Esteban Lafuente, László Szerb and András Rideg
The analysis of the interconnectedness between resources and capabilities, and the way businesses use them as competitive weapons is a central element of the strategic management…
Abstract
Purpose
The analysis of the interconnectedness between resources and capabilities, and the way businesses use them as competitive weapons is a central element of the strategic management literature. Finding the appropriate configuration of competitive pillars is particularly relevant for resource-constrained small businesses. Drawing on the resource-based view and the configuration theory, this study evaluates the effect of both competitiveness and the configuration of the competitiveness system on performance.
Design/methodology/approach
An index methodology based on the configuration theory was used to compute the competitiveness index on a unique sample of 625 Hungarian small- and medium-sized firms. The study hypotheses were tested via regression analysis.
Findings
Results show that the impact of competitiveness-enhancing strategies is conditional on the configuration of the system of competencies. Low-competitive businesses benefit more from investments in the weakest competitive pillar, while strategies oriented to improve more than one competitive pillar yield higher competitiveness improvements among high-competitive businesses. Our findings also indicate that competitiveness positively impacts performance, and that the exploitation of competitive strengths leads to superior results among high-competitive businesses.
Originality/value
By employing an index methodology, our analysis contributes to unveil how competitiveness impact business performance. The proposed analysis has value for scholars and strategy makers by showing how the configuration of the business' competitive system—in terms of competitive strengths and weaknesses—conditions the generally positive impact of competitiveness enhancing actions linked to the acquisition or development of resources and capabilities.
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Anna Róza Varga, Norbert Sipos, Andras Rideg and Lívia Lukovszki
The purpose of this paper is to identify the differences between Hungarian family-owned businesses (FOBs) and non-family-owned businesses (NFOBs) concerning the elements of SME…
Abstract
Purpose
The purpose of this paper is to identify the differences between Hungarian family-owned businesses (FOBs) and non-family-owned businesses (NFOBs) concerning the elements of SME competitiveness and financial performance.
Design/methodology/approach
The research covers the Hungarian data set of the Global Competitiveness Project (GCP, www.sme-gcp.org) of 738 (data collection between 2018 and 2020) non-listed SMEs, of which 328 were FOBs. The study uses the comprehensive, multidimensional competitiveness measurement of the GCP built on the resource-based view (RBV) and the configuration theory. Financial performance was captured with two composite indicators: short-term and long-term financial performance (LTFP). The comparative analysis between FOBs and NFOBs was conducted using binary logistic regression.
Findings
The results show that FOBs are more prone to focusing on local niche markets with higher longevity and LTFP than NFOBs. However, FOBs have lower innovation intensity and less organised administrative procedures. The most contradicting finding is that the FOBs’ higher LTFP is accompanied by significantly lower competitiveness than in the case of NFOBs.
Originality/value
This study goes beyond other GCP studies by including composite financial performance measures among the variables examined. The combination of performance-causing (resources and capabilities) and performance-representing (financial performance) variables provides a better understanding of the non-listed SMEs in terms of family ownership. The results help academia to enrich the RBV-competitiveness, the non-listed SME management and finance literature, and policymakers to design business development and support schemes. They also show future entrepreneurs the impact of family ownership on entrepreneurial success.
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Gábor Balogh, Norbert Sipos and András Rideg
Competitiveness is a multidimensional construct, related to a number of external and internal company factors. This paper aims to provide empirical evidence on the relationship…
Abstract
Purpose
Competitiveness is a multidimensional construct, related to a number of external and internal company factors. This paper aims to provide empirical evidence on the relationship between the application of small- and medium-sized enterprises’ (SMEs) compensation incentives as an index/element of human system development and competitiveness.
Design/methodology/approach
A unique primary data set drawn from the Global Competitiveness Project on SMEs’ competitiveness was analysed, using cross-sectional data of 784 firms. First, descriptive statistics were used to show the data set peculiarities. Second, a forward logistic regression was applied to show the effects on the application of compensation incentives. A 25.1% of explanatory power was found by targeting the application of compensation systems by 7 firm-level principal factors and 30 control variables.
Findings
The findings suggest that there is a higher chance of the application of compensation incentives in cases when the employees possess a more substantial tacit knowledge and formal and informal relationship networks. It is also positively impacted by the higher level of intra-company manifestation of knowledge.
Research limitations/implications
The research was conducted among SMEs from eight countries, based on a unique questionnaire designed for small enterprises. The respective countries are from Europe and Latin America, which serve as a reference category for Hungary. Also, there is a high level of 0 answers for the involved variables. The binary logistic regression methodology is suitable for filtering out some of these; nevertheless, the proportion of uncertain factors remains high as it is indicated by the explanatory power.
Originality/value
The majority of the literature is dealing with large companies in the topic of competitiveness, whereas in this data set, a deeper analysis was carried out among SMEs from eight countries, comparing their results to the Hungarian ones. The findings can be used as reference points for future studies, and the understanding of the HR cycle within SMEs.
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Lívia Lukovszki, András Rideg and Norbert Sipos
The purpose of this study is to identify the corporate functions that contribute most to the innovation success of SMEs with limited resources. After a systematic literature…
Abstract
Purpose
The purpose of this study is to identify the corporate functions that contribute most to the innovation success of SMEs with limited resources. After a systematic literature review, the authors used a unique primary data set of 784 SMEs from eight countries. Descriptive statistics and binary logistic regression were used to show the data set peculiarities. The logistic regression targeted the presence of innovative products and services in sales by 11 dummy variables and 4 principal factors describing SMEs’ different resources and capabilities.
Design/methodology/approach
The authors developed a resource-based product innovation model that is synthesising the impact of the company resources and capabilities and of the innovation activity of the company on the actual innovation performance. The authors carry out an empirical analysis of the characteristic features of innovation activity in an international sample of SMEs.
Findings
The results show that two corporate functions play a crucial role in the effectiveness of innovation for SMEs as follows: management and research and development (R&D). In addition, although of lesser importance, the effect of the marketing function also appears significant. The binary logistic regression had 84.2% of explanatory power.
Originality/value
From a scientific point of view, the SME-focussed, complex and synthesising RBV model of innovation construction and literature review can be used as a reference point for future researches. From a practical point of view, the analysis is useful for those SMEs, which want to gain a competitive advantage through innovation. Indeed, the results show that in the case of SMEs, a company wishing to innovate must invest in three corporate functions for innovation to be effective as follows: management, R&D and marketing.
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The purpose of this paper is to interconnect the firm level competitive performance (competitiveness) to the financial performance of the firms. The goal is to give evidence on…
Abstract
Purpose
The purpose of this paper is to interconnect the firm level competitive performance (competitiveness) to the financial performance of the firms. The goal is to give evidence on how successful small- and medium-sized enterprises (SMEs) use their financial performance to support their competitive performance.
Design/methodology/approach
Competitiveness is interpreted and measured through the resource-based view theory on a wide range of competitiveness measurements with a sample size of 639 SMEs. Financial data originate from official, publicly accessible governmental archives. All data are from a mid-size Central European country (Hungary). To interconnect competitiveness and financial performance, this paper recognizes two types of cash flow, namely, cash flow to the “past” (dividend and debt service) and cash flow to the “future” (CAPEX and innovation). This paper used ordinary least squares regression and binomial logistic regression to analyze connections.
Findings
Cash flows to the “future” have much stronger effects on competitiveness than cash flows to the “past.” Debt services do not affect competitiveness, whereas dividends, CAPEX and innovation efforts have a significant positive connection to competitiveness, showing that higher cash flow indicates higher competitive performance. If this paper knows how much the firm spends on innovation and dividends, in about the four-fifths of the cases, this paper can predict the level of the competitiveness of the firm without any additional information. The level of these variables gives enough information, the variability of them is not relevant.
Research limitations/implications
The explanatory power of future-oriented cash flow elements is much higher than that of the past-oriented ones, while innovation dominates all models. Firms with higher competitiveness build their returns in their cost structure, and only when the financial position of the firm is stable enough, withdraw the financial resource based on a long-term plan. The results are limited by the fact that using the current sample, detailed and representative (e.g. cross-industrial, spatial, etc.) decomposition is not possible.
Originality/value
Literature is focusing on how SMEs reach success, how SMEs “earn money.” There is no evidence on how SMEs “spend money,” earned during their success.
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This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies.
Abstract
Purpose
This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies.
Design/methodology/approach
This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.
Findings
SMEs typically struggle with gaining and maintaining competitive advantage. Utilizing competitive pillars to identify strengths and weaknesses, improvements can be found quickly, that can be sustained at high intensities.
Originality/value
The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.