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Management practices and small firms’ productivity in emerging countries
Abstract
Purpose
The purpose of this study is to explore the potential for increasing the productivity of small firms from emerging countries by enhancing their management practices.
Design/methodology/approach
The link between four types of management practices and labor productivity at the firm level is tested through a sample of 13,566 small firms from 15 emerging countries. Subsequently, the policy options available to upgrade management practices in such firms are analyzed through a systematic review of recent experiences in 12 emerging countries.
Findings
The econometric results confirm that the adoption of good management practices has a significant effect on labor productivity, especially when several management practices are combined. This effect is context-dependent, with a higher intensity in lower-middle income countries and in manufacturing firms. The paper also outlines the different components of successful policy programs to support the adoption of good management practices.
Research limitations/implications
On the one hand, the challenge of isolating the causal relationship between management practices and firm productivity affects the econometric part of this study. On the other hand, the analysis of policy experiences is purely explorative and does not attempt to evaluate impacts but rather to offer a general overview of policy options.
Practical implications
The paper provides practical guidance for policymakers from emerging countries in their efforts to support the adoption of good management practices by small firms.
Social implications
Improving management practices of small firms can contribute to a more inclusive development agenda by narrowing wage differentials between leading and laggard firms, while transforming informal businesses into formal ones.
Originality/value
The multi-method approach used in this study provides rich insights into the relationship between management practices and productivity of small firms in emerging countries.
... Therefore, firms need to view firm management as a non-financial source of capital, and this capital must be invested in the same way as labor, capital, and technical inputs (Bloom et al., 2014). However, while most empirical evidence is interpreted for medium and large firms (Bloom et al., 2011;Bloom et al., 2012a,b;Bloom et al., 2013a,b;Bloom et al., 2013a,b;Bloom et al., 2015a,b;Bloom et al., 2015a,b;Bloom & van Reenen, 2007;Nguyen et al., 2022), study on management practice in SMEs context is still limited (McKenzie & Woodruff, 2017;Salazar-Elena & Guimón, 2019). ...
... These results are in agreement with theories of management (Drucker & Maciariello, 2008;Fayol, 2016;Mintzberg, 1990;Taylor, 1919). However, empirical evidence for SMEs is very limited, except for the results of McKenzie & Woodruff (2017) and Salazar-Elena & Guimón (2019). Therefore, to provide more evidence on management practices, the current paper tested a hypothesis on the association between business quality and business performance of SMEs in the trade and service sector in the Vietnamese context. ...
... This implies that management should be viewed as an endogenous factor chosen by a firm and compensated fairly for its contribution to productivity (Bloom et al., 2014). This result strengthens the role of business practice for SMEs and is consistent with the conclusions of McKenzie & Woodruff (2017) and Salazar-Elena & Guimón (2019). The activities of owners/managers as marketing practices, input control practices, costing and record-keeping practices, and financial planning practices will help them have a better view of the market (e.g., customer, competitor, supplier) and have a clear view of the firm's business status (e.g., changes in costs and sales, reasons for customers to leave the firm, or proactive responses to adverse business shocks). ...
The paper aims to measure and explain the business activities of small and micro enterprises (SMEs) in Vietnam. The paper is approached based on management practice perspectives in enterprises to test the hypothesis about the relationship between business practices and the outcome of SMEs, simultaneously determining the factors affecting the business practice level of owners/managers of the SMEs. The data were collected from two different sources: (i) face-to-face interviews with 168 owners/managers about their application of business practices, and (ii) business outcomes of the firms collected from corporate income tax reports provided by tax authorities. The results show mean business practice scores of the firms of 15,87 (out of 26), which has a positive correlation with the profit of the firms. Furthermore, it shows that business practice scores depend on the competitive level, education of managers, and type of business. This paper also highlights the importance of the competitive effect, human capital, and types of business on business practices. Finally, implications and ideas for future research are suggested.
... Velu and Wit (2020) pointed out that organisational factors greatly explain medium businesses' productivity. In the study conducted by Guimon and Elena (2019), they observed that good management is a catalyst for the productivity of businesses. Caabrer-Borras and Rico (2020) highlighted a positive effect between knowledge management and organisational factors. ...
... Various scholars from previous studies have used different determinants to test the relationship between intangible resources and the productivity of businesses. Sengaloum (2010), Okpara (2020), Guimon and Elena (2019) and Cebrer-Boras and Rico have used the following intangible resources knowledge and skills (Ir1), stakeholders' relationship (Ir2), reputation (Ir3), information (Ir4), marketing skills (Ir4), entrepreneur practices (Ir5), management practices (Ir6) and capabilities (Ir7) in explaining the productivity of MSMEs. A ve Likert scale was used to measure the constraints ranging from strongly disagree to strongly agree. ...
Purpose:
The study sought to analyse the determinants of business productivity among Micro, Small and Medium Enterprises (MSMEs) in Rwanda. The productivity of MSMEs is still a major challenge in Rwanda, where most of the MSMEs do not exceed five years of existence.
Methodology
The study adopted a quantitative approach where primary data was collected using a closed-ended questionnaire administered to 399 business owners/managers. Structural equation modelling was used to test the determinants of MSMEs' productivity in Rwanda.
Findings
Data collected from the survey indicated that there is a significant relationship between physical, human, technological resources and productivity of micro small and medium enterprise. The results further highlighted that stakeholder relationship, reputation, information, marketing skills entrepreneurship practices and business productivity.
Originanlity and Value
The current study contributes to the current literature by highlighting the determinants of both the tangible and intangible resources that enhance the productivity of MSMEs which can help policymakers to design policies to improve the productivity of MSMEs.
JEL: M`13
... There is much evidence that good management practice is an important factor that positively correlated to businesses' productivity around the world (e.g., Bender et al., 2018;Bloom et al., 2019;Bloom, Genakos, et al., 2012;Bloom, Liang, et al., 2015;Bloom, Propper, et al., 2015;Bloom, Schweiger, & Van Reenen, 2012;Brozeit et al., 2016;Green et al., 2009;Heyman et al., 2014;McConnell et al., 2009McConnell et al., , 2013Ohlsbom & Maliranta, 2019;Salaza-Elena & Guim on, 2019). However, little evidence on the link between management practice and performance of Vietnamese firms has been drawn. ...
... Bloom and Van Reenen (2007) indeed showed that good-managed firms would have on average productivity, profitability, competitiveness, and survivability better than their poor-managed counterparts. Subsequent studies also found that management practices play a key role in business organizations (Bloom et al., 2019;Bloom, Eifert, et al., 2013;Bloom, Liang, et al., 2015;Bloom, Propper, et al., 2015;Brozeit et al., 2016;Delfgaauw et al., 2012;Green et al., 2009;Heyman et al., 2014;Lemos & Scur, 2012;McConnell et al., 2009McConnell et al., , 2013Ohlsbom & Maliranta, 2019;Salaza-Elena & Guim on, 2019). To expand the literature, a hypothesis to test the impact of management quality on performances of the Vietnamese firms is as follows. ...
There is much evidence that good management practice is an important factor that positively affects firms' productivity around the world. However, little evidence on effect of management practices on Vietnamese firms has been drawn. This paper provides results of such a study. The quality of management activities is found to be poor and be positively related to the turnovers of firms, the ages of firms, the numbers of employees, investment capital, and human capital. Also, management practice scores change significantly according to the influencing factors including level of competition, degree of decentralization, types of ownership, types of customer firms are serving, advancement of export market, and types of product firms are selling.
... Desde esta perspectiva, el menor uso, o aplicación sistemática, de estas prácticas de gestión entre las empresas más pequeñas podría atribuirse a la falta de conocimiento sobre sus beneficios o mayores dificultades para adoptar nuevos métodos. (Bloom et al., 2016) Los estudios internacionales muestran que el nivel de aplicación de las PGAD es mayor en las grandes empresas que en las pymes (Aradanaz-Badia et al., 2017;Forth y Bryson, 2018;Salazar y Guimón, 2019). La investigación en el Uruguay muestra el mismo comportamiento: las pymes tienen en general menor aplicación sistemática de las PGAD que las grandes empresas (Miles et al., 2023). ...
Investigaciones internacionales y nacionales muestran que la implementación sistemática y metódica de un conjunto de prácticas de gestión de alto desempeño está asociada a mejores resultados empresariales en empresas de todo tipo y tamaño. Este trabajo analiza los perfiles organizacionales de las pymes que muestran una aplicación más sistemática de las prácticas de gestión, e indaga el impacto de dichos perfiles en los resultados empresariales. Para ello utiliza una muestra representativa de empresas uruguayas obtenida de la Encuesta Anual de Actividad Económica del Instituto Nacional de Estadística, empleando la técnica de regresión de árbol de decisión. Se constata que la aplicación más sistemática de las prácticas de gestión de alto desempeño en las pymes uruguayas está vinculada a la gestión del conocimiento, como el uso intensivo de las tecnologías de la información y comunicación, el nivel de formación del personal, el grado de internacionalización y la práctica de certificación. A su vez, estos perfiles están asociados a mejores resultados empresariales. Se concluye que el apoyo a la formación en las pymes, la capacitación operativa tanto del personal de dirección como del personal en general aparecen como aspectos muy importantes de las políticas de fortalecimiento de las pymes que mejoran sus prácticas empresariales y sus resultados. La replicación de la investigación con datos longitudinales, así como la incorporación del estudio de casos en diseños experimentales u otros, puede permitir profundizar en la exploración de la causalidad y en las formas de avance en las prácticas de gestión.
Background: This study examines the influence of Green Business Strategy on the performance of small and medium enterprises (SMEs) with a particular focus on its mediating role in the relationship between strategic orientation and performance, as well as its implications for long-term sustainability.Aim: This study seeks to provide empirical evidence on the strategic role of green business as a mediating factor in the relationship between environmental orientation and the performance of SMEs.Setting: The continuously evolving competitive landscape in the digital era has made the ability to generate innovative ideas a crucial aspect for SMEs. Therefore, understanding the role of Green Business Strategy as a mediator in the relationship between environmental orientation and SME performance has become increasingly important.Methods: This study examines 103 SME participants in East Java, Indonesia, employing a quantitative research approach. Data were collected through a semi-structured questionnaire. Mediation analysis and t-tests were conducted using SmartPLS 3.0 to trace relationships within the dataset.Results: The empirical findings indicate that Green Business Strategy serves as a mediating factor in the relationship between environmental orientation and SME performance in East Java, Indonesia.Conclusion: The study on SMEs in East Java is limited by data availability. A comparative analysis with publicly traded firms and longitudinal data could strengthen findings. Future research should include SMEs from both Asian and European contexts for more comprehensive policy implications.Contribution: The study suggests that SMEs can adopt a Green Business Strategy encompassing environmental orientation, environmental performance, top management environmental awareness and SME performance to achieve long-term sustainability and enhanced business.
Amaç: Çalışmada, işletmelerde sağladığı güvenilir bilgi ortamı bağlamında bağımsız denetim ile operasyonel verimlilik arasındaki ilişkinin araştırılması amaçlanmıştır. Yöntem: Bağımsız denetim ile operasyonel verimlilik arasındaki ilişki deneysel olmayan bir tasarımla araştırılmıştır. Çalışma kapsamında Dünya Bankası veri tabanından çekilen ikincil veri kullanılmıştır. Bu doğrultuda işletme düzeyinde işgücü verimliliği, yatırım verimliliği ve toplam faktör verimliliği hesaplamaları yapılmıştır. Verimlilik göstergelerinin bağımlı değişken, bağımsız denetimin bağımsız değişken, şirket büyüklüğü, aile şirketi olup olmama, üst yöneticinin tecrübesi ve finansmanın şirket faaliyetlerine engel olma derecelerinin kontrol değişken olduğu üç ayrı model geliştirilmiştir. Oluşturulan modeller çoklu regresyon analiziyle test edilmiştir. Bulgular: Elde edilen sonuçlar, bağımsız denetim ile işgücü verimliliği ve toplam faktör verimliliği arasındaki pozitif yönlü ilişki öngörüsünü desteklemektedir. Yatırım verimliliği ile bağımsız denetim arasında iki değişkenli analizde anlamlı pozitif ilişki olduğu görülse de kontrol değişkenleri modele dahil edildiğinde bu ilişki istatistiksel olarak anlamlı çıkmamaktadır. Özgünlük: Bu çalışmada bağımsız denetim ile operasyonel verimlilik arasındaki ilişki daha önce literatürde rastlanmayan bir açıdan ele alınmaktadır. Söz konusu ilişki bağımsız denetimin sağladığı güvenilir bilgi ortamı çerçevesinden işlenmiştir. Ayrıca bağımsız denetim ile verimlilik arasındaki ilişkinin Türkiye örneği ile araştırıldığı ilk çalışmadır.
Purpose
The main purpose of this study is to examine the impact of imported inputs on firms' productivity in selected South Asian economies, namely Pakistan, India and Bangladesh. Furthermore, this study explores the complementarity between firms' capabilities and imported inputs in an augmented productivity framework.
Design/methodology/approach
A dataset comprising 7117 manufacturing firms of selected South Asian economies was taken from the World Bank for 2013 and 2014. The empirical analysis was based on stochastic frontier models, the ordinary least square method and instrumental variable estimation techniques.
Findings
The empirical results show that imported inputs have positive and significant effects on the firms' productivity in the selected countries. Moreover, the study findings demonstrate that firms' capabilities play a complementary role in expanding the firms' production frontier.
Practical implications
The study outcomes suggest that reducing tariffs on imported inputs will enhance the firms' productivity in the selected emerging economies. However, the study further finds that the potential gain of imported inputs is conditional on the firm's capabilities. It implies that firms operating in these countries can improve their performance by allocating more resources to capabilities, such as workers’ training, management and internal R&D effort.
Originality/value
The existing literature on the subject is sceptical about the positive impact of imported inputs on firms' productivity in the case of developing countries. In this regard, the shortage of skilled labour and firms' capabilities are compelling rationales that need to be explored. Thus, the potential contribution of the study lies in explaining the moderating role of firm's capabilities operating in the selected emerging economies in the nexus of imported inputs and productivity.
A tanulmány középpontjában a mikro-, kis-és középvállalatok vállalati szintű tényezői és a javadalmazási rendszerek alkalmazása közötti összefüggések empiri-kus vizsgálata áll. Az elméleti megalapozást és a kutatási kérdés ismertetését köve-tően nagymintás elemzési eredmények bemutatására kerül sor: az 1069 magyar kis-és középvállalat vizsgálata leíró statisztikai eszközök és forward szelekciós logisztikus regresszió segítségével történt. Az eredmények azt mutatják, hogy a javadalmazási rendszerek alkalmazására 1. a menedzsmentmegoldások, 2. a mar-ketingeszközök, 3. az emberi erőforrás tényezői és 4. a külső támogatás mértéke gyakorolnak hatást. A kutatás újdonságát egyrészt az emberierőforrás-elmélet kis-és középvállalatokra történő alkalmazása adja, másrészt a tanulmány empirikus bizonyítékokkal szolgál a tématerület kutatói számára. Az összefüggések egyaránt jól hasznosíthatók a kis-és középvállalati menedzsment és emberierőforrás-gaz-dálkodás elmélete és oktatása számára. * Journal of Economic Literature (JEL) kód: O15, J33.
This community service activity is continuously carried out to develop the creativity of mothers in producing innovative and attractive products. This activity involves training and assistance in preparing financial and marketing reports. This activity was carried out in collaboration with the Sukolilo District and STIESIA Surabaya. MSMEs in Sukolilo District experienced several obstacles related to preparing financial reports, marketing that utilized social media, and other technical obstacles. After this mentoring activity, MSME managers gained several benefits, including having started compiling financial reports. Marketing training activities are carried out using Instagram social media as a means of producing products. In this activity, assistance was carried out to create an Instagram account, taking photos of products to be uploaded on Instagram, assisting in uploading product photos on Instagram accompanied by product descriptions so that they could attract consumers. This activity is carried out to improve the business carried out from the management aspect. The target to be achieved is that MSME players have financial reports that can be used to submit funds or capital to banks for business development, expand marketing networks, and increase sales.
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.
Purpose – While the born global (BG) phenomenon has been well established in the literature, studies on accelerated internationalization of firms in the service sector have been scarce, particularly for the specific case of knowledge-intensive services (KIS). The purpose of this paper is to explore which competitive characteristics differentiate KIS BGs from other KIS firms in the context of a peripheral region.
Design/methodology/approach – The empirical focus of this study comprehends primary survey data from 250 Spanish KIS firms (Andalusia) that have been internationalized and analyzed through ordinal and ordinary least squares regressions. The authors address the “born-global effect” on five features of interest, namely, entry mode, technological capabilities, qualification of staff, external resources and quality of services.
Findings – Results suggest that KIS BGs in Andalusia perceive exports as a more relevant form of internationalization than its non-BG peers. Also, KIS BGs in Andalusia present higher levels of technological intensity. Differences in terms of staff qualification, access to extramural R&D resources and the quality of services could not be identified.
Research limitations/implications – The main limitation of this research concerns its cross-sectional character, thus hindering the evaluation of developmental trajectories taking place in the cohort under scrutiny. Such an approach would allow a better comprehension of the competitiveness dynamics in internationalized KIS firms. Also, because this assessment is geographically restricted to Andalusia, Spain, the authors recommend caution in establishing direct comparisons and appropriation of results for other regional/national contexts.
Practical implications – Recommendations for public policy include establishing the necessary infrastructures to encourage the technological development of KIS companies and provide support – through export promotion agencies, for instance – for early approximation with foreign markets. Taking into account the contributions of KIS firms for the development of a peripheral economy, this involves the need to establish instruments that provide strategic information to internationalize, as well as lines of funding for these
companies.
Originality/value – Empirical evidence on KIS BGs is needed to fully grasp its differences to other internationalized service firms. The analysis within this specific domain represents an advance in the literature on this subject. Also, the context of peripheral regions – considering their economic differences to core areas – has been understudied. The elaboration and application of the survey have allowed the authors to have access to primary in-depth data and, therefore, to build a better understanding of KIS BGs in Andalusia, Spain
Following long-standing calls to investigate information and communication technology (ICT) sector development in lesser-developed economies, this study examines the sector’s rapid emergence in Ukraine utilizing a catch-up cycle conceptual framework. Ukraine is a unique case due to the country’s location in Eastern Europe, the sector’s explosive growth within an otherwise stagnant economy, and related disconnectedness to other economic sectors. This study finds that the confluence of several windows of opportunity spurred an entrepreneurial response among hundreds of firms. However, most of these firms focus on low value-added segments of the ICT global value chain and lack the managerial and technical capabilities to compete globally, much less develop new products and services. As the global ICT services sector evolves, multi-level interventions are required to maintain the sector’s growth trajectory and realize the economic and social benefits normally associated the development of a domestically inter-connected ICT sector. In order for Ukraine to secure its digital future, it must seize windows of opportunity in the global and European data economy.
Purpose
The agribusiness sector has long been acknowledged as a major source of livelihood to many people in developing countries. Hence, determining the resources and capabilities influencing farm-level competitive advantage are vital to better understand and formulate appropriate strategies to increase the competitiveness ofminor export crops farms. This study aims to understand of the link between resources-capabilities-competitive advantage for appropriate measures to be recommended to enhance the competitive position of the smallholding farms.
Design/methodology/approach
This study adopts the resource-based view in combination with dynamic capabilities. The scope comprises owners of farms who possess experience in commercial cultivation of minor export crops in Sri Lanka. A self-administrated structured questionnaire was used to collect data.
Findings
Based on the responses from 456 farm owners, results of the multiple regression analysis indicate that variables representing resources such as human assets, physical assets, financial assets, institutional capital, collective action and entrepreneurial identity; and dynamic capabilities such as organisational learning, relationship building, quality management and marketing are significantly associated with competitive advantage of the minor export crops farms. Reputation and farm process management capability are the only two insignificant variables. Taken together, the resources and dynamic capabilities investigated explain 89.3 per cent of the variation in competitive advantage, in which 82 per cent is contributed by resources.
Originality/value
The findings provide useful insights not only in terms of understanding the link between resources, dynamic capabilities and competitive advantage but also how resources and capabilities can be channelled and leveraged to bring about competitive advantage to the minor export crops farms. Theoretical and practical implications as well as future research directions are provided.
Robert L. Katz first called attention to the problem of identifying those skills necessary for successful performance in managerial roles. This paper identifies the impact of Katz's classic 1955 work on managerial skills and notes the continuing legacy of his work. Modifications and additions appearing in the management literature, particularly introductory or principles textbooks, are noted with a suggested expansion of Katz's work that would subsume the dominant ones of those. The importance of managerial skills to the carrying out of managerial functions is also discussed.
This paper is based on the idea that existing evaluations of individual RTDI policy interventions can be utilized to understand
policies beyond the respective cases covered by the evaluations. We discuss a methodological approach for a comprehensive
secondary analysis of evaluations. With this approach, existing evaluations can be used to learn not only about policy interventions,
but also about policy performance and policy effects on the system level.
This paper discusses the main econometric issues in the identification and estima-tion of production functions, and reviews recent methods. The main emphasis of the paper is in explaining the role of different identifying assumptions used in alternative estimation methods.
This paper comprehensively examined the linkages between systems of High Performance Work Practices and firm performance. Results based on a national sample of nearly one thousand firms indicate that these practices have an economically and statistically significant impact on both intermediate outcomes (turnover and productivity) and short- and long-term measures of corporate financial performance. Support for the predictions that the impact of High Performance Work Practices is in part contingent on their interrelationships and links with competitive strategy was limited.
What capital is missing in developing countries? We put forward “managerial capital,”
which is distinct from human capital, as a key missing form of capital in developing countries. And it has also been curiously missing in the research on growth and development. We argue in this paper that lack of managerial capital has
broad implications for firm growth as well as for the effectiveness of other input factors. A large literature in development economics aims to understand the impediments to firm growth, particularly in small and medium enterprises. Standard growth theories have explored the importance of input factors such as capital and labor in the production function of firms and countries. At the micro level, empirical studies
such as Suresh de Mel, David McKenzie and Christopher Woodruff (2008), Abhijit Banerjee
et al. (2009), and Dean Karlan and Jonathan Zinman (2009) have estimated the impact of
access to finance for capital constrained microenterprises (see Karlan and Jonathan Morduch, 2009, for a review). At the macro level, papers by Robert King and Ross Levine (1993), Raghuram Rajan and Luigi Zingales (1998), and Marianne Bertrand, Antoinette Schoar, and David Thesmar (2007) suggest the importance of the financial system for economic growth.
This paper analyses the provision of auxiliary clinical services that are typically carried out within the hospital. We estimate a flexible cost function for the three most important (cost- wise) diagnostic techniques and therapeutic services in Portuguese hospitals: Clinical Pathology, Medical Imaging and Physical Medicine and Rehabilitation. Our objective in carrying out this estimation is the evaluation of economies of scale and scope in the provision of these services. For all services, we find evidence of ray economies of scale and some evidence of economies of scope. These results have important policy implications and can be related to the ongoing discussion of where and how should hospitals provide these services.
Scholars of public management have consistently found that management matters, but little research has considered how much
management matters or whether the link between management and performance may be contingent on various factors. This article
further investigates the link between management and performance by examining the functional form of the relationship. Analyses
using data from 1000+ public organizations point to some diminishing returns. Results suggest that networking with other organizations
might not always result in gains for the organization. Findings also show how managerial quality and differences in organizational
staff can affect this relationship.
This paper is concerned with small business development in rural areas and the policy approaches currently being used to support them. The key question underlying the paper is the extent to which small businesses located in rural areas have distinctive support needs, associated with the characteristics of rural businesses themselves or their owners, and/or the characteristics of the external operating environment for business in rural areas. A related question concerns the possible influence of enterprise characteristics and the characteristics of rural areas on how the business support needs of rural businesses are best addressed. The study comprised a desk-based review of existing literature relevant to the support needs of rural enterprises and/or the means of addressing them. It also included primary research on policy initiatives and programmes concerned with enterprise development in rural areas. Telephone interviews were conducted in 2001 with representatives of Business Links with catchments that included rural areas, as well as other key agencies (for example, the Countryside Agency). In addition, twenty-four case studies were completed of rural policy initiatives, based on face-to-face interviews. Following a brief review of key literature, an overview of the policies currently being operated by Business Link is described, based on the survey. This is followed by an identification of good-practice principles of rural business support, based on an analysis of the case-study support initiatives. The paper concludes by identifying the implications of the analysis for future enterprise support policy.
This paper investigated the relationship between Internet‐enabled supply chain integration strategies and performance in manufacturing and services. It summarizes the literature on demand and supply integration and describes four web‐based strategies. A stratified random sample was collected from UK manufacturers and services, and there was strong evidence that demand chain management (DCM) led to the highest performance in manufacturing, but few signs of DCM in services. Manufacturers and services relying on only web‐based demand or supply integration outperformed their low integration counterparts, but lagged DCM in manufacturing. The study also investigated DCM adoption drivers and found that rational efficiency and bandwagon effects drove change. The findings have some important implications for theory as well as for manufacturing and service companies interested in improving their performance.
The SME Policy Index is a benchmarking tool designed for emerging economies to assess SME policy frameworks and monitor progress in policy implementation over time. The Index has been developed by the OECD in partnership with the European Commission (EC), the European Bank for Reconstruction and Development (EBRD), and the European Training Foundation (ETF) in 2006 for the Western Balkans. The South East European Centre for Entrepreneurial Learning (SEECEL) joined as an additional partner in 2014. The SME Policy Index has since 2006 been applied in four regions and nine assessment rounds overall.
The SBA Assessment monitors the progress in the implementation of the ten principles of the Small Business Act for Europe and measures convergence towards EU practices and standards.
The dedicated methodology – the SME Policy Index – was specifically developed by the partner organisations in 2006 in order to apply the SBA in EU pre-accession economies. The index identifies strengths and weaknesses in policy design, implementation, monitoring and evaluation; allows for comparison across countries; and measures convergence towards EU SME policy standards.
The purpose of the SBA Assessment is to improve SME policy-making in partner countries and to enhance the capacity of policy-makers, as well as to improve the business environment "on the ground" and to foster entrepreneurship and competitiveness. It aims to support governments in setting targets for SME policy developments and strategic priorities to further improve their business environments. It also engages governments in policy dialogue and facilitates the exchange of experiences within the region and with the partner organisations.
Purpose
This paper analyses the location as root of the specificity of the sources of competitiveness in subsistence small businesses (SSBs) of wood industry in order to improve the situation of poverty and the different behavior of subsistence entrepreneurs.
Design/methodology/approach
The research uses an exploratory analysis based on principal components in two phases and confirmatory analysis based on PLS techniques applied to a sample of 113 SMEs of wood industry in Oberá, a region of Argentina.
Findings
The analysis evidences the use of competitiveness sources of SSBs and a double behaviour in SSBs according with subsistence threshold. Satisfactory SSBs use competitiveness sources to improve organizational and economic performance. Unsatisfactory SSBs find economic performance without relation with organizational performance.
Research limitations/implications
Data is cross-sectional and in a conjuncture of economy expansion, future research should monitor the sample of firms using panel data to assess the development of relations. Sample is in a particular region and sector and generalizations should be done carefully.
Practical implications
SSBs should raise the strategy integrating short and long term, which requires a strengthening of intellectual capital, especially in cooperation, professionalism and training. They could integrated and share a business community to develop competitive advantages of collective systemic
Originality/value
The research shows the importance of the location for the competitiveness of SSBs and provides a classification of SSBs according with their performance.
In this paper we critically evaluate the standard-setting inferences that can be drawn from value relevance research studies that are motivated by standard setting. Our evaluation concentrates on the theories of accounting, standard setting and valuation that underlie those inferences. Unless those underlying theories are descriptive of accounting, standard setting and valuation, the value-relevance literature's reported associations between accounting numbers and common equity valuations have limited implications or inferences for standard setting; they are mere associations. We argue that the underlying theories are not descriptive and hence drawing standard-setting inferences is difficult.
Purpose
To identify the leverage points in the Vietnamese coffee supply chain that would be intervened for increasing the competitive advantages of the product.
Design/methodology/approach
A sequential approach by combining two established modelling techniques (Causal loop diagram and Bayesian Belief Networks - BBNs) was applied to identify the leverage points in the Vietnamese coffee supply chain for increasing the competitive advantages of the product. Data for the study were collected from a series of workshops and in-depth interviews with numerous relevant stakeholders of the coffee industry in the central highland of Vietnam.
Findings
The systems archetypes were developed and sensitivity analysis was used to identify potential factors that would increase the competitive advantages of coffee production. The results indicate that higher investment in all elements of the coffee supply chain will lead to enhanced competitive advantage.
Originality/value
Supply chain management (SCM) has become a potentially valuable way to improve the competitive advantages since competition is no longer only between organizations, but also among supply chains. Therefore, this research focus on enhancing the competitive advantages of production via supply chain management
The past few years have witnessed an increasing global interest in ISO 9000 standards. Thousands of companies have already been certified. However, doubts have been raised about the effectiveness of ISO 9000 standards for infusing quality within organizations. In this paper, we empirically explore, in the international context, the relationship between ISO 9000 and the level of quality management practices and quality results. Our findings indicate that ISO 9000 registered companies exhibit higher levels of quality leadership, information and analysis, strategic quality planning human resource development, quality assurance, supplier relationships, customer orientation and quality results.
This paper discusses the relevance of local development policy as an instrument for regional development. Endogenous development strives to obtain self-sustained development in urban and rural areas and argues that institutions that facilitate the introduction of innovations leading to diversification of productive activities and market access are key to the process. The efficiency of local initiatives depends on the agreement between local actors on strategies and goals, as well as local communities’ participation in the management and control of development initiatives. The effectiveness of local initiatives confronts important challenges, such as compatibility of goals, interaction of the forces of development, and strengthening of institutions. Therefore, endogenous development is always a slow process that demands the evolution of institutions and requires specific local initiatives and actions for each territory.
In the organic olive oil sector in Spain, which comprises small companies, supply outstrips demand by a considerable margin, requiring the sector to take a robust approach to exporting. This sector of traditional production should invest in the inclusion of human capital – qualified people who are capable of managing the process – and take advantage of the commercial opportunities that information and communications technology (ICT) affords to contact and do business with potential customers in other countries. The results of the crisp set quality comparative analysis (csQCA) method yields the following favorable factors for exportation of firms in this sector: qualifications of the manager, specifically his or her university education; effecting sales through the corporate website; a knowledge of electronic markets; and a presence in online social networks.
Purpose
The aim of this paper is to analyse the impact on businesses in Chile of the Seed Capital Program (SCP) implemented by Chile’s Technical Cooperation Services.
Design/methodology/approach
In order to analyze the impact of this SCP, a counterfactual scenario was used that entailed a combination of the Propensity Score Matching with Difference in Difference methods. A total of 682 businesses were surveyed (378 in the treatment group and the rest in the control group), 164 of which gave complete responses to the surveys, 89 belonging to the treatment group and 75 to the control group.
Findings
The results are mixed. On the one hand, the impact of sales is positive but its statistical significance depends on the model used. With regard to the number of employees, however, the results are positive and statistically significant regardless of the model used. The results also show that participating in the program has no incidence on the probability of later obtaining financing.
Research limitations/implications
This study highlights the importance of differentiating between opportunity-driven entrepreneurship programs and necessity-driven entrepreneurship programs.
Practical implications
It also suggests improvements in public policy to develop entrepreneurship in small businesses in Chile. These suggestions may also be interesting for other countries facing similar challenges in terms of developing private entrepreneurship as a vehicle to generate economic development.
Originality/value
This exploratory work may be interesting to those in charge of designing, implementing and evaluating public programs in support of SME development.
Business training programs are a popular policy option to try to improve the performance of enterprises around the world. The last few years have seen rapid growth in the number of evaluations of these programs in developing countries. This paper undertakes a critical review of these studies with the goal of synthesizing the emerging lessons and understanding the limitations of the existing research and the areas in which more work is needed. It finds that there is substantial heterogeneity in the length, content, and types of firms participating in the training programs evaluated. Many evaluations suffer from low statistical power, measure impacts only within a year of training, and experience problems with survey attrition and measurement of firm profits and revenues. Over these short time horizons, there are relatively modest impacts of training on survivorship of existing firms, but stronger evidence that training programs help prospective owners launch new businesses more quickly. Most studies find that existing firm owners implement some of the practices taught in training, but the magnitudes of these improvements in practices are often relatively modest. Few studies find significant impacts on profits or sales, although a couple of the studies with more statistical power have done so. Some studies have also found benefits to microfinance organizations of offering training. To date there is little evidence to help guide policymakers as to whether any impacts found come from trained firms competing away sales from other businesses versus through productivity improvements, and little evidence to guide the development of the provision of training at market prices. The paper concludes by summarizing some directions andkey questions for future studies.
The Latin American Structuralism (LAS) is a significant part of the heterodox tradition in the theory of long run growth, with a focus on the problems of developing economies which started their industrialization process when other regions had already accumulated substantial technological capabilities. The emergence of a centre-periphery system posed specific problems to growth and distribution in laggard economies which LAS discusses in a systematic way. In this paper we presented a simple model which, firstly, captures key insights of the LAS school, such as the persistency of technological asymmetries and structural heterogeneity; secondly, it can be used to analyze the impacts of shocks and policies based on how they affect supply-side and demand side parameters of the model; thirdly, it links more closely (Post-) Keynesian macroeconomics based on the BOP constraint with the evolutionary microeconomics concerned with the dynamics of learning; lastly, it can be used as a toolbox and a teachable model in the analysis of the interactions between structural change, technological catching up and long run growth.
Using country-level data, this paper investigates the determinants of pro- ductivity in emerging knowledge economies by estimating the spillovers as- sociated with investment in Research & Development (R&D) and Informa- tion Technology (IT). The work illustrates that both forms of technically- advanced capital (R&D and IT) matter for long-run TFP growth. Further- more, by inspecting knowledge spillovers associated with either the domes- tic production or import penetration of high-tech (IT) goods, we show that the R&D base of the domestic producers of IT assets is a fundamental driver of economic growth for the industrialized countries. In terms of TFP gains, a low degree of industry specialization in information technology can only partly be compensated by a country's trade openness, i.e. importing R&D- intensive (IT) goods from abroad. This contrasts to what occurs for less technically-advanced (non-IT) productions, for which trade is an effective conduit for knowledge.
This article presents the results of an itlvestigation of in-house employee training and development practices within hotels in Scotland having 50 or more bedroonls front an operation/ management perspective. Issites pertaining to employee trainitzg and development practices are identified - reduction in st@ turnover; responsibility for staff traitzing and development, time constraints, variety of training methods and training frequency. III the context of training and development, with particular reference to issues ident, a number of recommendations are postulated.
Abstract The past few years have witnessed an increasing global interest in ISO 9000 standards. Thousands of companies have already been certified. However, doubts have been raised about the effectiveness of ISO 9000 standards for infusing quality within organizations. In this paper, we empirically explore, in the international context, the relationship between ISO 9000 and the level of quality management practices and quality results. Our findings indicate that ISO 9000 registered companies exhibit higher levels of quality leadership, information and analysis, strategic quality planning, human resource development, quality assurance, supplier relationships, customer orientation and quality results.
This paper first considers the role and characteristics of the small firm and its collective, the small business sector. A brief examination of the small firm discourse and research agenda is provided. The following section undertakes a critical examination of the small firm management context. A critical appraisal of the strategic management approach suggests that strategic activity in the small firm sector is much more informal, intuitive and invisible than has been previously suggested by design school advocates. The final part of the paper considers the role and development of policy and its effects on the survival, growth and performance of small firms.
Offers the view that TQM concepts apply equally to manufacturing and service industries and examines assertions through a survey of selected manufacturing and service companies involved in TQM implementation. To test the hypothesis a framework of 19 TQM dimensions is developed and, based on this framework, the studied companies are evaluated. It is shown that under varied environmental conditions the TQM tools and procedures may vary but the underlying concepts apply equally to both manufacturing and service companies. The differences in the studied dimensions between manufacturing and service companies signify slow dissemination of TQM knowledge among the service companies. Service operations are generally not sure whether the tested procedures in manufacturing companies will work equally well for them. As a result, commitment for a fully fledged TQM has been lacking in the service industries.
Most studies of organizational performance define performance as a dependent variable and seek to identify variables that produce variations in performance. Researchers who study organizational performance in this way typically devote little attention to the complications of using such a formulation to characterize the causal structure of performance phenomena. These complications include the ways in which performance advantage is competitively unstable, the causal complexity surrounding performance, and the limitations of using data based on retrospective recall of informants. Since these complications are well-known and routinely taught, a pattern of acknowledging the difficulties but continuing the practice cannot be attributed exclusively to poor training, lack of intelligence, or low standards. Most researchers understand the difficulties of inferring causal order from the correlations generated by organizational histories, particularly when those correlations may be implicit in the measurement procedures used. We suggest that the persistence of this pattern is due, in part, to the context of organizational research. Organizational researchers live in two worlds. The first demands and rewards speculations about how to improve performance. The second demands and rewards adherence to rigorous standards of scholarship. In its efforts to satisfy these often conflicting demands, the organizational research community sometimes responds by saying that inferences about the causes of performance cannot be made from the data available, and simultaneously goes ahead to make such inferences. We conclude by considering a few virtues and hazards of such a solution to dilemmas involving compelling contradictory imperatives and the generality of the issues involved.
The small business sector of the UK economy is extremely important and the government expends considerable resources in providing support services for this sector. This paper investigated the reasons why SMEs move from traditional commerce to e-commerce, the efficacy of the support services and the barriers encountered by SMEs adopting e-commerce. The research methodology involved literature review and interviews with SMEs’ owner-managers and a UK Online business adviser. It was found that at least two “e-commerce stars” used by the government to promote its support services had in fact not used those services. The historical relationship problems between Business Link and SMEs were still causing problems. Cost was not seen as an inhibitor to adopting e-commerce. Some evidence was emerging that e-commerce may be able to save failing or struggling businesses. Other unexpected outcomes were that e-commerce had social benefits for SMEs’ owners in reducing working hours yet still increased sales.
As decision makers become more involved in implementing Total Quality Management, questions are raised about which management practices should be emphasized. In this exploratory investigation of the relationship of specific quality management practices to quality performance, a framework was constructed. It focuses on both core quality management practices and on the infrastructure that creates an environment supportive of their use. In addition, it incorporates two measures of quality performance and their role in establishing and sustaining a competitive advantage.
Path analysis was used to test the proposed model, with multiple regression analysis determining the path coefficients, which were decomposed into their various effects. Weak linkages were eliminated. The trimmed model indicated that perceived quality market outcomes were primarily related to statistical control/feedback and the product design process, while the internal measure of percent that passed final inspection without requiring rework was strongly related to process flow management and to statistical control/feedback, to a lesser extent. Both measures of quality performance were related to competitive advantage. Important infrastructure components included top management support and workforce management. Supplier relationships and work attitudes were also related to some of the core quality practices and quality performance measures.
The results were interpreted in light of Hill's concept of order winners and order qualifiers and Garvin's eight dimensions of quality. They indicate that different core quality management practices lead to success in different dimensions of quality, and that those dimensions function differently as order winners and order qualifiers.
This paper studies the relation between financial reporting quality and investment efficiency on a sample of 38,062 firm-year observations between 1980 and 2003. Financial reporting quality has been posited to improve investment efficiency, but to date there has been little empirical evidence to support this claim. Consistent with this claim, I find that proxies for financial reporting quality are negatively associated with both firm underinvestment and overinvestment. The relation between financial reporting quality and underinvestment (overinvestment) is mainly driven by the innate (innate and discretionary) component of reporting quality. Further, financial reporting quality is more strongly associated with overinvestment for firms with large cash balances and dispersed ownership, which suggests that financial reporting quality mitigates information asymmetries arising from agency conflicts. However, I find mixed evidence for the hypothesis that financial reporting quality is more strongly associated with underinvestment for firms facing financing constraints. Finally, the relation between financial reporting quality and investment efficiency is stronger for firms with low quality information environments. Overall, this paper has implications for research examining the determinants of investment efficiency and the economic consequences of enhanced financial reporting.
Combining two unique data sets, this paper explores the relationship between the relative importance of different financial institutions and their average size and firms' access to financial services. Specifically, the authors explore the relationship between the share in total financial assets and average asset size of banks, low-end financial institutions, and specialized lenders, on the one hand, and firms' access to and use of deposit and lending services, on the other hand. Two findings stand out. First, the dominance of banks in most developing and emerging markets is associated with lower use of financial services by firms of all sizes. Low-end financial institutions and specialized lenders seem particularly suited to ease access to finance in low-income countries. Second, there is no evidence that smaller institutions are better in providing access to finance. To the contrary, larger specialized lenders and larger banks might actually ease small firms' financing constraints, but only at low levels of gross domestic product per capita.
Entrepreneurs have always been heroes in the business world. But, while the world routinely extols people like Richard Branson and Bill Gates, there is a much larger world of entrepreneurship to be found in emerging markets. Rajesh Chandy and Om Narasimhan explain how micro-entrepreneurs may be a major factor in the return of a robust global economy.
Prior research shows that financial reporting quality (FRQ) is positively related to investment efficiency for large U.S. publicly traded companies. We examine the role of FRQ in private firms from emerging markets, a setting in which extant research suggests that FRQ would be less conducive to the mitigation of investment inefficiencies. Earlier studies show that private firms have lower FRQ, presumably because of lower market demand for public information. Prior research also shows that FRQ is lower in countries with low investor protection, bank-oriented financial systems, and stronger conformity between tax and financial reporting rules. Using firm-level data from the World Bank, our empirical evidence suggests that FRQ positively affects investment efficiency. We further find that the relation between FRQ and investment efficiency is increasing in bank financing and decreasing in incentives to minimize earnings for tax purposes. Such a connection between tax-minimization incentives and the informational role of earnings has often been asserted in the literature. We provide explicit evidence in this regard.
This paper investigated the relationship between Internet-enabled supply chain integration strategies and performance in manufacturing and services. It summarizes the literature on demand and supply integration and describes four web-based strategies. A stratified random sample was collected from UK manufacturers and services, and there was strong evidence that demand chain management (DCM) led to the highest performance in manufacturing, but few signs of DCM in services. Manufacturers and services relying on only web-based demand or supply integration outperformed their low integration counterparts, but lagged DCM in manufacturing. The study also investigated DCM adoption drivers and found that rational efficiency and bandwagon effects drove change. The findings have some important implications for theory as well as for manufacturing and service companies interested in improving their performance.
Seeking evidence on the role of bank governance in the 1997 crisis, we study financial structure and bank performance from 1987 to 1997. Financial performance ratios (capital adequacy, liquidity, profitability, and loan preference) are regressed on structural variables (bank assets, net income, administrative expenses, and time), focusing on banks’ management efficiency and financial performance. During financial liberalization, loan-preference ratios were higher, perhaps signaling more risk; so were capital-adequacy ratios. Capital adequacy falls, then rises as management size increases; profitability behaves oppositely, indicating diminishing returns. Thailand’s, Korea’s and Indonesia’s banks show stronger lending preference but weaker profitability; possible harbingers of crisis.
This paper investigates the effects of implementing the international standard ISO 9000 on measures of business and operating performance. Based on the literature and a case study we identified two stages in implementing ISO 9000—(1) Installation, which has two dimensions: (a) external coordination and (b) integration; and (2) Usage, which also has two dimensions: (a) in daily practice and (b) as a catalyst for change. The hypotheses were that installation of ISO 9000 is positively related to use of ISO 9000, and use of ISO 9000 is positively related to operating performance. In addition, use of ISO 9000 is positively related to business performance since operating performance is positively related to business performance. We used hierarchical linear models (HLM) to test our hypotheses and validated the results by comparing the longitudinal performance of ISO 9000 certified companies with four matched samples of companies that were not ISO 9000 certified. Our analysis indicated that while the installation stage was necessary to successfully implement ISO 9000, organizations achieved a distinct operating advantage from this replicable standard when they used it in daily practice and as a catalyst for change. These findings were based on responses to a survey of 1150 quality managers in 924 organizations, which was supplemented for about one-third of the organizations with longitudinal information from the Compustat database on the organizations’ business and operating performance. The validation indicated that implementing the ISO 9000 standard led to improved operating performance, but that this outcome did not necessarily or automatically yield better business performance.
We add to the methods for conditioning out serially correlated unobserved shocks to the production technology. We build on
ideas first developed in Olley and Pakes (1996). They show how to use investment to control for correlation between input
levels and the unobserved firm-specific productivity process. We show that intermediate inputs (those inputs which are typically
subtracted out in a value-added production function) can also solve this simultaneity problem. We discuss some theoretical
benefits of extending the proxy choice set in this direction and our empirical results suggest these benefits can be important.
Economists have long puzzled over the astounding differences in productivity between firms and countries. In this paper, we present evidence on a possible explanation for persistent differences in productivity at the firm and the national level -- namely, that such differences largely reflect variations in management practices. We have, over the last decade, undertaken a large survey research program to systematically measure management practices across firms, industries, and countries. Our survey approach focuses on aspects of management like systematic performance monitoring, setting appropriate targets, and providing incentives for good performance. We explain how we measure management; identify some basic patterns in our data; then turn to the question of why management practices vary so much across firms and nations. What we find is a combination of imperfectly competitive markets, family ownership of firms, regulations restricting management practices, and informational barriers allow bad management to persist.
This paper calculates indices of central bank autonomy (CBA) for 163 central banks as of end-2003, and comparable indices for a subgroup of 68 central banks as of the end of the 1980s. The results confirm strong improvements in both economic and political CBA over the past couple of decades, although more progress is needed to boost political autonomy of the central banks in emerging market and developing countries. Our analysis confirms that greater CBA has on average helped to maintain low inflation levels. The paper identifies four broad principles of CBA that have been shared by the majority of countries. Significant differences exist in the area of banking supervision where many central banks have retained a key role. Finally, we discuss the sequencing of reforms to separate the conduct of monetary and fiscal policies. IMF Staff Papers (2009) 56, 263–296. doi:10.1057/imfsp.2008.25; published online 23 September 2008
Notions of social inclusion and the need to combat social exclusion have become popular areas of attention in academic and policy circles. The importance of small firms and entrepreneurship as a means to raising inclusion has been emphasized in these new agendas. A priori, there are a number of reasons why small businesses may be regarded as providing opportunities for social inclusion. However, in this paper we argue that the recent expectations of the role of small firms and entrepreneurship in combating social exclusion are over optimistic. Some of the assumptions on which these expectations are based are questioned. Instead, we suggest that attention should start by a clearer understanding of the concept of social exclusion. Individual economic strategies, in the form of small business activity, can make some contribution but because of the complex multidimensional nature of social exclusion, over-inflated claims should be avoided. When these claims are not achieved there may be a danger of a policy backlash against the promotion of business ownership and disaffection amongst those who fail to realize their goals. This paper draws on secondary evidence and concludes with implications for policy and suggestions for further research.
The role and importance of entrepreneurship and new business creation to the economy have been the subject of increased attention in recent years. Indeed, it is now widely recognised that the promotion of entrepreneurship is not only necessary for a healthy economy, but also critical for sustaining prosperity and creating new jobs. The authors discuss the debate on intervention in the business creation process, and pay particular attention to one aspect of such intervention, namely entrepreneurship training. The issue of the effectiveness of this type of training is also addressed, and the results of a comparative study of eight enterprise training programmes in five European countries, are presented. In addition to the intercountry comparison of entrepreneurship training programmes, the research undertaken comprised a three-year longitudinal study of participants in one of these programmes (CCNEA). The combination of the analysis of the comparative study with the more in-depth case study, has highlighted a number of issues which should be of particular interest to enterprise policymakers throughout Europe. These include the need for early stage awareness-raising through the education system, and the importance of providing secure funding for programmes; for pre-programme screening; for evaluation; and the need to ensure wide access.