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Managers' perceptions regarding management challenges and the development of romanian smes. Selected findings from 2012-2015

Authors:
  • Babeş-Bolyai University Faculty of European Studies

Abstract

The importance of small and medium sized enterprises (SMEs) to the economy of Romania is fully demonstrated by indicators such as the number of enterprises, the number of employees, and the value added generated by this sector. If the level of the value added and the rate of employment are taken into account (both lower in 2013 than in 2008, when the financial crisis started), it may be stated that the recovery of this sector has not yet been accomplished. However, this article, focusing on the SMEs business environment in Romania, argues that this sector is slowly but steadily improving its performance. By investigating SMEs management practices as perceived by their managers, primary quantitative research was employed in order to collect data through four online annual surveys addressing Romanian SMEs throughout the period 2012- 2015. Secondary research was also used in order to outline frames of reference describing the national context of business development. The findings of this paper highlight two dimensions of Romanian SMEs - one at the organizational level (aspects related to perceived organizational performance) and one at the individual level (particular attributes of people with leadership positions). From a practical standpoint, our empirical findings are relevant for both academics and practitioners who are interested in Romanian SMEs practices. The study is particularly valuable as it identifies trends in the evolution of Romanian SMEs management practices, as reported by their managers in the post economic crisis context (2012-2015).
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Scientific Committee:
Prof. Dr. Gérard BOSSUAT, European Union Liaison Committee of Historians/ Professor Emeritus, Université de
Cergy- Pontoise, France
Prof. Dr.dr.h.c. Wichard WOYKE, Westfälische Wilhelms-Universität Munster, Germany
Prof. Dr. Wilfried LOTH, President of the European Union Liaison Committee of Historians/Duisburg-Essen
University, Germany
Prof. Dr. phil. habil Michael GEHLER, Universität Hildesheim, Germany
Prof. Dr. Dr.h.c. Reinhard MEYERS, Westfälische Wilhelms-Universität, Munster, Germany
Prof. Dr. Dietmar WILSKE, Westfälische Wilhelms-Universität, Munster, Germany
Prof. Dr. Sylvain SCHIRMANN, Director of the Institut d’études Politiques de Strasbourg, France
Prof. Dr. Ioan HORGA, Institute for Euroregional Studies, University of Oradea
Prof. Dr. George POEDE, Alexandru Ioan Cuza University of Iaşi, Iași
Prof. Dr. Nicu GAVRILUTA, Alexandru Ioan Cuza University of Iaşi, Iași
Prof. Dr. Vasile PUȘCAȘ, Babeş-Bolyai University, Cluj-Napoca
Prof. Dr. Ovidiu PECICAN, Faculty of European Studies, Babeș-Bolyai University, Cluj-Napoca
Prof. Dr. Marius JUCAN, Faculty of European Studies, Babeș-Bolyai University, Cluj-Napoca
Prof. Dr. Gheorghe CLIVETI, “Alexandru Ioan Cuza” University, Iaşi
Assoc. Prof. Dr. Adrian BASARABA, West University, Timişoara
Assoc. Prof. Dr. Mircea MANIU, Faculty of European Studies, Babeș-Bolyai University, Cluj-Napoca
Assoc. Prof. Dr. Simion COSTEA, Petru Maior University, Tg. Mureș
Assoc. Prof. Dr. Liviu ȚÎRĂU, Faculty of European Studies, Babeș-Bolyai University, Cluj-Napoca
Assoc. Prof. Dr. Georgiana CICEO, Babeş-Bolyai University, Cluj-Napoca
Assoc. Prof. Dr. Nicoleta RACOLTA-PAINA, Babeş-Bolyai University, Cluj-Napoca
Assoc. Prof. Dr. Florin DUMA, Faculty of European Studies, Babeș-Bolyai University, Cluj-Napoca
Assist. Prof. Dr. Mariano BARBATO (Professor DAAD), Babeș-Bolyai University, Cluj-Napoca
Dr. Titus POENARU, Industry, Research and Energy (Policy Advisor), EP Brussels
Dr. Gilda TRUICĂ, European Institute of Romania, Head of Communication Unit
Editorial Staff
Prof. Dr. Nicolae PĂUN: nicolae.paun@ubbcluj.ro
Assoc. Prof. Dr. Georgiana CICEO: gciceo@yahoo.com
Lect. Dr. Miruna Andreea BALOSIN: miruna.balosin@ubbcluj.ro
Lect. Dr. Adrian CORPĂDEAN: adi_corpadean@yahoo.com
Lect. Dr. Horațiu DAN: dan.horatiu.sorin@gmail.com
The On-line journal Modelling the New Europe is opened to PhD students, young researchers, academic staff interested
to promote researches and present different perspectives on the EU. The papers should provide an analysis of economic,
social, cultural and political perspectives and developments on subjects concerning the European Union
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MANAGERS’ PERCEPTIONS REGARDING MANAGEMENT
CHALLENGES AND THE DEVELOPMENT OF ROMANIAN SMES.
SELECTED FINDINGS FROM 2012-2015
Andreea IBĂNESCU
Danis Consulting S.R.L., Cluj-Napoca, România
andreea.ibanescu@danis.ro
Research interests: CSR, organizational development
Nicoleta Dorina RACOLŢA-PAINA
Associate Professor, PhD
Faculty of European Studies
Babeş-Bolyai University Cluj-Napoca, România
nicoleta.paina@euro.ubbcluj.ro
Research interests: organizational management, strategic management
Dan IONESCU
Danis Consulting S.R.L., Cluj-Napoca, România
dan.ionescu@danis.ro
Research interests: leadership and organizational development
Abstract: The importance of small and medium sized enterprises (SMEs) to the economy of Romania is fully
demonstrated by indicators such as the number of enterprises, the number of employees, and the value added
generated by this sector. If the level of the value added and the rate of employment are taken into account
(both lower in 2013 than in 2008, when the financial crisis started), it may be stated that the recovery of this
sector has not yet been accomplished. However, this article, focusing on the SMEs business environment in
Romania, argues that this sector is slowly but steadily improving its performance. By investigating SMEs
management practices as perceived by their managers, primary quantitative research was employed in order
to collect data through four online annual surveys addressing Romanian SMEs throughout the period 2012-
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2015. Secondary research was also used in order to outline frames of reference describing the national
context of business development. The findings of this paper highlight two dimensions of Romanian SMEs
one at the organizational level (aspects related to perceived organizational performance) and one at the
individual level (particular attributes of people with leadership positions). From a practical standpoint, our
empirical findings are relevant for both academics and practitioners who are interested in Romanian SMEs
practices. The study is particularly valuable as it identifies trends in the evolution of Romanian SMEs
management practices, as reported by their managers in the post economic crisis context (2012-2015).
Keywords: Romanian SMEs, management practices, leadership challenges, subjective ratings
1. Perceived Business Environment in Romania
The sector of small and medium sized enterprises (SMEs) plays an important role
in the economy of Romania, one that has been demonstrated by several indicators
(according to values estimated in 2013), such as the number of enterprises (99.7% versus
99.8% in the case of the EU-28 average), the number of employees (66.7% of the total
number of employees, the EU-28 average being 66.9%) and the value added generated by
this sector (49.4% of the total value added versus 58.1% which is the EU-28 average)
(European Commission, 2014a). The economic crisis (which started in 2008) has had a
tremendous negative effect on the European SMEs sector, the major influences on SMEs
being a very high drop in demand for goods and services and a restricted access to
financial resources (in terms of financial loans). From the perspective of SMEs, Romania
is part of the group of very weak performers (along with another nine countries from the
EU), according to the following indicators: the level of value added in 2013 by SMEs in
the non-financial business sector (17% lower than in 2008 versus the EU-28 average that
increased with 1%) and the employment rate (down by 7% in 2013 relative to 2008, while
the EU-28 average decline was 2.6%) (European Commission, 2014b).
This article focuses on SMEs business environment in Romania and SMEs
management practices as perceived by their managers. The paper has two main parts: a
theoretical one, which briefly presents the SMEs business environment and entrepreneurial
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culture in Romania, and a practical one. The latter is a primary quantitative research, based
on data collected through four online annual surveys, during 2012-2015. The data are used
to analyze the evolution of two dimensions of Romanian SMEs one at the organizational
level (aspects related to perceived organizational performance) and one at the individual
level (particular attributes of people with leadership positions). Our research question is
“How Romanian SMEs have evolved after the economic crisis and what is their current
situation, according to their managers?”
The SMEs’ performance is highly influenced by the entrepreneurship culture and
by the business environment, as well as by specific characteristics of SMEs, such as the
closeness to customers and a flexible and informal environment, the openness to risk-
taking and to trying new ways of working, and the focus on incremental innovation rather
than on radical innovation (Laforet and Tann, 2006; Oke et al., 2007; Forsman and
Rantanen, 2011).
From the perspective of the entrepreneurial culture, Romania is characterized by
low tolerance to failure. Business failure in Romania is perceived: as a barrier for future
business projects (according to 37% of the respondents in 2014 versus 34% in 2013), as a
failure in career (according to 17% of the respondents in 2014 versus 24% in 2013), or as
the lack of skills needed to be an entrepreneur (according to 11% of the respondents in
2014 versus 24% in 2011) (EYGM Limited, 2015, 2013). However, the same studies
indicate an increase of the percentage of respondents that consider business failure as a
learning opportunity (from 5% in 2013 to 29% in 2014); therefore, we consider that there
is an improvement of this dimension of entrepreneurial culture in Romania.
The order of the importance of motivational factors when it comes to Romanian
entrepreneurs is as following: necessity (40.45% of the respondents in 2013, 35.9% in
2012 and 48.65% in 2011), and mixed motives - necessity and opportunity (24.15% of the
respondents in 2013, 29.25% in 2012 and 13.8% in 2011) (Nagy et al., 2014). According to
the same source, the opportunity motives (such as an increased income and independence)
register lower values (35.31% of the respondents in 2013, 34.09% in 2012 and 36.50% in
2011). Therefore, necessity or mixed motives determine the set-up of companies by
Romanian entrepreneurs. In comparison to the EU entrepreneurs, Romanian entrepreneurs
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seem quite similar (43% of the respondents are opportunity driven versus 49% in 2014)
(EYGM Limited, 2013, 2015).
According to the CNIPMMR4 (2014) as cited by Anghel (2014), in Romania the
economic environment is perceived by SMEs managers as unfavorable to business
development (by 39.20% of the respondents in 2014, 43.38% in 2013, 54.45% in 2012,
69.61% in 2011 and 78.13 in 2010) and permissive or neutral (by 44.17% of the
respondents in 2014, 41.28% in 2013, 33.74% in 2012, 22.66% in 2011 and 17.96 in
2010). By looking at the above data, it can be seen that there are slightly positive changes
in SMEs managers’ perception of economic environment, in the last five years. On one
hand, this may seem positive, since it indicates a rise of the percentage of SMEs managers
who perceived the business environment as favourable; on the other hand, it may be a
negative sign of the general business environment, generally perceived as either
unfavorable or, at most, permissive or neutral to business development.
The perceived business opportunities for SMEs in Romania are: the increase of
sales on the domestic market (63.48% of the respondents in 2014, 64.67% in 2013 and
74.08% in 2011), the assimilation of new products (60.93% of the respondents in 2014,
50.75% in 2013 and 48.27% in 2011), entering new markets (42.77% of the respondents in
2014, 44.40% in 2013 and 47.58% in 2011), the use of new technologies (30.66% of the
respondents in 2014, 27.37% in 2013 and 28.03% in 2011), new business partnerships
(30.27% of the respondents in 2014, 26.93% in 2013 and 28.54% 2011), the increase of
exports (9.75% of the respondents in 2014, 7.32% in 2013 and 7.28% in 2011), and
obtaining grants (7.65% of the respondents in 2014, 11.31% in 2013 and 15.12% 2011),
according to the CNIPMMR (2014) as cited by Banila (2014), CNIPMMR (2013, 2011).
On the basis of the above data, it could be stated that Romanian SMEs are mainly focused
on domestic markets and on the introduction of new products; a lower level of attention is
paid to innovation and internationalization. According to the above mentioned sources, the
4 The National Council of Small and Medium Sized Private Enterprises from Romania is a national
employers’ association that publish annually the White Paper of SMEs (that contains results of surveys
conducted with Romanian SMEs managers).
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main (perceived) difficulties faced by SMEs in Romania are: excessive taxation (58.06%
in 2014, 54.25% in 2013 and 48.44% in 2011), inflation (55.45% in 2014, 50.27% in 2013
and 67.77% in 2011), the reduction of domestic demand (55.39% in 2014, 70.08% in 2013
and 67.77% in 2011), bureaucracy (45.70% in 2014 and 41.39% in 2011), excessive
administrative controls (44.55% in 2014 and 31.15% in 2011), unfair competition (40.92%
in 2014), and corruption (32.25% in 2014). By analysing these results, it seems that the
main difficulties faced by SMEs in Romania are related to tax and regulation.
In this context, in which the Romanian business environment is perceived as a
threat to SMEs, managers have a difficult task. The SMEs managers’ activity is highly
influenced by several specific characteristics of this type of companies, such as limited
resources (money, time, and people), a lesser number of formal mechanisms and practices
comparing to larger organizations and a shortage of trained and experienced staff.
Therefore, the assessment of SMEs managers’ perspectives regarding several management
practices would add valuable information about this important sector of economy.
2. Methodology
Aim of the study: The aim of the present study is to investigate Romanian SMEs
practices, based on managers’ perceptions.
Research question: Specifically, the study analyzes the evolution of two sets of
variables one at the organizational level (aspects related to perceived organizational
performance) and one at the individual level (particular attributes of people with leadership
positions) related to Romanian SMEs between 2012-2015. Therefore, we are interested
in finding out how Romanian SMEs have evolved after the economic crisis and what is
their current situation, according to their managers.
Research objective(s): Considering the aim of the study and the research questions,
the following research objectives are proposed: (1) to investigate key Romanian SMEs
management practices, as reported by their managers, and (2) to identify trends in their
evolution, especially in the post economic crisis context (2012-2015).
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Design: Taking into account the research objectives, this primary research study is
based on a quantitative observational design. Specifically, two types of variables were
measured: (1) aspects related to perceived organizational performance (perceived impact of
the general economic climate on organizations, organizational changes encountered in the
previous year, main challenges faced by organizations in the previous year, strategies
employed in order to overcome specified challenges), and (2) particular attributes of
people with leadership positions in organizations (perceived stressors and motivators for
managers’ performance, essential qualities for a managerial position).
Participants: The data pool was selected from a national survey investigating
Management Challenges and the Development of Romanian Organizations, conducted
yearly by Danis Consulting, a management-consultancy firm from Cluj-Napoca, Romania,
with the support of Babeş-Bolyai University (Danis Consulting, 2015; 2014; 2013; 2012a).
The Annual Survey (Danis Consulting, 2015; 2014; 2013; 2012a) is addressed to people
with leadership position in various private organizations in Romania, irrespective of their
size and field of activity. Since 2007, Danis Consulting has developed their own database
of Romanian organizations, at the national level, as potential respondents for this research
(based on public national databases). For the present study, only participants from SMEs
(up to 250 employees) were selected from the Annual Survey 5th-8th Editions, conducted
yearly between 2012-2015. Specifically, there were: 86 participants in 2012, 220 in 2013,
112 in 2014, and 113 in 2015 respectively. In addition, results from a previous study
(targeting Romanian SMEs immediately after the economic crisis and investigating the
same sets of variables; Palade et al., 2011) were also integrated in the analysis, as a
reference point for comparing previous and present results. Participation was entirely
voluntary. In all editions participants’ roles ranged mostly from top management positions
top/ general managers/ CEOs/ presidents (47.5% of respondents in 2015; 57% in 2014;
74.9% in 2013; 60.2% in 2012) to middle and line management positions department
managers (29.7% in 2015; 22.5% in 2014; 12.2% in 2013 and 30.2% in 2012) and line
managers (12.2% in 2015; 0.7% in 2014; 2.7% in 2013 and 6.3% in 2012); approximately
10% of respondents from each study’s edition had non-managerial positions.
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Instruments: The questionnaire was developed by Danis Consulting, with the
support of academics from the partner university. It addresses several areas regarding
organizational life and management practices in Romanian companies. Specifically, it
includes items refering to perceived influence of the economic climate, key aspects of
organizational life (organizational changes, current challenges, strategies employed in
order to overcome specified challenges etc.), management characteristics (leadership
attributes, needs for development, motivators, stressors etc.), as well as demographic
characteristics of organizations (size, field of activity etc.) and of respondents (age, sex,
professional experience, current position in the organization etc.). The survey was
modified from one edition to the next (on average, it had 29 items), both in order to
improve the measure and to adapt it to specific trends in management research (for
instance, in 2013 and 2014 items concerning the use of online communication means were
added to the questionnaire). However, there is a set of items, included in the present
research, that has been consistent across all editions, in order to identify trends in the
dataset and investigate the evolution of Romanian organizations; they refer to: perceived
impact of the economic climate, organizational changes, current challenges and the
startegies emoloyed to overcome them, stressors, motivators and essential qualities of
people with leadership positions.
Procedure: The questionnaire was administered via an online platform designed for
different types of research studies. Participants were selected from Danis database, and the
invitation for participation, with the link to the survey, was sent via email.
Data analysis: Firstly, frequency distributions were analyzed for all items of the
questionnaire. In addition, trends in the dataset (from 2012 to 2015) were identified. In
order to preserve the accuracy of the data, it should be noted that the percentages presented
here are not adjusted for sample size (considering that sample sizes were different every
year and, sometimes, they were different between items).
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3. Results concerning the evolution of Romanian SMEs management practices
between 2012-2015
3.1. Aspects related to perceived organizational performance
Firstly, we were interested in the perceived impact of the economic climate on
organizations, with its political, social, and macro-economic uncertainties. As shown in
Chart 1, most respondents consider their companies’ performance just as expected.
However, it should be noted that in 2013 and in 2014, the percentages are below the results
in 2011; however, a significant increase appears in 2015, when over 50% of respondents
consider that their organizations’s results matched their initial expectations. It seems that
the economic crisis seriously affecting organizations during 2008-2011 (Palade et al.,
2011) has gradually decreased its negative influence: only 17.7% of respondents report
having achieved results below expectations in 2015.
Chart 1. Respondents’ perceptions regarding the reached versus the expected level of
organizational performance in the previous year (measured yearly during 2012-2015)
We also investigated the types of organizational changes encountered by
organizations in the previous year (Chart 2). Strategic changes (related to markets,
products, or other similar activities) turn out to be the most frequent in all four years
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examined (mentioned by 42% up to 48.6% of respondents). In addition, some participants
mention changes related to organizational systems and procedures (17% - 23.9%), as well
as related to organizational structure and functions (19.6% - 26.7%). Interestingly, a
negative trend appears with regard to layoffs and restructuring in the last 3 years: whereas
in 2013, 26.8% of respondents select this option, only 10.6% report it in 2015. Lastly, even
though changes in top management are mentioned by 14% of respondents in 2012,
between 2013-2015 the results are quite similar (on average, only 8% of participants report
it).
Chart 2. Types of organizational changes experienced by respondents in the previous
year (measured yearly during 2012-2015)
With regard to the main challenges faced by organizations in the previous year
(Chart 3), the top three are related to workforce quality, cash flow management, and cost
reduction. However, whereas in 2012, workforce quality was the most significant
challenge, reported by 79.1% of respondents (since then evolving a negative trend), in
20155 it is overtopped by the challenge of developing new products and services, which is
5 It must be noted that during 2012-2014, the survey item referring to organizational challenges included a
Likert scale (1 not at all; 7 to a high extent) in order for respondents to select the extent to which each
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affecting 40% of respondents. It has been shown before, however, that Romanian SMEs
are oriented towards domestic markets and on the development of new products
(CNIPMMR, 2014 as cited by Banila, 2014 and CNIPMMR 2013, 2011). Although
perceived as an opportunity of the business environment, offering new products seems to
be challenging for the respondents, probably as a result of their low tolerance for failure
associated with the entreprenuerial culture in this country (EYGM Limited, 2015; 2013).
Consequently, although the business environment is perceived to offer opportunities
related to the assimilation of new products and services (CNIPMMR, 2014 as cited by
Banila, 2014 and CNIPMMR 2013, 2011), actually offering them seems to be difficult for
Romanian SMEs managers, who are rather risk aversive (a cultural trait of the Romanian
people; David, 2015). Moreover, following the results from the previous study on
Romanian SMEs during the economic crisis of 2008-2011 (Palade et al., 2011), it seems
that employee attraction and retention are increasingly challenging in the present business
environment, where workforce mobility has reached an unprecedented rate.
option presented was a significant challenge for their organization in the previous year. In 2015, the item was
rephrased and participants were asked to identify top 3 most significant challenges that they faced in the
previous year.
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Chart 3. Types of organizational challenges experienced by respondents in the
previous year (measured yearly during 2012-2015)
Lastly, we were interested in the strategies employed by organizations in order to
overcome perceived challenges (Chart 4). The focus on core business and reengineering
seem to have an evolving negative trend (from 68.6% to 39.8%; and from 24.4% to 15%
respectively). Cost reduction strategies seem to be preferred in 2012 and in 2014 (when
62.8% and 58% of respondents selected this option), but, in 2015, only 45.1% of
participants report it. Moreover, offering new products and services and looking for
strategic partners have evolved a positive trend in the last 3 years: in 2015, 52.2% and
41.6% of respondents report their organizations have used these strategies in order to
overcome economic challenges. It was mentioned before that although perceived as an
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opportunity of the business environment (CNIPMMR, 2014 as cited by Banila, 2014 and
CNIPMMR 2013, 2011), offering new products seems to be challenging for respondents,
probably as a result of their low tolerance for failure associated with the entreprenuerial
culture in this country (EYGM Limited, 2015; 2013). At this point, however, we can infer
that more and more efforts are made by Romanian SMEs managers to overcome their
cultural biases in order to capitalize on perceived business opportunities. These results may
support the idea that Romanian managers are taking steps towards broadening their
business strategies.
Chart 4. Types of strategies employed by organizations in response to perceived
challenges in the previous year (measured yearly during 2012-2015)
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3.2. Characteristics of people with leadership positions in Romanian SMEs
When it comes to people with leadership positions, it is of paramount importance to
identify stressors affecting managers’ performance (Chart 5).
Chart 5. Perceived workplace stressors (measured yearly during 2012-2015)
In Romanian SMEs, lack or delay of relevant information appears to be the most
significant source of stress: even though there was a decline from 2012 to 2013 (from
39.5% to 25.5% of participants reporting it), over the last two years the results remain
similar (29.5% in 2014 and 29.2% in 2015, respectively). In addition, high levels of
responsibility represent another stressor that affects managers from Romanian SMEs,
although to a somewhat lesser degree in 2015 (only 22.2% of respondents mention this
option, whereas in 2012 it is reported by 27.9% of participants). Workload seems to have
relatively the same impact during 2012-2015: on average, 20% of respondents perceive it
as a significant stressor. Interestingly, games of power inside the organization are
perceived to a much greater extent in 2015, as mentioned by 15.9% of respondents, as
compared to the previous years, when, on average, it is reported by only 7% of
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participants. Another key finding is that both job insecurity and income have dramatically
reduced their influence: in 2015, only 2.7% of respondents consider job insecurity causes
stress, and only 14.2% of them perceive their income as a source of stress. Therefore, it can
be inferred that current causes of stress at work are related to (high) levels of responsibility
or (lack of) access to information; job and financial insecurity are, in the post economic
crisis context, no longer so significant. Moreover, considering the national culture and the
historical context of Romania, it seems natural that managers perceive high levels of
responsibility as stressful (consistently throughout the period investigated): while in the
past (during the communist era), roles and work tasks were clearly defined from the top, in
the present managers are required to take the initiative, and to assume multiple and flexible
roles; this shift in perspective can be difficult for respondents.
Apart from stressors, motivators supporting managers’ performance are also
important to investigate, as they can offer organizations an insight into practices that are
worth being supported and even adopted from scratch in order to create a positive working
environment, in which employees can both reach professional targets and find meaning in
their work. In the case of mangers from Romanian SMEs, it appears that several factors
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contribute to their work motivation (Chart 66).
Chart 6. Perceived workplace motivators (measured yearly during 2012-2015)
Specifically, finding meaning in one’s work is reported as such by the majority of
respondents throughout the whole period investigated (on average, 80% of participants). In
addition, opportunities for development are relevant, on average, for 70% of respondents,
and reaching personal targets for 62% of them. Appreciation from coworkers and a flexible
work schedule seem to have a similar importance, as they are reported, on average, by 52%
and 50% of participants in the four editions of the study. It is worth mentioning that,
according to 54% of respondents, appreciation from one’s supervisor and the supervisor’s
leadership style have a relatively greater significance in 2015, as opposed to the previous
years. Lastly, is seems that opportunities for promotion are, once again in 2015, strong
motivators, reported by 46% of participants.
6 It must be noted that percentages are influenced by sample size, which differed significantly in 2013 (220
participants answered this question) from the rest (on average, 72 respondents answered this question).
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Another key area of research refers to what it takes to have a top management
position, in terms of skills, abilities, and attitudes, as perceived by Romanian managers.
As shown in Chart 7.1. and 7.2., strategic thinking and managerial decision making are by
far the most consistent qualities that respondents consider essential for such a role,
throughout the period 2012-2015.
Chart 7.1 Essential qualities for a top management position, according to Romanian
SMEs managers (measured yearly during 2012-2015)
Communication skills are also significant, even though in the last 3 years they have
been ranked by fewer participants. Surprisingly, there is a series of qualities that seem to
become increasingly more important, since the negative trend during 2012-2014 has
shifted in 2015: stress management declined from 12.8% in 2012 to 4.4.% in 2014, only to
reach 10.6% in 2015; mentoring declined from 17.4% in 2012 to 3.5.% in 2014, only to
reach 10.6% in 2015; negociation declined from 24.4% in 2012 to 3.9.% in 2014, only to
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reach 15.9% in 2015; finally, motivation declined from 25.6% in 2012 to 10% in 2014,
only to reach 17.7% in 2015. Taken together, the results point to the conclusion that there
are systematically more and more critical skills and abilities that top managers are required
to have in order to be efficient and reach organizational goals.
Chart 7.2 Essential qualities for a top management position, according to Romanian
SMEs managers (measured yearly during 2012-2015)
4. Conclusions and discussion
It can be inferred that SMEs, an important sector of the Romanian economy, are
still in the process of recovery after the economic crisis if the level of the value added by
this sector and the employment rate in this sector are taken into account (in both cases, the
values are lower in 2013 than in 2008). Moreover, Romanian SMEs seem to operate in a
business environment perceived as either unfavourable or permissive or neutral at most
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(according to almost 80% of Romanian SMEs managers investigated; CNIPMMR, 2014 as
cited by Banila, 2014). According to the same respondents, the Romanian business
environment is characterized by both opportunities (such as the increase of sales on the
domestic market and the assimilation of new products) and threats (excessive taxation,
inflation, bureaucracy and excessive administrative control).
However, the results of the present quantitative study show a more complex picture
of Romanian SMEs, as perceived by their managers. Specifically, key Romanian SMEs
management practices (as reported by their managers) were investigated, identifying trends
in their evolution in the post economic crisis context (2012-2015): aspects related to
perceived organizational performance and particular attributes of people with leadership
positions in organizations were analyzed. On the one hand, it has has been shown, at the
organizational level, that Romanian SMEs have overcome the economic crisis since the
negative trend between 2012-2014 has been replaced by an increase in the number of
organizations that have achieved results matching or exceeding their initial expectations. In
addition, strategic changes, although the most frequently experienced, have declined
during the last three years, which may account for a more stable business environment.
Moreover, the three types of organizational challenges that remain consistently significant
throughout the whole period investigated (i.e. workforce quality, cash flow management
and cost reduction) are not surprising in the case of SMEs, since they are more prone to
workforce mobility and to unsystematic and informal practices when it comes to cash flow
management. Lastly, in support of the above mentioned positive trend that Romanian
SMEs have overcome the financial crisis are the results that show most organizations have
gone from defensive business strategies (focus on core business) to expansion and
development – offering new products and services or looking for strategic partners.
At the individual level, the profile of Romanian SMEs managers seems to be a
complex one, accounting for a variety of skills, abilities and attitudes that are necessary in
order to be successful on the job. Specifically, apart from the most obvious characteristics
that are essential for a top management position (i.e. strategic thinking, managerial
decision making, communication skills), participants seem to acknowledge that these
should be supplemented by other critical skills, such as stress management, mentoring,
On-line Journal Modelling the New Europe
Issue no. 16/2015
38
negociation, or motivating others. Therefore, leadership roles are perceived as increasingly
more complex, especially since most participants report that workload, lack or delay of
relevant information and high levels of responsibilities are the most prevalent causes of
stress. Interestingly, financial and job insecurity have declined in 2015, which most likely
is related to the positive economic evolution of SMEs during 2012-2015. On the other
hand, games of power inside the organization have incresed dramatically in 2015 as a
stressor, which may be related to the increased efforts of the Romanian authorities to
reduce corruption and violations of the law. Last but not least, it seems that motivation at
work cannot be attributed to one aspect only; rather, Romanian SMEs managers report that
a wide array of factors contribute to their motivation, among which finding meaning in
one’s work, opportunities for development and reaching personal targets stand out. It
follows, therefore, that fulfilment at work involves a lot ore than just money making. This
is in accordance with a previous research study on leading organizations, conducted by
Danis Consulting (2012b), which shows that good leaders are curious, and constantly
looking to learn more; they build a strong vision that embodies their core values and are
able to instill it into others and make them adhere to a common goal.
Implications of the present study. From a theoretical standpoint, the results of the
present study offer an interesting avenue of research in order to investigate Romanian
SMEs from managers’ perspective. As key decision makers, these leaders’ perceptions and
behaviours need to be analyzed if we are to understand and even influence organizational
performance. Their expertise and experience ought to be investigated in-depth so that
bottom up theoretical models of management and SMEs practices could be developed.
This way, the state of research concerning Romanian SMEs can be advanced, particularly
on specific topics that are relevant to the local business environment.
From a practical standpoint, the results of the present study can support Romanian
managers to assess their current practices, and even improve their decision making,
identifying trends and the evolution of similar organizations in Romania. They can be used
to infer causes and relationships between various aspects of organizational life, which may
be of use not only for managers themselves, but also for business, management and
organizational development consultants as well.
On-line Journal Modelling the New Europe
Issue no. 16/2015
39
Limitations. As any other research, this study is not without limitations. Although a
mixed-method approach is ideal, the present study used only one data collection method
managers’ subjective ratings, based on predefined questionnaire items. This constraint was
a result of the fact that large, national samples were used; in addition, participants’ role
made it diffcult for them to allocate much time for aswering the research questions.
Therefore, an approach that would minimize particioants’ effort and maximize the data
collection process was employed.
Future research areas. Future research studies should continue investigating the
evolution of Romanian SMEs in the same regard, outlining trend every four years. In
addition, future studies may also employ more complex research designs, such as a multi-
trait multi-method approach (investigating a larger set of varibles through an array of
methods). In this regard, qualitative research methods would be particularly relevant, since
most management research is quantitative and, therefore, limited. Last but not least, an
interesting avenue for future research would be developing joint research groups from
different countries of the EU in order to investigate the profile of Romanian SMEs in
comparison to other European SMEs, particularly since the EU is strongly supporting this
sector. This way, benchmarks and frames of reference could be developed in order for
SMEs to assess and improve their practices, taking into account the broader European
business trends.
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Article
Full-text available
Purpose – Our research highlights main SMEs managerial responses to economic crisis, focusing on the local Romanian picture (2008-2011). Methodology/approach – We used secondary and primary research and commenced with analysing the specialised management literature on behavioural and decisional patterns during economic turmoil. Qualitative and quantitative research was conducted to assess Romanian organizational realities: qualitative data were collected through observation and semi-structured interviews, while quantitative results were gathered through four online annual surveys (2008-2011). Findings – To reduce the impact of the world crisis, managers turned to cost reductions, tapped new markets, or developed new products, though overall, reactions from local SMEs seem rather slow. Research limitations/implications – Are given by the subjectivity in managers’ assessments of their organisations and the business environment. Also, the first two editions of the study focused on the Transylvanian region alone; however, we have extrapolated the results of all studies and drew conclusions at national level. Practical implications – Our paper presents a radiographic image of management practice during economic turmoil – focused on Romanian SMEs. Originality/value – The key contribution is the practical approach and the consistency of the methodology. General theories on the SMEs managers’ behaviour during the crisis are confirmed, while new findings shed light on Romanian specificity.
Article
Purpose – This paper aims to focus on innovation development in enterprises with fewer than 50 employees. It explores differences in innovation capacity and in the diversity of developed innovations across the four enterprise size categories within the small manufacturing and service enterprises. Design/methodology/approach – The empirical evidence is based on quantitative data gathered through an e-mail questionnaire, which yielded 708 responses from the representatives of Finnish small enterprises. The analysis is based on non-parametric tests. Findings – The findings display a broad diversity of innovation patterns among small enterprises. The evidence identifies differences and similarities in innovation capacity and innovation development across the different size categories within the manufacturing and service sectors. Finally, a summary of the characteristics of small enterprises as innovators across size categories is provided. Research limitations/implications – This paper studies innovation patterns based on innovation capacity and developed innovations. There is a need to study how innovation capacity has been transformed into innovations; thus, the innovation process should be included in the examination. Practical implications – At a public policy level, the results of this study give ideas for encouraging innovation development in small enterprises. The evidence suggests that there are significant discrepancies between the enterprises as innovators. It should be acknowledged that small enterprises comprise several divergent target groups for policy making. Originality/value – This study makes a contribution to academic literature by crystallizing the relationship between the size of an enterprise and innovation development. Applying these results will provide more specific questions for studying the nature of innovation development in small enterprises.
Purpose – The purpose of the paper is two-fold: one, to focus on a specific industry – the manufacturing industry. In response to recent criticisms research in small to medium-sized enterprises (SME) is not sector/industry-specific, consequently the advice for these companies was too general and not of any particular help. Two, the research addresses innovation management in terms of the interrelationship among the three elements of a business: product, process and ways of working, which were often explored in isolation in the literature. Similarly, a definition of innovation was established and a systematic approach to company innovativeness was adopted. Design/methodology/approach – A survey of 1000 West-Midlands-based manufacturing SMEs (SMMEs) was conducted. Ten indicators were used to measure company innovativeness. The top 20 per cent firms were compared with bottom 80 per cent firms in terms of product innovation management, process and work organisation. Means of responses were compared for two sets of companies. T-tests were performed to draw some conclusions on the results. Discriminant analysis was used to determine the factors distinguishing more and less innovative companies. Findings – The results showed SMEs in the manufacturing industry are similar to SMEs in other industries. The drivers of SMME innovativeness were: market anticipation, customer focus and commitment of CEO/owners in NPD, processes and new ways of working. Innovation was part of the business strategy and goal-oriented. However, innovation in SMME was based more around developing new ways of working than new product innovations. The use of systems/technology and process innovation was not uniform amongst more and less innovative companies. The main constraints of SMMEs were customer dependency, skills and knowledge acquisition through training, poor learning attitude and networking because of their tradition of being insular and autonomous. Originality/value – The paper provides useful information on innovation management in small manufacturing firms
Article
Purpose The objective of this study is to explore the types of innovation that are predominant in UK SMEs, whether they are predominantly radical or incremental, and to investigate the impact of these innovations on performance. Design/methodology/approach A web‐based survey instrument was used to administer survey questionnaires to a sample of UK SMEs in manufacturing, engineering, electronics, information technology and telecommunications industries. The response rate was 13.8 percent. Relevant statistical analytical techniques including regression for analysis was then used. Findings It is found that the SMEs tend to focus more on incremental than radical innovations and that this focus is related to growth in sales turnover. Practical implications It is not such a bad idea for SMEs, particularly those operating in high technological industries, to focus on incremental innovations as these are actually related positively to sales turnover growth. Originality/value An investigation of the types of innovation that SMEs pursue is pioneering in the field as previous studies of this type have been based on large firms. The contention that the raison d'etre of SMEs is to develop radical innovations is not supported empirically, at least for the sample of SMEs. In addition, it is found that the age of an SME is not related to its focus on either incremental or radical innovation. These are the contributions of this paper.
Carta Albă a IMM-urilor din România: Aşteptări şi provocări
  • Silviu Banila
  • Marian
BANILA, SILVIU MARIAN (2014) Carta Albă a IMM-urilor din România: Aşteptări şi provocări. Available from: http://www.manager.ro/articole/analize/carta-alba-a-immurilor-din-romania-asteptari-si-provocari-pentru-2014-74939.html [Accessed
Entrepreneurs Speak Out. Entrepreneurship Barometer Romania
  • Eygm Limited
EYGM Limited (2013) Entrepreneurs Speak Out. Entrepreneurship Barometer Romania 2013. Available from:
Antreprenorii vorbesc. Barometrul antreprenoriatului românesc
  • Eygm Limited
EYGM Limited (2015) Antreprenorii vorbesc. Barometrul antreprenoriatului românesc 2015, Ediţia a 3-a. Available from:
SBA Fact Sheet Romania
European Commission (2014a) 2014 SBA Fact Sheet Romania. Available from: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performancereview/files/countries-sheets/2014/romania_en.pdf [Accessed 01.05.2015]
Aprecieri asupra sectorului IMM din România şi câteva recomandări
  • Florin Anghel
ANGHEL, FLORIN (2014) Aprecieri asupra sectorului IMM din România şi câteva recomandări. Available from: http://www.slideshare.net/florin_anghel/aprecieri-asuprasectorului-imm-din-romnia [Accessed 01.05.2015]
The Influence of the Business Environment on Small and Medium Enterprises
  • Iulian Braşoveanu
  • Viorel
  • Petronela-Evelina Bǎlu
BRAŞOVEANU, IULIAN VIOREL and BǍLU, PETRONELA-EVELINA (2014) The Influence of the Business Environment on Small and Medium Enterprises. Journal of Knowledge Management, Economic and Information Technology, IV(2), pp. 1-13.