Strategy development by SMEs for competitiveness: a review

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Strategy development by SMEs for competitiveness: a review

SMEs for competitiveness

Rajesh K. Singh and Suresh K. Garg Mechanical Engineering Department, Delhi College of Engineering, Delhi, India, and

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S.G. Deshmukh Mechanical Engineering Department, Indian Institute of Technology, Delhi, India Abstract Purpose – SMEs are considered as engine for economic growth all over the world. After the globalization of market, SMEs have got many opportunities to work in integration with large-scale organizations. They cannot exploit these opportunities and sustain their competitiveness if they focus only on certain aspects of their functioning and work in isolation. This paper tries to identify the major areas of strategy development by SMEs for improving competitiveness of SMEs in globalised market. Design/methodology/approach – About 134 research papers, mainly from referred international journals are reviewed to identify thrust areas of research. On the basis of review, gaps are identified and research agenda is proposed. Findings – SMEs have not given due attention for developing their effective strategies in the past. They are localized in functioning. On export fronts SMEs face many constraints due to lack of resources and poor innovative capabilities. For sustaining their competitiveness, they have to benchmark their assets, processes and performance with respect to the best in industry. There is also need for developing a framework for quantifying the competitiveness by adopting a holistic approach. Originality/value – This paper explores major areas for research on SMEs. It will be of great value for researchers and professionals involved on SMEs management. Keywords Globalization, Small to medium-sized enterprises, Competitive strategy Paper type General review

1. Introduction Small and medium enterprises are considered backbone of economic growth in all countries. They contribute in providing job opportunities, act as supplier of goods and services to large organizations. SMEs are defined by a number of factors and criteria, such as location, size, age, structure, organization, number of employees, sales volume, worth of assets, ownership through innovation and technology (Rahman, 2001). In manufacturing sector, SMEs act as specialist suppliers of components, parts, and sub-assemblies to larger companies because the items can be produced at a cheaper price than the large companies could achieve in-house. Lack of product quality supplied by them could adversely affect the competitive ability of the larger organizations. Majority of SMEs have simple systems and procedures, which allows flexibility, immediate feedback, short decision-making chain, better understanding and quicker The authors would like to thank referees and chief editor of the journal for their valuable suggestions and comments to improve the quality and contents of this paper.

Benchmarking: An International Journal Vol. 15 No. 5, 2008 pp. 525-547 q Emerald Group Publishing Limited 1463-5771 DOI 10.1108/14635770810903132

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response to customer needs than larger organizations. In spite of these supporting characteristics of SMEs, they are on tremendous pressure to sustain their competitiveness in domestic as well as global markets. Owing to global competition, technological advances and changing needs of consumers, competitive paradigms are continuously changing. These changes are driving firms to compete, simultaneously along different dimensions such as design and development of product, manufacturing, distribution, communication and marketing. According to Chiarvesio et al. (2004), a leading firm is characterized by dynamic strategic behaviour in terms of innovation, relationship management with market and suppliers, internationalization processes, ability to organize and manage business networks, etc. According to Leachman et al. (2005), superior manufacturing performance leads to competitiveness. It is synonymous with productivity and is assumed to capture quality as well as efficiency feature (Porter, 1998). In most of the studies, competitiveness of an organization is measured in terms of certain financial parameters. Man et al. (2002) and Vargas and Rangel (2007) have observed that business performance is positively related with development of internal capabilities such as soft technology (methods and processes that support the firm) and hard technology (externally acquired equipment, in house development of machinery and innovation in raw materials) and a strategy of continuous improvement, innovation and change. For continuous improvement and change, SMEs have to benchmark themselves with the best in industry. This study will try to synthesize different issues related with the competitiveness through review of literature to identify the directions for future research on strategy development by SMEs. Framework adopted for classifying this literature is shown in Figure 1. According to this framework, market condition will be major guiding force for deciding strategies and priorities. Based on these priorities, organizations have to adopt different processes and management practices. Effective implementation of theses processes will lead to performance improvement. Processes and performance have to be reviewed with respect to benchmark standards continuously in order to develop dynamic strategies. 2. Market condition for SMEs after globalisation Improvements in competitors’ capabilities have shortened product life cycles, elevated product complexity and expanded accessibility to new technical breakthroughs.

Market condition • Pressures • Constraints

Figure 1. Framework for competitiveness analysis

Strategy development

Benchmarking of processes and performance

Competitive Priorities

Processes/ Management Practices

Performance

Recently intense competition requires that firms excel simultaneously in several areas without trade-off, including innovativeness and responsiveness to their customers. Rise in global competition has compelled the firms to increase performance standards in many dimensions such as quality, cost, productivity, product introduction time and smooth flowing operations. Different pressures on SMEs are conformance to quality, i.e. low-defect rates, product features or attributes, competitive price and performance (Corbett and Campbell-Hunt, 2002). Capacity of a firm to maintain reliable and continuously improving business and manufacturing processes to meet above challenges appears to be a key condition for ensuring its competitiveness in the long run (Lagace and Bourgault, 2003). Other major challenges for SMEs are up gradation of technology (Kleindl, 2000), human resource development (Hudson et al., 2001), new product development (Sonia and Francisca, 2005) and finally managing its supply chain through collaboration and partnerships with customers, suppliers, distributors, competitors, and other organizations such as consulting firms and research centers (Soh and Roberts, 2005; Bennett and O’Kane, 2006). In such a challenging environment, the capacity of a firm to maintain reliable and continuously improving business and manufacturing processes appears to be a key condition for ensuring its sustainability in the long run (Denis and Bourgault, 2003). Vos (2005) has observed that managers of SMEs have poor skills in reflecting upon their companies strategically. SMEs often are oriented towards serving local niches or developing relatively narrow specializations (Urbonavicius, 2005). They may have constraints due to the scarcity of resources, flat organizational structure, lack of technical expertise, paucity of innovation, occurrence of knowledge loss, etc. The flat structure of SMEs can often leave employees frustrated because they are often unable to realize their short and mid-term career goals. That is why SMEs may find it difficult to employ high-caliber staff and even harder to retain them (Ghobadian and Gallear, 1996). Major constraints on SMEs in meeting the challenges of competitiveness are: . Inadequate technologies as well as other resources (Gunasekaran et al., 2001; Hashim and Wafa, 2002). . Excessive cost of product development projects (Chorda et al., 2002). . Lack of effective selling techniques and market research (Hashim and Wafa, 2002). . Unable to meet the demand for multiple technological competencies (Muscatello et al., 2003; Narula, 2004). . Information gap between marketing and production functions as well as lack of funds for implementing expensive software such as ERP system (Xiong et al., 2006). 3. Strategy development A firm’s competitive strategy specifies the potential products and markets, long-term objectives, and policies for achieving the objectives. Organizations must continuously review their manufacturing strategies to identify the aspects of market priority, product structure, manufacturing configuration, and investment (Errin, 2004; Silveira, 2005). Improvement programs should match operational goals and objectives (Muda and Hendry, 2003; Sum, 2004; Raymond and St-Pierre, 2005).

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Main task of corporate strategy is not to describe the current state-of-art, but to identify and explore core competencies that must be added. Otherwise the current competencies can become obsolete and begin to function as core rigidities. Building core competencies becomes essential for long-term competitive advantage because advantages emanating from the product-price-performance-tradeoffs are almost short-term (Kak and Sushil, 2002). SMEs, which link operations to their business strategies, outperform the competition. O’Regan et al. (2006a, b) have observed that high-growth firms place a greater emphasis on external drivers such as strategic orientation, their operating environment and the use of e-commerce compared with firms having static or declining sales. As SMEs are faced with unfamiliar products and processes on a fairly regular basis, they must develop programs for improving their skills and competencies (Fuller-Love, 2006). They can get competitive advantage by developing internal and external capabilities (Lai-Yu, 2001). According to Corbett and Campbell-Hunt (2002), companies should focus their energy and resources on innovative product and its niche. Singh et al. (2006) have observed that SMEs should be flexible in developing their strategies. Chou and Hsu (2005) have suggested that by developing industry portals, SMEs can aggregate flexibility and agility, despite their lack of resources. For the SME to grow from local to world class status, entrepreneurial actions need to be undertaken. This includes recognizing and exploiting market opportunities through the use of advanced technology, such as advanced manufacturing systems (AMS), creating new distribution channels, products, services and customer segments (Sambamurthy et al., 2003). World class SMEs develop themselves through diversification and extended networks (Cagliano et al., 2001). They can outperform local and transition SMEs with regards to the development of networks and markets (Raymond and Croteau, 2006). 4. Competitive priorities Competitive priorities represent a holistic set of tasks, which should be performed by the manufacturing function in order to support the business strategy (Kim and Arnold, 1996).Competitiveness of a company is mostly dependent on its ability to perform well in dimensions such as cost, quality, delivery, dependability and speed, innovation and flexibility to adapt itself to variations in demand (Carpinetti et al., 2000). While alignment of the manufacturing function with strategic priorities is core to competitiveness, the continuous improvement of the manufacturing function plays a very important complimentary role in the quest of competitiveness in the long run. Four widely accepted competitive priorities are cost, delivery, quality and flexibility. Competitive priorities might be used as measures of competitiveness (external) and competence (internal). According to Fleury and Fleury (2003), organizations should optimize the quality/price ratio for operational excellence. Lau (2002) have observed that quality and lower cost are the top ranking competitive factors among US electronics and computer industries. Dangayach and Deshmukh (2005) have observed that SMEs give highest priority to quality and the least priority to flexibility. Lagace and Bourgault (2003) have advocated for linking of manufacturing improvement programs and practices with the competitive priorities of SMEs. Therefore, competitive priorities will have to be decided very carefully

because it will set the direction for adoption of different processes or management practices by the organization. 5. Processes/management practices Organizations need competence to organize and manage work processes in new and efficient ways to compete in the market. These practices may be related with top management commitment, development of alliances, organization culture, clean production, innovation and knowledge management, research and development, supplier development, quality management, technology management, information technology (IT) applications, measurement of performance and competitiveness. Contributions of researchers for development of different processes are discussed in following sections. 5.1 Leadership/top management support The top management of the organization is directly responsible for determining an appropriate organization culture, vision and quality policy. In order to enhance net profit and revenue as well as to reduce cost of quality, managers must convey their priorities and expectations to their employees. In SMEs, major problem is that owner of the company usually does not delegate adequate power and responsibility to top managers of the company. O’Regan et al. (2005) have observed that leading firms tend to have higher levels of empowerment with greater involvement by top management in key issues such as staff advancement and disciplinary matters. The success of small firms is generally attributed to the managerial skills, training and education, and the personal background of the company’s leader(s). Managers must develop a system that motivates workers to think and act flexibly and productively to meet company goal. Adoption of new manufacturing changes by SMEs may be hampered due to their limited financial and human resources. However, the flexibility often associated with SMEs may counterbalance this difficulty, provided that managers are capable of defining a clear manufacturing strategy (Chapman and Hyland, 2000). Researchers have found that the drive to invest in new improvement programs is influenced mainly by senior management, regardless of firm size (Schroder and Sohal, 1999). Leadership plays a significant role in framing organization strategy (Egbu et al., 2005), benchmarking of performance (Deros et al., 2006) and in shaping the quality focus of companies (Sila and Ebrahimpour, 2005). Firms whose managers have been able to make shift in their business paradigms and are open to create change and to incorporate new business practices have been able to match multinational competitors (Vargas and Rangel, 2007). 5.2 Organization culture The challenge before managers is to cultivate an organizational culture that supports innovation. In high-performing firms, organization culture is more associated with innovation (O’Regan et al., 2006a, b). Problems of small firms in developing a quality culture are resistance to change, lack of experience in quality management, lack of resources. Managing organizational culture effectively requires clarity in the minds of managers about the type of culture and specific norms and values that will help the organizations reach its strategic objectives. Support for taking risks, change and tolerance for mistakes stimulates creativity. It has been found that those employees

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with high-job satisfaction exhibited the highest creativity when commitment to company was high and when support for creativity was available from the organization and coworkers (Zhou and George, 2001). Culture and cultural fit are more important in SMEs than other organizations because an SME is likely to be entirely enveloped in a culture, rather than large organizations, where several cultures may be present. It is easier to attain cultural change in SMEs than in larger organizations. However, it is probably more difficult for SMEs management to recognize the need for change (Ghobadian and Gallear, 1996). McAdam and McClelland (2002) have observed a strong correlation between the culture of continuous improvement and innovation in SMEs. Quality culture is a key enabler in the development of innovation management. Flat structure of SMEs and fewer departmental interfaces normally result in a more flexible work environment. 5.3 Total quality management Total quality management (TQM) is a philosophy mainly dominated by large companies (Yosuf and Aspinwall, 2000) but the fear of losing contracts prompts SMEs to bring quality into their system. The increasing intensity of competition has made continuous planning and quality improvement a prerequisite for the survival of not only large firms but also for SMEs (Temtime, 2003). According to Yosuf and Aspinwall (2000), TQM should not be implemented at the expense of losing flexibility which is strength in small businesses. While implementing TQM, SMEs should focus on training and education of employees. Leadership and information analysis play a significant role in shaping the quality focus of companies (Sila and Ebrahimpour, 2005).The success of a TQM program increases when its implementation is extended to the entire company. TQM can foster continual improvement (CI) through integrated, consistent and involving everyone and everything in SMEs. Effective implementation of TQM is a valuable asset in a company’s resource portfolio, which can produce important competitive capabilities and be a source of competitive advantage (Demirbag et al., 2006). Prajogo (2007) have observed that that quality is predicted by differentiation strategy. This strategy aims to build up competitive advantage by offering unique products which are characterized by valuable features, such as quality, innovation, and customer service. Firms can achieve improved productivity, greater customer satisfaction, increased employee morale, improved management labour relations and higher overall performance through TQM. According to Corbett and Campbell-Hunt (2002), SMEs can gain competitive advantage through the quality of their products because they can implement JIT system with low-defect rates or higher quality of products. It will also help in reducing product cost through eliminating scrap and rework (Fullerton and McWatters, 2001). 5.4 Development of alliances Since scope for improvement within the organization is decreasing; organizations have to think for newer alternatives of integrating the business activities beyond the organizations boundary. Cagliano et al. (2006) have advocated for integration of information flows and integration of physical flows. Even the most vulnerable newly established SMEs have potential of joining international value chains and even developing their own marketing strategies (Chen and Huang, 2004). By aligning and

coordinating the business processes and activities, overall performance and effectiveness of value chain can be improved (Sarmah et al., 2006). Alliances provide sharing of product, manufacturing technology, marketing and R&D know how and resources. It also reduces the uncertainty and vulnerability associated with the design and introduction of new products (Magnan et al., 1999). In addition, through alliances and collaborations, new product design and development and manufacturing capabilities are internalized (Banerjee, 2000). It also helps in tracking of customer expectations and reduction of product and process development cycle times (Perry and Sohal, 2001). Learning how to build stronger relationships with customers is often recommended as a way of ensuring the survival of firms in the face of turbulent and highly competitive market conditions. Organizations should have thorough analysis about their own strengths and weaknesses before thinking of getting into partnering relations (Varis et al., 2004). Firm’s competitiveness may be determined more by its external network than its own size. Alliances provide higher added value to customers and develop better working relationships (Loh and Koh, 2004). Noori and Lee (2006) have advocated for dispersed network manufacturing (DNM) by SMEs to compete on global scale. This will focus on creating network of plants that are electronically linked so that the participating members, spread geographically, focus on their specialized tasks yet also share their manufacturing and production resources to create a loosely structured and flexible enterprise. DNM will require SMEs to have the ability to rapidly develop and enhance their internal production capabilities. 5.5 Vendor development A large number of SMEs operate with poor forecasting and planning systems and operate with long cycle times. They also have problems with unreliable inventory control systems, with no stock tracing and poor cost control. This can lead to excess obsolete stock and eroding customer service levels (Gunasekaren et al., 2000). SMEs in manufacturing industry need to improve their production and material management systems (Ulusoy, 2003). For this development of vendors is essential. Vendor development helps in improving the performance of not only buyers but of vendors also (Humphreys et al., 2004). By vendor development, buying firm helps their vendors for increasing their capabilities to improve their performance. It was found that higher rated vendors emphasize process management and employee satisfaction to a greater degree than the lower rated vendors (Park et al., 2001). Trent and Monczka (1999) stressed that maintaining a small number of vendors, improves product quality and productivity of buyers by encouraging enhanced vendor commitment to product design and quality. Mutually supportive long-term supplier relationship is the best way to achieve quality improvement. Direct product costs and customer’s acquisition and operational costs can be also lowered when buyers and suppliers work together closely (Canon and Homburg, 2001). 5.6 Supply chain management Earlier most of the manufacturing organizations have accomplished massive productivity gains through the implementation of lean production by eliminating “waste” from different internal operations. Now a significant productivity improvement for most of the manufacturing organizations is very limited. However, there is a huge improvement potential to reduce the inefficiencies caused by the poor

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performance of the suppliers, unpredictable customer demands and uncertain business environment. This can be done by integration of internal processes of the organization with the suppliers and customers known as supply chain management (SCM). SMEs have significant impacts on supply chain performance, where they may serve the roles of suppliers, distributors, producers and customers (Hong and Jeong, 2006). Owing to this, firm level competition is popular only in developing economies and is being replaced by competition between supply chains (Koh et al., 2006). SCM practices will not only reduce inventory level, but will also free up warehouse space and untighten cash flow (Mistry, 2006). This is particularly important for SMEs which are in constant need for cash to run the business. Building long-term partnership relations with suppliers and customers also helps to improve the flexibility of the supply chain by creating a mutual understanding among the members (Chang et al., 2005). SCM practices directly influence operational performance of SMEs (Koh et al., 2007). 5.7 Clean production and total productive maintenance (TPM) Clean production and safety measures for environment have become essential criteria for organizations to compete in the market. Worthington and Patton (2005) have observed that companies that voluntarily embrace environmental friendly practices can simultaneously improve their business performance. Rao and Holt (2005) have advocated for green supply chains to improve competitiveness of organization. Competitive advantage can arise from integrating environmentalism with organizational strategy. SMEs see the environment as an important business issue but are often unaware of environmental legislation affecting their business (Petts et al., 1999). One way to enhance understanding among SMEs is to consider environmental responsibility as part of the quality attributes which customers may expect from suppliers. Laugen et al. (2005) have observed that increasing equipment productivity and environmental compatibility are the best manufacturing practices for improving performance of organization in present scenario. For improving equipment productivity and environmental compatibility, TPM can be an important strategy. Machine productivity can be improved by using properly trained personnel and by using appropriate IT controlled processes, thereby providing better proactive servicing (Eti et al., 2006). It is observed that business performance of TPM firms is significantly superior to the non-TPM firms (Brah and Chong, 2004; Chan et al., 2005). 5.8 Innovation and knowledge management To keep in pace with international competition, firms of all size are challenged to improve and innovate their products and processes constantly (Ernesto et al., 2005). The foundation of organizational competitiveness has shifted from physical and tangible resources to knowledge (Wong and Aspinwall, 2005). SMEs can improve their responsiveness by developing capabilities in external knowledge acquisition (Liao et al., 2003). Learning-by-doing is the most effective mode of knowledge acquisition (Oyeyinka and Lal, 2006). Knowledge-based resources are positively linked to performance of SMEs (Wiklund and Shepard, 2003; Liu et al., 2004). Innovation, firm’s knowledge accumulation and the development of internal technical capabilities help SMEs in achieving better competitive position in international and national market (Vargas and Rangel, 2007). Nunes et al. (2006)

have observed that by adequately capturing, storing, sharing and disseminating knowledge, SMEs could achieve greater innovation and productivity. When compared with large-sized firms, the innovative process in small units is more informal and less structured, the base of managerial competencies is limited, availability of financial resources is lower and the attraction towards skilled labour is weaker (Toni and Nassimbeni, 2003; Scozzi et al., 2005). Levy et al. (2003) have observed that SMEs are knowledge creators but are poor at knowledge retention. The ability of a firm to respond to identified changes in market or customer behaviour is an important feature exhibited by successful firms (Chaston et al., 2001). For innovative products and processes, management of employees’ knowledge and skills is essential. Lei et al. (1999) have expressed the view that in tomorrow’s business world, success will be critically influenced by the degree to which firms utilize new knowledge to support innovation. Innovation implementation requires ongoing effort, commitment and understanding beyond that of continuous improvement (Humphreys et al., 2005). Effective innovation must involve all areas of an SME with the potential to affect every discipline and process (McAdam, 2000). 5.9 Research and development To meet rapidly changing product features and customer needs, SMEs should build a dynamic capability to develop new to market products (Eisenhardt and Martin, 2000). According to Mosey (2005), SMEs can compete with their larger rivals by developing new-to-market products. Investment in product research and development will also help in improving quality and in reducing cost. According to Chorda et al. (2002), cost of product development and uncertainty of the market were found to be the major determinants that confront the product development. Most of the SMEs research focuses on factors that contribute to their survival such as financing, rather than a greater understanding of the growth process and the achievement of sustainable competitive advantage. However, according to Karlsson and Olsson (1998), small firms not only spend more on fundamental research but also account for a high proportion of innovations in products and services. For higher growth small firms should focus on research and innovation in the longer term. However, many SMEs have some difficulty in converting research and development into effective innovation, that leads to positive return/high growth (O’Regan et al., 2006a, b). 5.10 Technology management Majority of SMEs rely on outdated technology, labour intensive and traditional management practices. This in many cases led to inefficient, lack of information and inadequate in-house expertise (Hashim and Wafa, 2002). Increased uncertainty in the SMEs’ environment has lead to increased levels of critical success factors for advanced manufacturing technologies applications (Raymond, 2005). According to Mosey (2005), SMEs can compete with their larger rivals by developing new to market products using novel and often simpler technologies. According to Chanaron and Jolly (1999), global competitive strategies are increasingly becoming technology driven in the context of extremely dynamic and turbulent environments. There should be linking between the capabilities of the technologies and the firm’s business and manufacturing priorities (Gupta, 1996).

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More importantly, if a competitor’s technology is accepted as the industry standard, it can threaten the existence of the firm (Narula, 2004). Technology operates on competitiveness in two ways. First by altering the price structure through the development of more efficient and flexible processes and second by enabling the creation of better products of greater quality, better design, after sales service and short delivery periods (Vinas et al., 2001). New technologies available for SMEs provide them with the possibility of accessing international markets and facilitate the process of introducing products to these markets (Aspelund and Moen, 2004). Gunasekaran et al. (2001) have observed that computer integrated manufacturing helps SMEs to reduce lead time, increase flexibility, reliability and to improve customer service. 5.11 Information technology applications Information and communication technologies are indispensable to the operation of the core routines of organizations (Hicks et al., 2006). SMEs generally have an ad hoc approach to IT management, and therefore seldom have a defined IT budget or an explicit IT plan or strategy (Sadowski et al., 2002; Barry and Milner, 2002). Investments in technology are often driven by the owner, rather than by any formal cost-benefit or strategic analysis. For making investment in information and communication technologies, SMEs should seek accredited advisors to ensure success (Morgan et al., 2006). Business executives of SMEs must regard IT as a strategic resource (Beheshti, 2004; Floyd and McManus, 2005). SMEs can get Competitive advantage by having integrated information systems (Koh and Simpson, 2005; Blackwell et al., 2006). AMS based on IT applications such as CAD/CAM, EDI, and MRPII help in strategic development and growth of SMEs (Gunasekaran and Ngai, 2004). e-Business applications such as EDI enhance SMEs SCM and collaboration capabilities within networks (Brown and Lockett, 2004). IT has both indirect and a direct effect on performance (Rivard et al., 2006). According to Corbett and Campbell-Hunt (2002), IT has become an important part of the manufacturing strategy for SMEs. Manufacturing performance of SMEs can be improved as a consequence of the use of the most appropriate IT tools without any major changes in business practices, manufacturing operations or the production facilities (Lal, 2004; Hodgkinson and McPhee, 2002). 6. Measurements of performance and competitiveness For sustainable growth in highly competitive global market, performance measurement has become an essential component of strategy development by SMEs. Effective performance measurement system plays an important role in supporting managerial development in the organizations (Garengo et al., 2005). Performance measurement is defined as the process of quantifying the efficiency and effectiveness of manufacturing system. Performance of an enterprise is often measured as a ratio of output to input. The outputs constitute the products of the enterprise and the inputs are the resources used by the enterprise (Choudhary, 2001). It is highly essential that all the factors, both tangible and intangible, should be included in analysing organizations performance. Traditionally, organizational performance has been measured by using only financial indicators such as profit, market share, sales, and growth rate. Financial indicators measure only past performance. Garg et al. (2003) suggest that as most small

firms are privately held, it is unlikely that their CEOs will be willing to provide detailed accounting data on the firms performance. Therefore, they suggest the use of “subjective and self-reporting measures of performance.” Performance of an organization relative to its industry standards is termed as its competitiveness. Vastag and Montabon (2001) have measured competitive advantage by using five point Likert scales, which compared the firm’s unit cost of manufacturing, delivery speed, etc. with its competitors. This comparison with best in industry is also referred as benchmarking. The core of the current interpretation of benchmarking is (Denkena et al., 2006): . Measurement of the own and the benchmarking partners’ performance level. . Comparison of performance levels, processes, practices, etc. . Learning from the benchmarking partners to introduce improvements. . Improvement, which is the ultimate objective of any benchmarking study. Benchmarking contributes to the CI in performance factors. Deros et al. (2006) have developed a benchmarking implementation framework for automotive manufacturing SMEs but it has been validated with only six pilot case studies, not tested empirically. They have divided key performance measures in two categories, i.e. hard measures and soft measures. Hard or tangible measures include work-in-progress levels, lead-time, delivery-time, rejection (percent), rework (percent), product quality, product reliability, process cycle time, employees skill level, etc. The soft measures may include management commitment towards quality improvement, improvement in customer’s satisfaction for both internal and external customers, existence and practice of team working, employee’s involvement, rewards and suggestion schemes, etc. Ribeiro and Cabral (2006) have developed a benchmarking methodology for metal casting industry. Performance assessment model given by them involves broad areas of manufacturing, customer focus and business results. St-Pierre and Delisle (2006) have developed an expert diagnosis system for the benchmarking of SMEs performance. On the basis of data taken from 100 SMEs, they have observed that benchmarking improve their operational and financial performance. Denkena et al. (2006) have given knowledge-based benchmarking of production performance for SMEs using an existing European database called Benchmark Tool to improve the Production Performance. It has integrated quantitative and qualitative information about the company. Many excellence models and performance measurement frameworks, like the Kanji’s business scorecard (Kanji and Sa´, 2002), the performance prism (Neely et al., 2002), balanced scorecard (Kaplan and Norton, 1992) and assets, processes and performance model (Momaya, 2000) have proposed ways for analysing performance but gaps have been observed between strategy and performance measures (Frigo, 2002). Hudson et al. (2001) have also recommended for taking steps to redesign the current performance measurement systems. 7. Benchmarking of processes and performance For having continuous improvements on different processes and performance, SMEs have to set some benchmark standards as their target. Benchmarking will have

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positive impact on competitiveness (Cassell et al., 2001; Carpinetti and Melo, 2002). Identification and transfer of best practices is considered a difficult task for SMEs due to severe resource constraints and limited knowledge of benchmarking methodologies. They often have difficulty in identifying their reference group. The selection of most appropriate reference group plays a key role in benchmarking since it greatly influences the performance indicators that will be used by enterprises throughout the exercise (Sousa et al., 2006). Benchmarking starts with a deep understanding of the internal processes. Then, competitors, dissimilar organizations or different units of the same organization are comparatively analysed. Practices and performance change frequently. Therefore, organizations should adopt benchmarking as an on-going process. Benchmarking involves lot of processes and activities, which are complex. Basic steps of benchmarking are planning, information gathering, analysis of the gaps between the enterprise and its partner and adoption or implementation of changes (Ribeiro and Cabral, 2006). 8. Summary and gaps identified from the literature This paper has tried to review the literature on different areas of strategy development by SMEs for competitiveness. Major areas considered in the framework for this study are concerned with market condition, strategy development, competitive priorities, processes, performance and benchmarking. In this regard 133 research papers are reviewed. The references corresponding to each particular area and major findings have been summarized in Table I. Most of the studies by researchers have focused on a specific issue such as quality management, technology management, competitive priorities, leadership issues, constraints and challenges for them. On the basis of this extensive literature review, the following gaps are identified: . There has been lack of empirical research on strategy development by SMEs for competitiveness. Even in developed countries, most of the studies related to competitiveness have been devoted to large-scale enterprises (LSEs). These studies have also not tried to compare SMEs with LSEs as well as different manufacturing sectors in terms of operation management issues. Most of the researchers have not tried to analyse the pressures and constraints of SMEs under globalized and liberalized economy. . Holistic approach has not been adopted to analyse the competitiveness. Researchers analysed certain aspects of competitiveness in isolation. Most of the studies have considered the relationship of a particular strategic issue with certain financial parameters only, not with overall performance or competitiveness. Different dimensions of competitiveness have not been explored in available studies. Available studies lack in identifying major drivers of competitiveness in global economy. No adequate framework was found to quantify the competitiveness of SMEs. . For continuous improvement of various processes and performance measures, organizations need to benchmark themselves with available standards. Simple and systematic empirically tested frameworks for benchmarking of SMEs processes and performance are lacking. Most of the frameworks have not

S no. Areas of strategy development 1

2

3

4

5

6

7

8

9

10

Concept of strategy development Explore core competencies Continuous improvement in processes Link operations to business strategies

Competitive priorities Holistic set of tasks to support the strategy Measures of competitiveness Linking of manufacturing programs with competitive priorities Leadership/top management support Success is attributed to management skills Motivate workers to think and act flexibly Define objectives and strategies Organization culture Support innovation/creativity/excellence Focus individual needs /motivation of each employee Promote flexibility and personal autonomy Total quality management Continuous planning and quality improvement a prerequisite for survival Helps in implementing JIT systems Development of alliances Sharing of product/technology/R&D Capabilities are internalized Reduction of product development time Vendor development Helpful to buyers as well as vendors Rationalization of vendors for productivity and quality improvement Supply chain management Competition is between supply chains More scope for performance improvement through SCM Clean production/TPM Clean production essential to compete TPM is beneficial for machines as well as employees Innovation/knowledge management To keep in pace with international competition Incorporate both incremental and radical changes Incorporate new knowledge to support innovation

References Cagliano et al. (2001), Lai-Yu (2001), Corbett and Campbell-Hunt (2002), Kak and Sushil (2002), Muda and Hendry (2003), Sambamurthy et al. (2003), Sum (2004), Errin (2004), Raymond and St-Pierre (2005) Silveira (2005), Chou and Hsu (2005), O’Regan et al. (2006a, b), Fuller-Love (2006), Raymond and Croteau (2006) and Singh et al. (2006) Kim and Arnold (1996), Carpinetti et al. (2000), Lau (2002), Fleury and Fleury (2003), Lagace and Bourgault (2003) and Dangayach and Deshmukh (2005)

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Schroder and Sohal (1999), Chapman and Hyland (2000), Egbu et al. (2005), O’Regan et al. (2005) and Sila and Ebrahimpour (2005), Deros et al. (2006) and Vargas and Rangel (2007) Ghobadian and Gallear (1996), Zhou and George (2001), McAdam and McClelland (2002) and O’Regan et al. (2006a, b) Yosuf and Aspinwall (2000), Fullerton and McWatters (2001), Corbett and Campbell-Hunt (2002), Temtime (2003), Sila and Ebrahimpour (2005), Demirbag et al. (2006) and Prajogo (2007) Magnan et al. (1999), Banerjee (2000), Perry and Sohal (2001), Loh and Koh (2004), Varis et al. (2004), Chen and Huang (2004), Sarmah et al. (2006),Cagliano et al. (2006) and Noori and Lee (2006) Trent and Monczka (1999), Gunasekaren et al. (2000), Park et al. (2001), Canon and Homburg (2001), Ulusoy (2003) and Humphreys et al. (2004) Chang et al. (2005), Hong and Jeong (2006), Koh et al. (2006), Mistry (2006) and Koh et al. (2007) Petts et al. (1999), Brah and Chong (2004), Worthington and Patton (2005), Laugen et al. (2005), Chan et al. (2005), Rao and Holt (2005) and Eti et al. (2006) Lei et al. (1999), McAdam (2000), Chaston et al. (2001), Liao et al. (2003), Wiklund and Shepard (2003), Levy et al. (2003), Toni and Nassimbeni (2003) Oyeyinka and Lal (2006), Liu et al. (2004), Scozzi et al. (2005), Humphreys et al. (2005), Ernesto et al. (2005), Wong and Aspinwall (2005), Nunes et al. (2006) and Vargas and Rangel (2007) (continued)

Table I. Classification of reviewed papers on strategy development by SMEs

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S no. Areas of strategy development

References

11

Karlsson and Olsson (1998), Eisenhardt and Martin (2000), Chorda et al. (2002) and Mosey (2005) and O’Regan et al. (2006a, b)

Research and development To meet rapidly changing product features and customer needs SMEs research focuses on short term objectives Technology management Better technological decisions improve productivity Linking of technological capabilities and manufacturing priorities Enable high quality products at low cost with timely delivery IT applications Has direct and indirect effect on performance Enable better performance in international market SMEs reluctant to make investment in IT

12

Gupta (1996), Chanaron and Jolly (1999), Gunasekaran et al. (2001), Vinas et al. (2001), Hashim and Wafa (2002), Aspelund and Moen (2004), Narula (2004), Mosey (2005) and Raymond (2005)

Corbett and Campbell-Hunt (2002), Sadowski et al. (2002), Barry and Milner (2002), Hodgkinson and McPhee (2002), Beheshti (2004), Brown and Lockett (2004), Lal (2004), Gunasekaran and Ngai (2004), Koh and Simpson (2005), Floyd and McManus (2005), Rivard et al. (2006), Morgan et al. (2006), Hicks et al. (2006) and Blackwell et al. (2006) Kaplan and Norton (1992), Momaya (2000), Performance and competitiveness Hudson et al. (2001), Frigo (2002), Vastag and Process of quantifying the efficiency and Montabon (2001), Kanji and Sa´ (2002), Neely et al. effectiveness of manufacturing system Subjective and self reporting measures for (2002), Choudhary (2001), Garg et al. (2003), Garengo et al. (2005), Denkena et al. (2006), Deros SMEs et al. (2006), Ribeiro and Cabral (2006) and St-Pierre and Delisle (2006) Benchmarking of processes and performance Cassell et al. (2001), Carpinetti and Melo (2002), Identification and transfer of best practices Sousa et al. (2006) and Ribeiro and Cabral (2006) Contributes to improvement in performance

13

14

15 Table I.

.

.

followed holistic approach rather they have focused on a specific functional area. Researchers have suggested improvement practices as part of benchmarking but not prioritized them. Prioritization of improvement activities will help SMEs in successful implementation of benchmarking exercise. Major emerging areas of research for strategy development by SMEs are extended network/synchronous supply chain and utilization of combined resources, distributed network manufacturing, to integrate SMEs in developing economies with developed economies, innovation and knowledge management, extent of TQM implementation and its effect on performance of SMEs, effective implementation of government policies to improve SMEs capabilities and competencies, decision support system for making investments in IT and AMTs. Most of the performance model do not have predictive power for future performance of SMEs and do not specify causes and corrective actions. Gaps are observed between existing performance models and management practices adopted by organizations.

9. Concluding remarks It has been observed that all over the world, SMEs are considered as major source for economic growth. SMEs have not given due attention for developing their effective strategies in the past. The reviewed literature reveals that most of the strategies have been formulated for short-term goals as most of them are localized in their functioning. On the export front, they are facing many constraints due to their limited resources and lack of innovation in capability development. Major problems are related with knowledge loss, product design and development capability, training infrastructure and networking. SMEs are also not following any comprehensive framework for developing their strategies and quantifying their competitiveness. Present paper has tried to identify different areas of strategy development by them. On the basis of gaps identified, further study need to be carried out to develop a holistic approach, i.e. considering all aspects of organization functioning for strategy development. This framework should also enable them in benchmarking of their processes and performance for continuous improvement. References Aspelund, A. and Moen, O. (2004), “Internationalization of small high-tech firms: the role of information technology”, Journal of Euro marketing, Vol. 13 Nos 2/3, pp. 85-105. Banerjee, S.K. (2000), “Developing manufacturing a management strategies: influence of technology and other issues”, International Journal of Production Research, Vol. 64 No. 1, pp. 79-90. Barry, H. and Milner, B. (2002), “SMEs and electronic commerce: a departure from the traditional prioritization of training?”, Journal of European Industrial Training, Vol. 26 No. 7, pp. 316-26. Beheshti, H.M. (2004), “The impact of IT on SMEs in the United States”, Information Management & Computer Security, Vol. 12 No. 4, pp. 318-27. Bennett, D. and O’Kane, J. (2006), “Achieving business excellence through synchronous supply in the automotive sector”, Benchmarking: An International Journal, Vol. 13 Nos 1/2, pp. 12-22. Blackwell, P., Shehab, E.M. and Kay, J.M. (2006), “An effective decision-support framework for implementing enterprise information systems within SMEs”, International Journal of Production Research, Vol. 44 No. 17, pp. 3533-52. Brah, S.A. and Chong, W.K. (2004), “Relationship between total productive maintenance and performance”, International Journal of Production Research, Vol. 42 No. 12, pp. 2383-401. Brown, D.H. and Lockett, N. (2004), “Potential of critical e-applications for engineering SMEs in e-business: a provider perspective”, European Journal of Information Systems, Vol. 13 No. 1, pp. 21-4. Cagliano, R., Blackmon, K. and Voss, C. (2001), “Small firms under MICROSCOPE: international difference in production/operations management practices and performance”, Integrated Manufacturing Systems, Vol. 12 No. 7, pp. 469-82. Cagliano, R., Caniato, F. and Spina, G. (2006), “The linkage between supply chain integration and manufacturing improvement programmes”, International Journal of Operations & Production Management, Vol. 26 No. 3, pp. 282-99. Canon, J.P. and Homburg, C. (2001), “Buyer-supplier relationships and customer firm costs”, Journal of Marketing, Vol. 65 No. 1, pp. 29-43. Carpinetti, L.C.R. and Melo, A.M. (2002), “What to benchmark? A systematic approach and cases”, Benchmarking: An International Journal, Vol. 9 No. 3, pp. 244-55.

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Carpinetti, L.C.R., Gerolamo, M.C. and Dorta, M. (2000), “A conceptual framework for deployment of strategy-related continuous improvements”, The TQM Magazine, Vol. 12 No. 5, pp. 340-9. Cassell, C., Nadin, S. and Gray, M.O. (2001), “The use and effectiveness of benchmarking in SMEs”, Benchmarking: An International Journal, Vol. 8 No. 3, pp. 212-22.

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Chan, F.T.S., Lau, H.C.W., Ip, R.W.L., Chan, H.K. and Kong, S. (2005), “Implementation of total productive maintenance: a case study”, International Journal of Production Economics, Vol. 95 No. 1, pp. 71-94. Chanaron, J.J. and Jolly, D. (1999), “Technological management, expanding the perspective of management of technology”, Management Decision, Vol. 37 No. 8, pp. 613-20. Chang, S.C., Lin, R.J., Chen, J.H. and Huang, L.H. (2005), “Manufacturing flexibility and manufacturing proactiveness: empirical evidence from the motherboard industry”, Industrial Management & Data Systems, Vol. 105 No. 8, pp. 1115-32. Chapman, R. and Hyland, P. (2000), “Strategy and continuous improvement in small-to-medium Australian manufacturers”, Integrated Manufacturing Systems, Vol. 11 No. 3, pp. 171-9. Chaston, I., Badger, B., Mangles, T. and Sadler-Smith, E. (2001), “Organisational learning style, competencies and learning systems in small, UK manufacturing firms”, International Journal of Operations and Production Management, Vol. 21 No. 11, pp. 1417-32. Chen, H.L. and Huang, Y. (2004), “The establishment of global marketing alliances by small and medium enterprises”, Small Business Economics, Vol. 22, pp. 365-77. Chiarvesio, M., Maria, E.D. and Micelli, S. (2004), “From local networks of SMEs to virtual districts? Evidence from recent trends in Italy”, Research Policy, Vol. 33 No. 10, pp. 1509-28. Chorda, I.M., Gunasekaran, A. and Aramburo, B.L. (2002), “Product development process in Spanish SMEs: an empirical research”, Technovation, Vol. 22 No. 5, pp. 301-12. Chou, T.C. and Hsu, L.L. (2005), “Towards a framework of the performance evaluation of SMEs industry portals”, Industrial Management & Data Systems, Vol. 105 No. 4, pp. 527-44. Choudhary, B.V. (2001), “Flexibility and related issues in evaluation and selection of technological systems”, Global Journal of Flexible Systems Management, Vol. 2 No. 2, pp. 11-20. Corbett, L.M. and Campbell-Hunt, C. (2002), “Grappling with a gusher! Manufacturing’s response to business success in small and medium enterprises”, Journal of Operations Management, Vol. 20 No. 5, pp. 495-517. Dangayach, G.S. and Deshmukh, S.G. (2005), “Advanced manufacturing technology implementation evidence from Indian small and medium enterprises (SMEs)”, Journal of Manufacturing Technology Management, Vol. 16 No. 5, pp. 483-96. Demirbag, M., Tatoglu, E., Tekinkus, M. and Zaim, S. (2006), “An analysis of the relationship between TQM implementation and organizational performance, evidence from Turkish SMEs”, Journal of Manufacturing Technology Management, Vol. 17 No. 6, pp. 829-47. Denis, L. and Bourgault, M. (2003), “Linking manufacturing improvement programs to the competitive priorities of Canadian SMEs”, Technovation, Vol. 23 No. 8, pp. 705-15. Denkena, B., Apitz, R. and Liedtke, C. (2006), “Knowledge based benchmarking of production performance”, Benchmarking: An International Journal, Vol. 13 Nos 1/2, pp. 190-9. Deros, B.M., Yusof, S.M. and Salleh, A.M. (2006), “A benchmarking implementation framework for automotive manufacturing SMEs”, Benchmarking: An International Journal, Vol. 13 No. 4, pp. 396-430.

Egbu, C.O., Hari, S. and Renukappa, S.H. (2005), “Knowledge management for sustainable competitiveness in small and medium surveying practices”, Structural Survey, Vol. 23 No. 1, pp. 7-21. Eisenhardt, K.M. and Martin, J.A. (2000), “Dynamic capabilities: what are they?”, Strategic Management Journal, Vol. 21 Nos 10/11, pp. 1105-21. Ernesto, R., Wagner, E. and Hansen, N. (2005), “Innovation in large versus small companies: insights from the US wood products industry”, Management Decision, Vol. 43 No. 6, pp. 837-50. Errin, E. (2004), “Technological intelligence and competitive strategies: an application study with fuzzy logic”, Journal of Intelligent Manufacturing, Vol. 15 No. 4, pp. 417-29. Eti, M.C., Ogaji, S.O.T. and Probert, S.D. (2006), “Strategic maintenance-management in Nigerian industries”, Applied Energy, Vol. 83 No. 3, pp. 211-27. Fleury, A. and Fleury, M.T. (2003), “Competitive strategies and core competencies: perspectives for the internationalization of industry in Brazil”, Integrated Manufacturing Systems, Vol. 14 No. 1, pp. 16-25. Floyd, D. and McManus, J. (2005), “The role of SMEs in improving the competitive position of the European Union”, European Business Review, Vol. 17 No. 2, pp. 144-50. Frigo, M.L. (2002), “Nonfinancial performance measures and strategy execution”, Strategic Management, August, pp. 6-9. Fuller-Love, N. (2006), “Management development in small firms”, International Journal of Management Reviews, Vol. 8 No. 3, pp. 175-90. Fullerton, R.R. and McWatters, C.S. (2001), “The production performance benefits from JIT implementation”, Journal of Operations Management, Vol. 19 No. 1, pp. 81-96. Garengo, P., Biazzo, S. and Bitici, U.S. (2005), “Performance measurement systems in SMEs: a review for a research agenda”, International Journal of Management Reviews, Vol. 7 No. 1, pp. 25-47. Garg, V.K., Walters, B.A. and Priem, R.L. (2003), “Chief executive scanning emphases, environmental dynamism and manufacturing firm performance”, Strategic Management Journal, Vol. 24 No. 8, pp. 725-44. Ghobadian, A. and Gallear, D.N. (1996), “Total quality management in SMEs”, International Journal of Management Science, Vol. 24 No. 1, pp. 83-106. Gunasekaran, A. and Ngai, E.W.T. (2004), “Information systems in supply chain integration and management”, European Journal of Operations Research, Vol. 159 No. 2, pp. 269-95. Gunasekaren, A., Forker, L. and Kobu, B. (2000), “Improving operation performance in a small company: a case study”, International Journal of Operations & Production Management, Vol. 20 No. 3, pp. 316-36. Gunasekaran, A., Marri, H.B., Mcgauahey, R. and Grieve, R.J. (2001), “Implications of organization and human behavior on the implementation of CIM in SMEs: an empirical analysis”, International Journal of CIM, Vol. 14 No. 2, pp. 175-85. Gupta, A. (1996), “Advanced manufacturing strategy: a managerial perspective”, International Journal of Vehicle Design, Vol. 17 No. 2, pp. 139-46. Hashim, M.K. and Wafa, S.A. (2002), Small and Medium Sized Enterprises in Malaysia – Development Issues, Prentice-Hall, Englewood Cliffs, NJ. Hicks, B.J., Culley, S.J. and McMahon, C.A. (2006), “A study of issues relating to information management across engineering SMEs”, International Journal of Information Management, Vol. 26 No. 4, pp. 267-89.

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Hodgkinson, A. and McPhee, P. (2002), SME Information Sourcing for Innovation and Export Market Developments: From Local or External Networks, Department of Economics, University of Wollongong, Wollongong. Hong, P. and Jeong, J. (2006), “Supply chain management practices of SMEs: from a business growth perspective”, Journal of Enterprise Information Management, Vol. 19 No. 3, pp. 292-302. Hudson, M., Smart, A. and Bourne, M. (2001), “Theory and practice in SME performance measurement systems”, International Journal of Operations & Production Management, Vol. 21 No. 8, pp. 1096-115. Humphreys, P.K., McAdam, R. and Leckey, J. (2005), “Longitudinal evaluation of innovation implementation in SMEs”, European Journal of Innovation Management, Vol. 8 No. 3, pp. 283-304. Humphreys, P.K., Li, W.L. and Chan, L.Y. (2004), “The impact of supplier development on buyer-supplier performance”, Omega, The International Journal of Management Science, Vol. 32 No. 2, pp. 131-43. Kak, A. and Sushil (2002), “Sustainable competitive advantage with core competence: a review”, Global Journal of Flexible Systems Management, Vol. 3 No. 4, pp. 23-38. Kanji, G. and Sa´, P. (2002), “Kanji’s business scorecard”, Total Quality Management, Vol. 13 No. 1, pp. 13-27. Kaplan, R. and Norton, D. (1992), “The balanced scorecard – measures that drive performance”, Harvard Business Review, Vol. 70, pp. 71-9. Karlsson, C. and Olsson, O. (1998), “Product innovation in small and large enterprises”, Small Business Economics, Vol. 10 No. 1, pp. 31-46. Kim, J.S. and Arnold, P. (1996), “Operationalising manufacturing strategy: an exploratory study of constructs and linkage”, International Journal of Operations & Production Management, Vol. 16 No. 12, pp. 45-73. Kleindl, B. (2000), “Competitive dynamics and new business models for SMEs in the virtual marketplace”, Journal of Developmental Entrepreneurship, Vol. 5 No. 1, pp. 73-85. Koh, S.C.L. and Simpson, M. (2005), “Change and uncertainty in SME manufacturing environments using ERP”, Journal of Manufacturing Technology Management, Vol. 16 No. 6, pp. 629-53. Koh, S.C.L., Saad, S.M. and Arunachalam, S. (2006), “Competing in the 21st century supply chain through supply chain management and enterprise resource planning integration”, International Journal of Physical Distribution & Logistics Management, Vol. 36 No. 6, pp. 455-65. Koh, S.C.L., Demirbag, M., Bayraktar, E., Tatoglu, E. and Zaim, S. (2007), “The impact of supply chain management practices on performance of SMEs”, Industrial Management & Data Systems, Vol. 107 No. 1, pp. 103-24. Lagace, D. and Bourgault, M. (2003), “Linking manufacturing improvement programs to the competitive priorities of Canadian SMEs”, Technovation, Vol. 23 No. 8, pp. 705-15. Lai-Yu, T.F. (2001), “Toward a capabilities perspective of the small firms”, International Journal of Management Reviews, Vol. 3 No. 3, pp. 185-97. Lal, K. (2004), “E-business and export behaviour: evidence from Indian firms”, World Development, Vol. 32 No. 3, pp. 505-17. Lau, R.S.M. (2002), “Competitive factors and their relative importance in the US electronics and computer industries”, International Journal of Operations & Production Management, Vol. 22 No. 1, pp. 125-35.

Laugen, B.T., Boer, H., Acur, N. and Frick, J. (2005), “Best manufacturing practices, what do the best performing companies do?”, International Journal of Operations & Production Management, Vol. 25 No. 2, pp. 131-50. Leachman, C., Pegles, C.C. and Shin, S.K. (2005), “Manufacturing performance: evaluation and determinants”, International Journal of Operations & Production Management, Vol. 25 No. 9, pp. 851-74. Lei, D., Slocum, J.W. and Pitt, R.A. (1999), “Designing organizations for competitive advantage: the power of unlearning and learning”, Organisational Dynamics, Winter, pp. 24-42. Levy, M., Loebbecke, C. and Powell, P. (2003), “SMEs, cooperation and knowledge sharing: the role of information system”, European Journal of Information System, Vol. 12, pp. 3-17. Liao, J., Welsch, H. and Stoica, M. (2003), “Organizational absorptive capacity and responsiveness: an empirical investigation of growth-oriented SMEs”, Entrepreneurship Theory & Practice, Vol. 28 No. 1, pp. 63-85. Liu, P.L., Chen, W.C. and Tsai, C.H. (2004), “An empirical study on the correlation between knowledge management capability and competitiveness in Taiwan’s industries”, Technovation, Vol. 24 No. 12, pp. 971-7. Loh, T.C. and Koh, S.C. (2004), “Critical elements for a successful enterprise resource planning implementation in small and medium sized enterprises”, International Journal of Production Research, Vol. 42 No. 17, pp. 3433-55. McAdam, R. (2000), “The implementation of reengineering in SMEs: a grounded study”, International Small Business Journal, Vol. 18 No. 1, pp. 29-45. McAdam, R. and McClelland, J. (2002), “Sources of new product ideas and creativity practices in the UK textile industry”, Technovation, Vol. 22 No. 1, pp. 113-21. Magnan, G.E., Fawcett, S.E. and Birou, L.M. (1999), “Benchmarking manufacturing practice using the product life cycle”, Benchmarking: An International Journal, Vol. 6, pp. 239-53. Man, T.W.Y., Lau, T. and Chan, K.F. (2002), “The competitiveness of small and medium enterprises: a conceptualization with focus on entrepreneurial competencies”, Journal of Business Venturing, Vol. 17 No. 2, pp. 123-42. Mistry, J.J. (2006), “Origins of profitability through JIT process in supply chain”, Industrial Management & Data Systems, Vol. 105 No. 6, pp. 752-68. Momaya, K. (2000), International Competitiveness, Hindustan Publishing Co., Delhi. Morgan, A., Colebourne, D. and Thomas, B. (2006), “The development of ICT advisors for SMEs business: an innovative approach”, Technovation, Vol. 26 No. 8, pp. 980-7. Mosey, S. (2005), “Understanding new to market product development in SMEs”, International Journal of Operations & Production Management, Vol. 25 No. 2, pp. 114-30. Muda, M.S. and Hendry, L. (2003), “The SHEN model for MTO SMEs: a performance improvement tool”, International Journal of Operations & Production Management, Vol. 23 No. 5, pp. 470-86. Muscatello, J.R., Small, M.H. and Chen, L.J. (2003), “Implementation ERP in small and midsize manufacturing firms”, International Journal of Operations & Production Management, Vol. 23 No. 8, pp. 850-71. Narula, R. (2004), “R&D collaboration by SMEs: new opportunities and limitations in the face of globalisation”, Technovation, Vol. 24 No. 2, pp. 153-61. Neely, A., Adams, C. and Kennerley, M. (2002), The Performance Prism: The Scorecard for Measuring and Managing Business Success, Prentice-Hall, Harlow.

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Urbonavicius, S. (2005), “ISO system implementation in small and medium companies from new EU member countries: a tool of managerial and marketing benefits development”, Research in International Business and Finance, Vol. 19 No. 3, pp. 412-26. Vargas, D.M. and Rangel, R.G.T. (2007), “Development of internal resources and capabilities as sources of differentiation of SME under increased global competition: a field study in Mexico”, Technological Forecasting and Social Change, Vol. 74 No. 1, pp. 90-9. Varis, J., Virolainen, V.M. and Pumalainen, K. (2004), “In search for complementarities-partnering of technology-intensive small firms”, International Journal of Production Economics, Vol. 90 No. 1, pp. 117-25. Vastag, G. and Montabon, F. (2001), “Linkages among manufacturing concepts, inventories, delivery service and competitiveness”, International Journal of Production Economics, Vol. 71 Nos 1/3, pp. 195-204. Vinas, B.C.B., Bessant, J., Perez, G.H. and Gonzales, A.A. (2001), “A conceptual model for the development of technological management processes in manufacturing companies in developing countries”, Technovation, Vol. 21 No. 6, pp. 345-52. Vos, J.P. (2005), “Developing strategic self descriptions of SMEs”, Technovation, Vol. 25 No. 9, pp. 989-99. Wiklund, J. and Shepard, D. (2003), “Knowledge-based resources, entrepreneurial orientation, and the performance of small and medium-sized business”, Strategic Management Journal, Vol. 24 No. 13, pp. 1307-14. Wong, K.Y. and Aspinwall, E. (2005), “An empirical study of the important factors for knowledge-management adoption in the SME sector”, Journal of Knowledge Management, Vol. 9 No. 3, pp. 64-82. Worthington, I. and Patton, D. (2005), “Strategic intent in the management of the green environment within SMEs: an analysis of the UK screen-printing sector”, Long Range Planning, Vol. 38 No. 2, pp. 197-212. Xiong, M.H., Tor, S.B., Bhatnagar, R., Khoo, L.P. and Venkat, S. (2006), “A DSS approach to managing customer enquiry stage”, International Journal of Production Economics, Vol. 103 No. 1, pp. 332-46. Yosuf, S.M. and Aspinwall, E. (2000), “TQM implementation issues: review and case study”, International Journal of Operations and Productions Management, Vol. 21 No. 11, pp. 1404-16. Zhou, J. and George, J.M. (2001), “When job dissatisfaction leads to creativity: encouraging the expression of voice”, Academy of Management Journal, Vol. 44 No. 4, pp. 682-96. About the authors Rajesh K. Singh is a Senior Lecturer in Mechanical Engineering at Delhi College of Engineering, Delhi, India. His areas of interest include competitiveness, small business management and quality management. He has published papers in journals such as Singapore Management Review, International Journals of Productivity and Performance Management, Competitiveness Review, Global Journal of Flexible Systems and Management, International Journals of Productivity and Quality Management, International Journal of Services and Operations Management, South Asian Journal of Management, Productivity, IIMB Management Review and Productivity Promotion. Rajesh K. Singh is the corresponding author and can be contacted at: [email protected] Suresh K. Garg is a Professor in Mechanical Engineering at Delhi College of Engineering, Delhi, India His areas of interest include competitive strategies, JIT manufacturing systems, quality management and SCM. He has published 60 papers in international and national

journals/conferences such as International journal of Manufacturing Technology and Management, International Journal of Production Economics, Competitiveness Review, International Journals of Productivity and Quality Management, International Journal of Services and Operations Management, IIMB Management Review, Global Journal of Flexible Systems and Management and Productivity. S.G. Deshmukh is a Professor in Mechanical Engineering at Indian Institute of Technology, Delhi India. His major research interests include manufacturing management, SCM and quality management. He has a long list of papers published in reputed international and national journals such as International Journal of Operations and Production Management, International Journal of Production Research, Competitiveness Review, International Journal of Manufacturing Technology and Management, Production Planning & Control, International Journal of Production Economics, International Journals of Productivity and Quality Management, International Journal of Services and Operations Management, IIMB Management Review, etc.

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