Moreover, entrepreneurial factors were proven to be the most influencing factors in export performance followed by market-level factors. In this context, the proposed resource-market-based model of export performance was tested and validated in a less developed country, Rwanda, for exporting SMEs. Originality/value The proposed model of export performance extends the existing literature in two ways: firstly, it integrates internal and external factors to explain the export performance of an SME and secondly, it tests the relative importance of these factors in driving and maintaining international performance.

Open innovation and SME performance: The roles of reverse knowledge sharing and stakeholder relationships

Although Small-to-Medium-sized-Enterprises (SMEs) frequently make vital contributions to both national and global economics and innovations, the relative influences of Open Innovation (OI) on SME performance is inconsistently argued in the literature. This study is set to fill this gap through an investigation of the details and dynamics of SMEs’ engagement in OI. Further, its impact on performance, through the perspective of knowledge networking, is examined. Specifically, this study investigates the relationships between OI activities, reverse-knowledge sharing, stakeholder relationship and SMEs performance in a context of numerous Vietnamese industries. Results revealed that OI activities are statistically insignificant when related to SMEs’ overall performance. However, it should be noted that OI indirectly affects SME performance through the mediation effect of reverse-knowledge sharing and the moderation effect of stakeholder relations. Practical implications and theoretical potential for future research are discussed.

The Mediating Effect of Innovation in Between Strategic Orientation and Enterprise Performance: Evidence From Malaysian Manufacturing Small-to-Medium-Sized Enterprises.

Strategic orientation and innovation are vital determinants for accelerating the performance of small-to-medium-sized enterprises (SMEs). However, there is a lack of empirical evidence confirming the innovation at the product and process levels that instigated the SMEs’ performance. Moreover, the mediating effect of process and product innovation can play a significant role in strategic orientation and manufacturing SMEs’ performance. In this respect, this study aims to examine the mediating effect of product and process innovation between strategic orientation (i.e., market, entrepreneurial, and customer orientation) and the performance of Malaysian manufacturing SMEs. The questionnaire survey gathered data from 360 manufacturing SMEs and was analyzed using partial least square structural equation modeling (PLS-SEM) to achieve these research objectives. The study analysis established that customer and entrepreneurial orientation significantly influence product and service innovation. However, the market orientation is significant for process innovation but insignificant for product-level innovation among SMEs. The study’s consequences exposed that process innovation has significantly mediated between the strategic (market, customer, and entrepreneurial) orientation and SMEs performance. It implies that market, entrepreneurial, and customer-related strategies would substantially improve SMEs’ performance by harnessing innovation at product and process levels. The core insights provided by the current work are to strengthen the strategic orientation that can promote product and process innovation, thereby harnessing the SMEs’ performance. Additionally, the study’s significance and limitations were reported at the end.

THE IMPORTANCE OF INTERNAL KNOWLEDGE GENERATION AND EXTERNAL KNOWLEDGE SOURCING FOR SME INNOVATION AND PERFORMANCE: EVIDENCE FROM IRELAND

This paper analyses the knowledge sourcing, transformation, and exploitation stages of the innovation value chain for a sample of Irish small to medium sized enterprises (SMEs) using Community Innovation Survey data. It explores the role of internal research and development (R&D) and external knowledge on SMEs’ innovation and performance. The open innovation paradigm, which stresses the importance of external linkages, is used to examine the impact of different external knowledge sources on SMEs’ innovation. The consideration of external linkages in the innovation performance of SMEs is crucial as these firms may be constrained in their ability to perform R&D due to their size. The analysis expands the traditional CDM methodology beyond the consideration of research and development as the sole source of knowledge for innovation by also considering a range of potential external knowledge sources. The findings indicate that SMEs generate knowledge internally through the performance of R&D, while also exploiting linkages to external agents. However, the impact of external sources of knowledge is not uniform. The results suggest that backward linkages have a positive impact on SME product innovation, but negatively affect SME process innovation, while public knowledge sources are positively related to the probability of product innovation occurring. This may have important policy implications. Finally, process innovation is also found to be a key determinant of SME productivity, while product innovation has no impact on SME performance.

Impact of business model innovations on SME’s innovativeness and performance

PurposeBusiness model innovations (BMIs), their drivers and outcomes are attracting increasing attention in academic literature. However, previous studies have mainly focused on large companies, while knowledge of BMI in small-to-medium-sized enterprises (SMEs) is limited. Therefore, the purpose of this paper is to add new insights into how related BMI drivers, practices and outcomes are in relation to SMEs.Design/methodology/approachAn extensive review of the existing literature was performed. Consequently, the relationships between BMI drivers, BMI practices and outcomes of BMI were developed as a conceptual framework. An empirical study was carried out. A structural equation modeling (SEM) procedure was used to empirically test the model using a quantitative data set of Lithuanian SMEs (n=73).FindingsThe study provides insights into the relations between BMI drivers, BMI practices and outcomes of BMI in SMEs. The findings of SEM, four drivers (innovation activities, strategic orientation, market and technology turbulence, respectively) are indicated to contribute to BMI of SMEs. In addition, the results proved that the implementation of BMI practices leads to strategic and architectural changes in firms and has a positive impact on SMEs performance and innovativeness.Research limitations/implicationsEmpirical research is focused on a limited number of internal and external BMI drivers, which have an influence on BMI in SMEs from one geographical region. Consequently, there are many external and internal BMI drivers which also may have an influence on BMI in SMEs, such as industry life cycle, organizational inertia and leadership. Meanwhile, SMEs possess multiple characteristics, i.e. a phase of maturity, gender of CEO, firm size and industry; therefore, the aforesaid aspects are considered to be significant limitations. In addition, the importance of SMEs characteristics as mediators for the effects on a firm’s performance and innovativeness should be considered in future research avenues.Practical implicationsFindings of this research can be used by SME managers to better understand how firms might actively engage in BMI practices, what drivers lead to BMI and, in turn, affect their firm’s performance and innovativeness. SME managers should be encouraged to pay attention to strategic and architectural changes of BM that can contribute to enterprise performance and innovativeness.Originality/valueThis paper adds to the stream of BMI research by empirically exploring drivers and outcomes of BMI in SMEs. In addition, this paper fulfills research gaps proposed by Bouwman et al. (2018), Foss and Saebi (2017), Heikkilä, Bouwman and Heikkilä (2018) and Lambert and Davidson (2013), and enhances the current overall understanding of BMIs.

Supply chain drivers, partnerships and performance of high-tech SMEs

PurposeThe purpose of this paper is to examine high-tech small-to-medium-sized enterprises (SMEs) supply chain partnerships. Partnerships are considered at the level of business function rather than the entire organisation. Second, the drivers of SMEs to engage in partnerships are assessed to see whether functions engage in partnerships for different reasons. Third, performance per function is assessed to see the differential effect of partnerships on the function’s performance.Design/methodology/approachIn this study, the relationship between the drivers of SMEs to engage in partnerships, four types of partnerships (marketing and sales, research and development (R&D), purchasing and logistics, and production) and four types of functional performances of firms (marketing and sales, R&D, purchasing and logistics, and production) are examined. The data have been collected from 279 SMEs. The proposed hypotheses are tested using structural equation modelling.FindingsThe results indicate that there are considerable differences between business functions in terms of the degree of involvement in partnerships and the effect of partnerships on the performance of these functions. This paper contributes to research by explaining the contradictory results of partnerships on SMEs performance.Practical implicationsThis study helps firms understand which type of partnership should be established based on the firm’s drivers to engage in supply chain partnership; and which partnership has a significant effect on which type of business performance of the firm.Originality/valueThe originality of this study is to investigate the relationship between different drivers to engage in supply chain partnership and different types of partnerships and different functional performance of firm in a single model.

Benefiting from economic crisis? Strategic orientation effects, trade-offs, and configurations with resource availability on SME performance

While there is growing interest in exploring strategic orientations, their interaction, and impact on firm performance, most research has been conducted within stable economic environments. Taking into consideration economic instability, it is timely to develop a more nuanced understanding of how economic crises may affect key strategic orientation prescriptions. In this research, we examine entrepreneurial and market orientations as means through which firms may operate within an economic crisis to seize available opportunities. Additionally, we consider how increasing financial resource availability during macro-economic constraint may affect these relationships. Based on a rare, and robust national random sample of 612 Russian small to medium-sized enterprises (SMEs) collected during a recent period of economic crisis in 2015–2016, our results reveal a positive effect of entrepreneurial orientation and a non-significant effect of market orientation. Moreover, we demonstrate how financial resource availability in concert with firms’ strategic orientations yields distinctly more, and less, productive configurations.

Antecedent and outcomes of innovation-based growth strategies for exporting SMEs

PurposeThe purpose of this paper is to investigate the antecedent and outcomes of different types of innovation as complementary growth strategies, which may enable exporting small- to medium-sized enterprises (SMEs) to achieve success in export markets.Design/methodology/approachThis study is based upon a quantitative survey on Norwegian exporting SMEs. A total of 380 questionnaires were received representing 16.8 per cent response rate. A structural equation modelling analysis is carried out on the sample.FindingsThe study finds positive and significant associations between the firm’s growth ambition and the pursuance of product and business model innovations. Moreover, the firm’s export degree and scope has a significant and positive association with its product innovation strategy, but the association with its business model innovation is significantly negative.Research limitations/implicationsThe study’s findings indicate that future studies should incorporate different types of innovation strategies since their associations with export performance differ substantially. Treating innovation as a general construct appears to be too simplistic.Practical implicationsThe study’s results indicate that focus on product innovation enhances the export performance of SMEs, but that focus on business model innovation has a negative impact. The latter may be too costly and distract focus from the firm’s core competences, whereas product innovation can be assumed to provide further competitive strength.Originality/valueBy taking a holistic approach towards innovation, this study addresses a gap in the literature on innovation and exporting in SMEs in order to investigate the association between different types of innovation-based growth strategies and the firms’ export prosperity.

KNOWLEDGE INFLOWS FROM MARKET- AND SCIENCE-BASED ACTORS, ABSORPTIVE CAPACITY, INNOVATION AND PERFORMANCE — A STUDY OF SMEs

Small to medium-sized enterprises (SMEs) are increasingly opening up their innovation processes in order to improve innovation outcomes. Exactly how openness influences enterprises’ ability to innovate and benefit from external sources of innovation is not well understood. Despite theoretical models explicating knowledge inflows as the antecedent and innovation as the consequence of absorptive capacity, to date, the relationships between external knowledge inflows from specific external actors, absorptive capacity, innovation and SME performance remain underexplored. We address this gap, focussing on market- and science-based knowledge flows, absorptive capacity, innovation and SME performance. Using structural equation modelling on a sample of 838 Australians SMEs, we find evidence indicating that the mechanisms by which external knowledge inflows from market- and science-based actors affect innovation differ: external knowledge inflows from market-based actors influence innovation directly or “serendipitously”, while external knowledge inflows from science-based actors influence innovation indirectly via absorptive capacity. We also find that their effect on innovation differ, with external knowledge inflows from market-based actors exerting a positive direct effect on innovation vis-à-vis external knowledge inflows from science-based actors where there is no significant direct effect. In contrast, external knowledge inflows from science-based actors influence innovation through absorptive capacity. In addition to this mediation effect, absorptive capacity has a positive direct effect on innovation, and an effect on firm performance through innovation. This research contributes to our understanding of how, and the extent to which, external knowledge inflows from specific external actors influence absorptive capacity, innovation and firm performance in SMEs.

Survival in fast-changing markets

Purpose – The purpose of this paper is to find out if the approach to strategy-making taken by small to medium-sized enterprises (SMEs) affects their performance. Design/methodology/approach – This paper reports findings from a longitudinal study of small Austrian manufacturing firms. It investigates their use of deliberate or emergent strategy-making and how this affected market development and product innovation. Findings – When you think about strategy development, perhaps you think of long, serious discussions between groups of managers. But what if the organization is a small business? Leaders of SMEs do not have that option. So if an SME starts a new initiative – product development, say, or a change of marketing approach – how does this happen? Is it planned by the entrepreneur? Or – if you do not have middle managers with time to spend on strategy development – does adopting a “try it and see” approach give better results? Research limitations/implications – It demonstrates the benefits of a longitudinal investigation of the performance effects of deliberate and emergent strategy development. Practical implications – It shows how the use of emergent or deliberate approaches to strategy development is linked to SME performance. Social implications – It highlights the benefits of using diverse information sources – including customers and employees – as an integral part of strategy-making to identify market opportunities and trends. Originality/value – It covers an unusually long time period, enabling researchers to compare firm performance in stable and dynamic market conditions.

Contextual ambidexterity in SMEs: the roles of internal and external rivalry

This article seeks to extend research on small to medium-sized enterprises (SMEs) and ambidexterity by investigating contingency factors that influence the relationship between contextual ambidexterity and SME performance. Acknowledging the importance of internal knowledge flows in leveraging ambidexterity, it offers unique insights into how internal and external rivalry conditions influence performance outcomes related to an ambidextrous posture. Using a sample of Canadian-based SMEs, the study shows that the contextual ambidexterity–performance relationship is suppressed at higher levels of internal rivalry and amplified at higher levels of external rivalry. The findings suggest that developing an ambidextrous posture should not be an end by itself, and they point to the need for SMEs to understand how the features of their internal and external environments affect the performance consequences of such posture.

Performance of Russian SMEs: exploration, exploitation and strategic entrepreneurship

Purpose – The purpose of this paper is to examine the ability of Russian firms to develop strategic entrepreneurship (SE) as a source of sustainable competitive advantage in a turbulent and hostile business environment. It aims to suggest a model of SE that includes two components – exploration and exploitation – and to test this model on 500 Russian small to medium‐sized enterprises (SMEs) which show the influence of these components on firm performance. It also aims to address one of the most fundamental questions confronting the international business (IB) field: “What determines the success and failure of firms around the world?”.Design/methodology/approach – The paper presents empirical research with a regression analysis of 500 Russian SMEs operating in Moscow and St Petersburg in three major industries: information technologies and communications (ICT), hotels, restaurants, and cafes (HoReCa) and wholesale/retail.Findings – The Russian firms show a positive influence of exploration and exploitation...

Disaggregating entrepreneurial orientation: the non-linear impact of innovativeness, proactiveness and risk-taking on SME performance

Previous studies have generally established a positive relationship between aggregated measures of entrepreneurial orientation (EO) and firm performance. However, there are theoretical reasons suggesting that three dimensions of EO (innovativeness, proactiveness, and risk-taking) may possess differential relationships with performance in smaller firms. This study utilizes a sample consisting of 1,668 small-to-medium sized enterprises (SMEs) in nine countries across 13 different industries to provide a finer-grained analysis of the EO-performance relationship. Specifically, we theorize and test a non-monotonic influence of innovativeness, proactiveness, and risk-taking on SME performance. Innovativeness and proactiveness displayed predominantly positive U-shaped relationships with SME performance. Risk-taking, however, displayed a predominantly negative U-shaped relationship with SME performance. Further, individualism was found to positively moderate the relationships between innovativeness-performance and proactiveness-performance. Taken together, these results suggest that differential relationships exist between three dimensions of EO and SME performance, with important theoretical implications for future EO research.

A systemic risk management model for SMEs under financial crisis

PurposeThe “business‐risk” relationship across countries does not fit exactly into a “model” nor does it have a pure palliative effect. Following this idea, the purpose of this research is to reinforce a comparative study on small to medium‐sized enterprises (SMEs) handling both risk and crisis management according to a new tailored model of a balance scorecard (BS). This new model of risk and crisis management aims at improving both SMEs' management adaptation and performance across all of crisis' stages, something not attempted so far in the literature.Design/methodology/approachThe application of such a BS comes from the author's experience as a banker financing various SMEs industries, as a bank consultant on risk management, yet primarily from the results of a survey performed on a set of Romanian and Cypriot SMEs, equal‐proportionally selected from the area of trading, manufacturing, and services. The data regard the period 12/2008‐06/2011 as representative for the latest global financial crisis affecting the entire European Union region, too.FindingsCoincidently or not, this study's results show a significant improvement of the financial performance of the SMEs who employed this model compared to those who did not.Originality/valueThis model's simplicity appeals to managers and regulators in understanding important business risks and crisis related phenomena. Backed by this idea, this research underpins a comparative study on SMEs handling risk and crisis management according to a new tailored model of a BS.

Financial performance of SMEs: impact of ownership structure and board composition

PurposeThe purpose of this paper is to investigate the impact that ownership structure and board composition have on financial performance in a sample of Finnish small to medium‐sized enterprises (SMEs).Design/methodology/approachThe data for this study were collected through a private survey. The financial data were collected from the Voitto+ register and observations were made from 2000 to 2005. The authors employ panel data estimation and 2SLS methods in their analyses.FindingsResults suggest that the ownership structure affects both the growth and the profitability of small private firms. Firms with high managerial ownership levels exhibit higher profitability ratios but have lower growth rates. Firms with high venture capital firm ownership ratios are found to grow faster and are less profitable. The results on board structure suggest that board structure has little impact on the performance of small firms. The only significant result in this context is that firms with outside board members have lower growth rates and are less profitable.Practical implicationsThe results of this study can be interpreted to indicate that owner‐managers are risk averse and that venture capital firms seek investments with high growth potential. The results could also imply that outsiders are taken on as board members in badly‐performing firms on financiers' requests, or because it is thought that they can enhance performance.Originality/valueThe paper is one of the few that shed light on how corporate governance and ownership structures affect the performance of small private firms.

The effect of the ISO 9001 quality management system on the performance of SMEs

PurposeThe purpose of this study is to examine whether there is a difference between ISO 9001 certified and non‐certified companies in terms of performance.Design/methodology/approachIn order to determine the effect of certification on performance, motivations for certification and companies' quality practices have been considered as factors. A survey was carried out with 255 small to medium‐sized enterprises (SMEs) in Turkey. The differences between certified and non‐certified companies in terms of performance and quality practices were examined by one‐way analysis of variance (one‐way ANOVA).FindingsThe results showed no statistically significant difference between certified and non‐certified companies in terms of performance. Certification showed no direct effect on performance. Also it has been claimed that the quality practices of certified companies was higher than those of non‐certified companies, according to results it is showing a statistically significant difference, in the 0.01 level of significance. However, higher quality practice does not necessarily mean higher performance. Motivations for certification also affect performance; it was found that companies that are internally motivated for certification have partially higher performance than companies externally motivated.Originality/valueTo the authors' knowledge, this is the first study examining the effect of the ISO 9001 quality management system on the performance of SMEs in Turkey.

Striving towards strategic alignment in SMEs: an empirical analysis

PurposeDespite general awareness and acceptance of the benefit of strategic planning/alignment of IS strategy with business strategy, few efforts have been made to define and study the relationship. A review of literature has revealed that past studies have largely neglected the specific consideration of small to medium‐sized enterprises (SMEs) especially IT/software developing SMEs in India. The purpose of this research is to investigate the prevalence of strategic planning activity in Indian IT SMEs and its decisive influence on business performance.Design/methodology/approachA survey‐based approach was adopted to understand the prevalence of strategic planning activity in Indian IT SMEs and its crucial influence on business performance at all three levels of management. A short survey instrument was designed by reviewing the literature on strategic planning activity in software developing SMEs. A sample of 23 software developing SMEs in India was used.FindingsA response rate of 88.8 per cent was achieved and included respondents at senior management, middle management, and lower level management across the software developing SMEs in India. The results indicate that the alignment of IS/IT strategy with corporate strategy has significant effect on performance of IT SMEs besides the general awareness of importance of strategic alignment in SMEs at all three levels of management.Research limitations/implicationsThe limited number of software developing SMEs will affect the generalizability of the study to the entire SME population. To negate the limitations of this study, multiple multi‐level case studies will be conducted in SMEs in the next phase of research. This research would contribute by indicating some of the implications, for both decision makers and academia, of an extended IT capabilities viewpoint on strategic planning activity. Future study should focus on performing a global survey on strategic alignment practices in SMEs.Originality/valueThe novelty of the paper lies in conducting a comparative study on the strategic alignment practices at all three levels of management in Indian SMEs and measuring its impact on the performance of the firm.

Strategic orientation, innovation patterns and performances of SMEs and large companies

Purpose – The purpose of this study is to examine the similarities and differences in the strategic orientation and innovation patterns of small to medium‐sized enterprises (SMEs) and large companies and to investigate their implications for market performance.Design/methodology/approach – Miles and Snow's strategic typology is applied to 592 new products to determine their companies' strategic orientations. Data collected over a two‐year period by 62 companies in the Italian yogurt industry are analyzed.Findings – The results show that, while large firms operate with a “prospector” orientation, SMEs have a “defender” or “reactor” orientation. Only a small number of SMEs can innovate successfully, and an ex post facto investigation reveals that these firms follow an “open innovation model”.Originality/value – The findings fill a gap in the literature by clarifying the similarities and differences in the strategic orientations, innovation patterns and performance of SMEs and large companies in a dynamic in...

Social capital and dynamic capabilities in international performance of SMEs

Purpose – The major goals of this paper are twofold: first, it aims to explore the link between social capital (structural, relational and cognitive) and the exploitative and explorative capabilities; second, to examine the influence of exploitative and explorative capabilities on international performance.Design/methodology/approach – This paper is conceptual in nature and relies on a conceptual model that builds on and synthesizes the theoretical foundations of social capital (structural, relational and cognitive), dynamic capabilities and international performance.Findings – A useful framework for further research in the social network field and dynamic capabilities is presented. In order to build new dynamic capabilities to cope with turbulent and unpredictable markets, small to medium‐sized enterprises (SMEs) need to leverage their network relationships that provide access to novel sources of information. These dynamic capabilities may in turn positively influence international performance.Practical ...

Linking firm and managers' characteristics to perceived critical success factors for innovative entrepreneurial support

PurposeThis paper aims to examine perceived critical success factors (CSFs) affecting the performance of small to medium‐sized enterprises (SMEs) and their relationship with firm characteristics. The paper also seeks to investigate the interdependence relationship among the perceived CSFs themselves using correlation coefficients.Design/methodology/approachThis paper is part of a wider study that was designed to investigate the perceived critical success/failure factors (PCSFs) affecting the development of SMEs. The study is based on a review of the literature, which provided a theoretical understanding of both CSFs and firm characteristics. This theoretical linkage was then tested using primary data that were collected through a two‐page questionnaire survey of 203 SMEs randomly selected from three cities in the Republic of Botswana. Principal component analysis (PCA) with Varimax rotation was used to reduce the data. Analysis of variance (ANOVA) was conducted to test the relationship between firm characteristics and perceived impacts of selected CSFs, and correlations were used to assess the relationships between the CSFs.FindingsThe study identifies ten sets of perceived CSFs affecting the performance of SMEs; statistically significant relationships between the perceived impact of selected CSFs and firm‐specific variables, indicating that the perceived impact of CSFs vary from firm to firm depending on their size, age, industry, and management profile; and statistically significant relationships among the selected CSFs themselves.Research limitations/implicationsThe study relies exclusively on a questionnaire as the data collection instrument, and many respondents were unwilling to participate in the survey. Therefore, it took the authors eight months to collect 203 questionnaires. This forced the authors to make some important changes from the original research proposal.Practical implicationsSME managers and advisors should not deal with CSFs individually, but should adopt an integrated and innovative approach to deal with them collectively. This approach should consider SMEs' uniqueness, given that these CSFs are perceived differently depending on firm characteristics. The paper forwards some research and policy implications for designing SME support and promotional interventions.Originality/valueThe paper uses well‐established and researched CSFs in the SME literature. To this end, the paper's originality and value lie in the investigation of these factors in Botswana. However, the findings are applicable to most SMEs, since they continue to suffer from the same problems worldwide.