Significance of globalization-specific factors for SME competitiveness: a conceptual model and an empirical test

Transcription

1 Busness Systems Revew ISSN: Sgnfcance of globalzaton-specfc factors for SME compettveness: a conceptual model and an emprcal test Zhelyu Vladmrov Sofa Unversty St. Klment Ohrdsk, Sofa, Bulgara. e-mal: jeve@feb.un-sofa.bg. Correspondng author Raltsa Smeonova-Ganeva Sofa Unversty St. Klment Ohrdsk, Sofa, Bulgara. e-mal: r_ganeva@feb.un-sofa.bg. Kaloyan Ganev Sofa Unversty St. Klment Ohrdsk, Sofa, Bulgara. e-mal: k_ganev@feb.un-sofa.bg. Submtted: 31/05/ Accepted: 11/10/2013, Publshed onlne: 15/10/2013. DOI: /BSR.C URL: ABSTRACT On the bass of exstng theory we suggest two man types of factors for SME compettveness. The frst type s comprsed of the basc factors, ncludng nternal, external and entrepreneurrelated factors, all well-defned and dscussed n the IO and RBV approach and the confguraton theory as well. The second type conssts of globalzaton-specfc factors, referrng to the nnovaton related processes as a response to the globalzaton challenges (nnovaton, nternatonalzaton, ICT and qualty standards adopton, etc.). Our man research queston s: Do globalzaton-specfc factors have a sgnfcant mpact on SME performance n tmes of crss and post-crss recovery? Usng the two types of factors, we develop a conceptual model explanng ther role for SME performance. We suggest that globalzaton-specfc factors determne SME performance, and that the confguratons of the two types of factors dffer n tmes of crss and post-crss recovery. Research hypotheses are tested through constructon of ndexes for compettveness and logt models usng data on Bulgaran SMEs for two perods one of economc crss, and another of post-crss recovery. Emprcal evdence confrms sgnfcant mpact of globalzaton-specfc factors n perod of post-crss recovery only. Our fndngs show that the confguraton of basc and globalzaton-specfc factors wth respect to busness success s dynamc: n tmes of crses globalzaton-specfc factors have no sgnfcant mpact whle basc factors have domnant role. In tmes of post-crses recovery both factors seem to be equally mportant for SME performance. Keywords: SMEs, compettveness, basc factors, globalzaton-specfc factors, confguraton, crss, post-crss recovery. 1

2 1. INTRODUCTION Busness Systems Revew, ISSN: Research on compettveness n the mcroeconomc settng focuses predomnantly on large frms. At the same tme, research on small and medum-szed enterprse (SME) compettveness tends to be lmted, partcularly n the context of globalzaton 1. Ths research gap wdened as economc globalzaton created new challenges affectng the valdty of the tradtonal models of frm compettveness at the SME level 2. Also, the relatve mportance of some SME compettveness factors ncreased substantally (OECD, 2000), thus the need for alternatve modellng approaches emerged. In a globalzng economy, there s a new role for nformaton and communcaton technologes (ICT), qualty standards, networkng and clusterng, nnovatons, ntellectual property management, and nternatonalzaton, therefore strateges to enhance small busness development have to take greater account of them. Despte the fact that those factors became crtcal for SME compettveness n the global envronment, there s stll nsuffcent knowledge how ther effects dffer dependng on the phase of the busness cycle. Advancng the understandng of those factors wll help entrepreneurs and polcy makers to take context-specfc measures to mprove SMEs performance. Ths s partcularly mportant for the compettveness of European SMEs, whch account for 98.8% of all enterprses, two-thrds of employment, and 58.4% of gross value added (GVA) n the prvate sector (EC 2011: 2-3). The modest recovery n 2010 showed that the export performance and the nnovatve capacty of an economy are ntrnscally lnked to a Member State s SME sector performance (EC 2011: 39-40). At the same tme, the compettve potental of many European SMEs contnues to suffer from nsuffcent access to fnance for rsky projects, expensve procedures for ntellectual property protecton, small share of attracted publc means for staff tranng, etc. (Blackburn & Wanwrght, 2010). Compettveness s a multdmensonal construct, whch ncludes a combnaton of factors that determne the frm s performance. A framework of dfferent compettveness models n terms of assets and processes was presented by Ambastha & Momaya (2004: 57) but, because of ts complexty, t s dffcult to utlse a common defnton of compettveness. Addtonally, the exstng global compettveness ndces refer to the natonal and not to the frm level. The European Commsson (EC) defnes frm compettveness as an ablty of frms to sustan and gan n market share through ther cost and prcng polcy, nnovatve use of producton factors and noveltes n product characterstcs (EC, Compettveness proofng). At the frm level, technology development and nnovaton (of busness products and/or processes) are of prmary mportance for both the cost and qualty compettveness of products (EC, Compettveness proofng). The fndngs of the European SMEs report for 2011/2012 underlned the mportance of h- and medum-tech manufacturng as well as of knowledge-ntensve sectors ndustres (Ecorys 2012: 11). The major theores whch seek to explan frm-level compettveness are the structure, conduct and performance (SCP) paradgm (beng at the nucleus of ndustral organzaton theory, IO), the resource-based vew (RBV), and the confguraton theory (CT). Buldng on these theores, our research ams to further develop the understandng of SME compettveness factors whle payng partcular attenton to key globalzaton-specfc factors. The paper s structured as follows: lterature revew, followed by research methodology, results, and concluson. The Appendx provdes further techncal explanatons of ndexes and econometrc models used. 2

3 Busness Systems Revew, ISSN: REVIEW OF LITERATURE AND OUTLINE OF BASIC AND GLOBALIZATION- SPECIFIC FACTORS FOR SME COMPETITIVENESS Wthn the framework of IO theory, M. Porter (1998) developed the concept of fve market forces nfluencng frm compettveness: 1) barganng power of buyers; 2) barganng power of supplers; 3) threat of new entrants; 4) threat of substtute products; 5) compettve rvalry wthn an ndustry. Frms objectves are to acheve advanced product dfferentaton and effcent cost structures as two key compettve advantages. In a sense, RBV s opposte to the IO paradgm by focusng upon the frms tangble and ntangble resources as the most mportant sources of compettveness (Wernerfelt, 1995). Frms have advantages f ther resources are valuable, rare, mmoble, and non-substtutable (Barney, 2001); f they have capabltes to combne resources n a unque way; and f they contnuously mprove ther resources and capabltes base (Peteraf, 1993). Accordng to some authors, ntangble resources affect more sgnfcantly frm success (Mathur et al., 2007). In the new global envronment, the employment of sklled workforce, and the possesson of unque knowhow, patents, trade-mark, brands, customer focus, etc. seems to be more mportant (Lev, 2004: 109). Prahalad and Hamel (1990: 81) ntroduced the term core competences to descrbe the key strategc capabltes of how to coordnate dverse producton sklls and ntegrate multple streams of technology. RBV developed a more dynamc perspectve named dynamc capabltes (Esenhardt & Martn, 2000). If Porter s framework reveals manly the external (ndustry-level) characterstcs, RBV underlnes the role of the frms nternal resources. For the emergng and transton economes, the nsttutonal factors (as part of the external factors) grew n mportance, too (Welter & Smallbone, 2011). Based on the complexty of the compettveness drvers, many authors adopted combnatons of the two theores. As Sarasvathy (2004) ponted out, there s a need to overcome the separaton of analyss of nternal and external factors on performance, and work towards ther ntegraton. Others proposed to combne Porter s model, RBV, and core competences nto the theory of competences-based strategc management (Sanchez & Heene, 2004). The need to combne external and nternal factors led some authors to the confguraton theores. Mller (1996: ) stated that both the compettve analyss framework and RBV can be extended by searchng for the most successful confguratons of organzatonal elements. The comparson of dfferent approaches led Mchor et al. (2010: 2) to conclude that the confguraton approach s best suted to analyze and model the performance of new ventures and SMEs because t reflects the holstc nature of enterprses (Harms et al., 2009). A major dsadvantage of the confguraton approach, however, s the lmted number of the varables whch can be selected for each combnaton (Szerb & Ulbert, 2009: 110). The smultaneous use of these paradgms can be justfed by the fact that both the SCP approach and RBV agree n ther recommendatons that companes should be nnovatve by creatng unque combnatons of resources and capabltes (Grant, 2002: 139; Porter, 2004: 123). Many researchers focus on a selected compettveness factor such as: ICT adopton (Smpson & Docherty, 2004); networkng (Álvarez et al., 2009); nnovaton (Rosenbusch et al., 2010); nternatonalzaton (Wllams & Shaw, 2011) etc., and only a lmted number consder several factors at once. Relatvely complex models of SME compettveness factors were developed by Man et al. (2002), Srkra & Tang (2006), and others. The model of Man et al. (2002: 131) covers four constructs of SME compettveness (external factors, nternal factors, entrepreneur profle, and frm performance); three compettveness dmensons (potental, performance, 3

4 Busness Systems Revew, ISSN: process), and four compettveness characterstcs (durablty, controllablty, relatvty, and dynamsm), but t has not been tested emprcally. Srkra & Tang (2006: 74, 78) proposed a framework of compettveness whch combnes external drvers (IO-based factors), nternal drvers (RBV-based), and fnancal and non-fnancal frm s performance ndcators. The external factors were dvded nto ndustry condtons and governmental roles, whle the nternal factors were manly operatonal. The model of Toppnen et al. (2007: ) consdered: resources and capabltes, marketng strateges and ndustry key factors. Szerb & Terjesen (2010: 8) proposed confguratons of seven factors, fve of whch were nternal (physcal resources, admnstratve routnes, networkng, human resources, and nnovaton), and two were external (supply and demand condtons). Chew et al. (2008) bult up a framework for the Chnese SMEs compettve strateges, whch ncluded strategc allances, nnovaton and dfferentaton. Yan (2010) showed the sgnfcance of cost reducton, dfferentaton, nnovaton, strategc allances and the envronment. Awuah & Amal (2011: 127) consdered the drvers for SME compettveness n less developed countres such as nnovaton, learnng, and nternatonalzaton. All suggested models combne dfferent factors of SME compettveness wthout dfferentatng the effects of globalzaton-specfc factors reflectng major changes n the operatng envronment. As Sngh et al. (2008: 536) observed, the holstc approach has not been adopted to analyse the compettveness. Researchers analysed certan aspects of compettveness n solaton. Followng the above, the factors for the small frm compettveness can generally be classfed as external, nternal, and ones specfc to the entrepreneur profle. The frst group ncludes the market forces of the IO-based theory combned wth nsttutonal factors. The second group encompasses nternal resources and capabltes of the RBV approach. The thrd group covers the abltes of entrepreneurs. These factors are ndspensable for the functonng of each enterprse. Ther basc combnatons assure the frm s everyday actvtes, ts ordnary reproducton and ts equlbrum n the everyday busness. Here, we wll generally refer to those three groups of factors as basc factors. Unlke them, a second group of factors, addressed here as globalzaton-specfc factors for SME compettveness, can be regarded as nnovaton-related processes wth a global mpact upon a broad range of busnesses. As such globalsaton-specfc factors depend on specfc combnatons of frms nternal, external, and entrepreneural resources and capabltes. They reveal not the prmary combnaton of resources as n the classcal producton functon, nor small gradual mprovements. They belong rather to the resdual element of ths functon, where economsts left technologcal progress, nnovatons, and other mportant frm s capabltes. The sgnfcance of these factors stems from the fact that they ndcate the new opportuntes to combne and recombne further the frms resources and capabltes n response to envronment changes. Ther dstngushng feature s that they are related to organzatonal change, and as such they are close to the concept of dynamc capabltes. «Dynamc capabltes thus are the organzatonal and strategc routnes by whch frms acheve new resource confguratons as markets emerge, collde, splt, evolve and de» (Esenhardt & Martn, 2000: 1107). Zahra et al. (2003: 166) noted also that: «resources per se are not as strategcally mportant as what the frm does wth these resources The leveragng of tangble resources wth ntangble resources allows for 4

5 Busness Systems Revew, ISSN: unque combnatons that are not only rare because they ncorporate the frm s specfc assets but also because the ncluson of ntangble resources creates an nvsble dmenson to the bundle of resources that makes t nmtable and non-substtutable.» Here the concept of dynamc capabltes approxmates the confguraton approach as both paradgms underlne the mportance of confguratons of frm s resources and capabltes. These confguratons may be seen as partcular organsatonal genomes. Entrepreneurs ntroduce new combnatons of producton factors n the form of: new product, hgher qualty of an exstng product, new producton method, new market, new sources of raw materals, or new organzaton n the sector (Schumpeter, 1934). Today, we mght add to these the adopton of ICT, nternatonal qualty standards, nternatonalzaton (as new foregn markets, Jansson & Sandberg, 2008), etc. Although there are some common determnants of most of the globalsaton-specfc factors, the latter are dstnctve due to ther own specfc determnants. Each nnovaton depends on nternal factors such as strategy, organzatonal routnes, human captal, etc. (Wang et al., 2010); external factors such as ndustry sector, regulatons, access to fnance (Galanks, 2006: 1231); and factors lnked to the entrepreneur s characterstcs: learnng, market orentaton, etc. (Masurel et al., 2003). Therefore, the basc factors are fundamental for the development of globalsaton-specfc factors. If we consder SME development over consecutve perods of tme, we may fnd an nterrelatonshp between basc and globalzatonspecfc factors consstng of the followng: on the one hand, basc factors determne success or falure of any nnovaton. On the other hand, once an nnovaton s accomplshed, t leads nevtably to a subsequent change n basc factors (re-organzaton of technologcal process, development of new sklls related to the nnovaton through staff tranng or hrng, etc.). Therefore, t could be consdered that present structure and contents of basc factors are result of prevous efforts, ncludng efforts n nnovatons. In the same tme, basc factors determne present attempts to nnovate, whch agan, followng a chan re-acton, re-shape SME basc factors n future perods. Further analyss on ther causalty could lead to a concluson that n the present perod basc and globalsaton-specfc factors mght be referred to as frst-order and second-order factors for SME compettveness RESEARCH QUESTION, CONCEPTUAL MODEL AND HYPOTHESIS Although most of the globalzaton-specfc factors are vewed as adequate responses of the SMEs to the new envronment, the above models do not account for ther relatve mportance. Besdes, these models are appled to perods of economc growth and do not consder changes n factors confguratons pertanng to perods of economc crses or post-crss recovery. The present artcle s am s to contrbute to fllng these gaps by offerng an answer to the followng queston: Do globalzaton-specfc factors have a sgnfcant mpact on SME performance n tmes of crss and post-crss recovery? On the bass of the SCP/ IO and RBV approaches, as well as the confguraton theory, we suggest a conceptual model depctng the confguraton of the basc and globalzaton-specfc factors for SME compettveness (Fg. 1). The role of the basc factors n the model s as follows: they are fundamental for the successful SME performance, and they also determne globalzaton-specfc factors wthn the frm. The 5

6 Busness Systems Revew, ISSN: nature of the relatonshp between basc and globalzaton-specfc factors s suggested on the bass of prevous research fndngs as dscussed above, but ths relatonshp s not analysed here. Fgure 1. Confguraton of basc and globalzaton-specfc factors n determnng busness performance Concepts, explanng SME compettveness: External factors (SCP/ IO approach), Internal factors (RBV approach), Entrepreneur s profle, and Combnaton of dfferent external and nternal factors (Confguraton theory) Basc factors for SME compettveness Globalzaton-specfc factors for SME compettveness SME performance Smlarly to the stuaton n the large enterprses, the globalzaton-specfc (or nnovatons-based) factors, are crucal for obtanng sustanable compettve advantages, whch have not been usually related to SMEs before the globalzaton, but nowadays are of sgnfcant mportance for SMEs compettveness. Thus, busness results of SMEs depend on both basc and globalzaton-specfc factors. Here, we attempt to fnd evdence for the confguraton of the two types of factors wth respect to ther mpact on SME performance durng the recent global economc crss, as well as to track the changes emergng durng the observed economc recovery. The hypotheses, whch are tested wth data sets on SMEs and ther performance for each of the two perods, are as follows: H 1 : Globalzaton-specfc factors have a sgnfcant mpact on SME performance. H 2 : The confguratons of the two types of factors wth respect to busness performance dffer n tmes of crss and post-crss recovery. Prevous research has shown that globalzaton-specfc factors are crucal for large companes; therefore we assume they have a sgnfcant mpact on SME performance as well. Snce theory and emprcs have not prescrbed whch of the two types of factors has a leadng role, we assume they are of equal mportance. We assume that there may be varatons n the confguratons of the two types of factors regardng SME performance n the dfferent phases of the busness cycle, but exstng research does ndcate nether such varatons, nor what the nature of such varatons mght be n perods of prosperty or recesson, etc. Hypothess testng for the two perods takes ths restrctve assumpton nto account. 6

7 4. DATA AND EMPIRICAL METHODOLOGY Busness Systems Revew, ISSN: Data from the annual SMEs surveys conducted n the begnnng of 2011 and 2012 for the Bulgaran Small and Medum Enterprses Promoton Agency are used 4. The 2011 survey was focused on the compettveness and performance of the Bulgaran SMEs n a year of economc crss 5. The 2012 survey kept the same focus but the reference perod was 2011, when a modest economc recovery was observed 6. The sample descrpton for the two waves s provded n table 1 below. Table 1. Sample descrpton Year Sample Frms sze Feld of economc actvty sze Mcro Small Medum Manufacturng Constructon Servces Trade % 9% 2% 13% 6% 40% 41% Core sample % 9% 2% 19% 6% 45% 30% Booster on bgger SMEs 50-53% 47% 47% 8% 21% 24% Source: 2011 and 2012 Annual SMEs Survey, Bulgaran Small and Medum Enterprses Promoton Agency Based on the conceptual model presented above, questons about busness performance and actvtes related to SME compettveness were formulated and used n both survey waves. Busness success can be measured through varous fnancal and non-fnancal ndcators, though the lterature does not dentfy a generally accepted lst of varables 7. Here, SME performance s measured through the usage of dummy varables (lack of decrease n sales vs. decrease n sales). Standard questonnare was used coverng questons on the mplementaton of actvtes related to SME compettveness and provded answers were used to construct ndexes for seven factors for SME compettveness 8 : (1) nnovatons; (2) nternatonalzaton; (3) trademarks and patents; (4) nformaton and communcaton technologes; (5) busness and marketng strateges; (6) human resources development; (7) access to fnance. Indexes 9 were constructed as rato between the sum of ndvdual scores and the maxmum sum of scores of the consttutve tems, and multpled by 100. Index values vary from 0 to 100 so that the close the values to 100 are, the better developed s the relevant factor 10. The emprcal testng of the formulated model s done usng a lmted number of basc and globalsaton-specfc factors, namely: Basc factors: human resource development, mplementaton of busness and marketng strateges, and sze of company (nternal factors); access to fnance (external factor); age, educaton and gender of the entrepreneur (entrepreneur profle); Globalzaton-specfc factors: nnovaton actvtes, nternatonalzaton, ownershp of trademarks and patents, and usage of nformaton and communcaton technologes. The mpact of the factors for compettveness on busness performance was estmated through logt models explanng the lack of decrease n sales. The acceptance or rejecton of H 1 was based on the followng relatonshp: D c1 1G1, 2G2, 3G3, 4G4, u1, (1) 7

8 Busness Systems Revew, ISSN: where D s a dummy varable, wth a value of one ndcatng no decrease n sales of the th frm, and a value of zero ndcatng the frm suffered a decrease n sales. G j, j = 1,,4 denotes the four globalsaton-specfc factors under consderaton, c 1 s the ntercept term, and u 1,j represents the stochastc error. Model (1) was estmated for the two perods consdered. In addton, a smlar specfcaton for the basc factors was used: D c2 1B1, 2B2,... 7B7, u2, (2) Where B j, j = 1,,7 denotes the seven basc factors under consderaton, c 2 s the ntercept term, and u 2,1 s the stochastc error. Model (2) was also estmated for the perods of economc crss and post-crss recovery. 5. RESULTS AND DISCUSSION 5.1 Compettveness of the Bulgaran SMEs Usng the survey data we have computed ndces for compettveness factors of the Bulgaran SMEs for the two perods of nvestgaton. The ndex values were grouped nto fve ntervals: low level [0, 20], rather low level (20, 40], average level (40, 60], rather hgh level (60, 80], hgh level (80, 100]. The dstrbuton of ndex values s provded below (table 2). Table 2. SME factors for compettveness: share of SMEs by grouped ndex values (%) Factors for compettveness Type Factors Low Rather Average Rather Hgh Low Rather Average Rather Hgh low hgh low hgh 1. G Innovatons G Internatonalsaton G Trademarks and patents G Informaton and communcaton technologes 5. B Access to fnance B Human resources development B Busness and marketng strateges Notes: G Globalsaton-specfc factor; B Basc factor Source: 2011 and 2012 Annual SMEs Survey, Bulgaran Small and Medum Enterprses Promoton Agency, own calculatons Each table cell contans the percentage of frms havng the respectve level of factor development. The data show that there was an overall mprovement n the level of development of the globalsaton-specfc factors for compettveness n In the begnnng of 2012, ndex values shfted sgnfcantly to the rght secton of the dstrbuton whch accounts for hgher level of compettveness. The factor-specfc data show that there was an ntensfcaton of nnovaton actvty. Ths could be explaned manly wth the adopton of new organsaton of producton targetng cost 8

9 Busness Systems Revew, ISSN: optmzaton. Nevertheless, n about 82% of SMEs n 2012 the nnovaton actvty remaned at low or rather low levels. The most nnovatve companes were medum-szed and small frms, most of them n manufacturng, whle the least nnovatve ones were mcro enterprses, most of them n trade. As other researchers have shown, the SMEs sector experenced an nnovaton management defct (O Regan et al., 2005). Increased values of the nternatonalsaton ndex corresponded to the mprovements n the export poston of the country n Accordng to the ndex values, 95% of the SMEs n 2011 and 78% n 2012 had a low level of nternatonalsaton, whle the rest had rather low or average levels. Companes wth rather hgh or hgh levels of nternatonalzaton were observed only occasonally. The most nternatonalzed were medum-szed and small frms, most of them n manufacturng 11. The hgher ndex value for trademarks and patents could be explaned by the partal mprovement of the nsttutonal envronment and by the slght smplfcaton of the ndex methodology n Humphrey & Schmtz (2002) demonstrated that SMEs could be more successful by developng hgher qualty or creatng ther own brands and trademarks. However, ths s a dffcult task n extremely compettve nternatonal markets. Index values ndcate that 94% of the Bulgaran SMEs n 2011, and 73% n 2012, had low level of these actvtes. There were only solated cases of hgh levels of such actvtes whch could be explaned wth nsuffcent fnancal resources. The hgher level of usage of nformaton and communcaton technologes followed the general trends of dgtalsaton of government and households. The role of the sector n ICT mplementaton corresponds to the data from other studes (e.g. Olvera and Martns, 2010). However, ther ntroducton to smaller busnesses s hndered by varous dffcultes (Faban et al., 2005, Ramdan & Kawalek, 2007: 49). These practces were more developed n SMEs n bgger ctes and less developed n smaller settlements, whch data are n lne wth other fndngs (Forman et al, 2008). Smlarly to the globalsaton-specfc factors, n early 2012 the ndex values of the basc factors ndcated a consderable progress n SME compettveness. Access to fnance mproved snce an ncreased number of SMEs benefted from bank credts n addton to n-house cash and unncorporated sources of fundng. In early 2011, fnancng was at low access levels for 93% of the SMEs, whle n 2012 ths share dropped to 69%. These fndngs correspond to the European Central Bank (ECB) data for 2010 and 2011, whch showed dffcultes n SMEs access to fnance n the European Unon (ECB, 2010, 2011). The bggest dffcultes n fnancng were observed n mcro enterprses, where the average ndex values were two tmes lower than n the medum-szed enterprses. Usually, banks grant credts to smaller frms under a hgher nterest rate and larger collateral because of hgher nformaton asymmetry, whch makes small busnesses prefer usng nternal funds (Klapper et al., 2006). In general, SMEs offer less staff tranng, because they fnd costs to be hgher than the expected return to tranng (Westhead & Storey, 1997: 63). Index values confrm a postve development n human resources. Two thrds of the SMEs provded some tranng for one or more of ther employees, whle 17% of them had varous types of tranngs for ther management and staff. Other studes have also revealed the mportance of human captal (Johnson et al., 1996). Accordng to Warner (1996), learnng and nnovaton n modern economes are nextrcably lnked (Warner, 1996: 348). Therefore, companes wth lmted resources (as SMEs) or 9

10 Busness Systems Revew, ISSN: countres wth lmted natural endowments should nvest n human captal as a strategy for compettve advantage (Chen et al., 2005). Good practces n developng busness and marketng strateges became mplemented more often n the post-crss perod. Whle n the perod of economc crss 3% of the SMEs mplemented such practces at a hgh level, n the post-crss year 19% of them started usng such ntensvely. 5.2 Emprcal evdence on the confguraton of basc and globalzaton-specfc factors n the determnaton of busness performance The specfed equatons n model (1) and (2) were analysed through logt method of estmaton. The acceptance of the hypothess s done through a lkelhood rato (LR) test checkng whether H 0 : , and through the Hosmer-Lemeshow test (H-L test) whch provdes evdence whether there s a dfference between observed and predcted values. The acceptance or rejecton of H 2 was supported by standard measures of goodness-of-ft for logt models lke specfcty, senstvty and percentage of correct predctons of the two specfed equatons. Usng these goodness-of-ft measures, we try to dentfy whether one of the two types of factors has a domnant nfluence on SME performance, or both of them are of equal mportance. Thus, we provde evdence for the confguraton of basc and globalsaton-specfc factors regardng sustanng the levels of frm s sales. The estmaton output s presented n table 5 n the Appendx. Table 6 and 7 n the Appendx contan addtonal nformaton about the mean values of the explanatory varables (ndexes for compettveness) wthn each category of the dependant dummy varable (ndcatng for the busness performance). The econometrc results for the perod of economc crss do not provde suffcent evdence to accept H 1. The LR test shows that there s jont sgnfcance of the coeffcents n front of the globalzaton-specfc factors but the probablty of the H-L statstc s rather low and we cannot be sure whether actual and ftted values dffer. In other words, there s some evdence that these factors affect busness performance, but t s not suffcently convncng to make a strong concluson (Fg 2). The ndvdual sgnfcance of ncluded factors s checked usng the z-statstc (see the estmaton output n the Appendx), though t has no drect relaton to the research hypothess. The only sgnfcant factor s nnovaton though ts mpact on busness performance could be lmted: the products and servces of nnovatve frms are more expensve, and when ncomes n the economy drop, the demand for and the sales of products of nnovatve frms may decrease (Esposto and Vcarell, 2011). However, nnovatve frms experence stronger growth durng perods of economc recovery and growth (see also Ecorys, 2012: 44). Unlke n the above case, there s suffcent evdence to accept H 1 for the perod of post-crss recovery: both the LR and the H-L tests show the jont sgnfcance of the globalzaton-specfc factors (Fg. 3). Here, the sgnfcant ndvdual factors are nternatonalzaton and ownershp of trademarks and patents. The lack of ndvdual sgnfcance of nternatonalzaton n the prevous year, and ts presence n the post-crss perod could be explaned by the fact that the economc crss was global and affected both export-orented SMEs, and those focused on domestc markets (Berthou and Emlnger, 2010). In a year of nternatonal markets recovery, nternatonalsaton matters once agan. The case of the factor related to trademarks and patents ownershp s analogcal n a perod of post-crss recovery, ntellectual property becomes more mportant for sales. 10

11 Busness Systems Revew, ISSN: Fgure 2. Evdence on the confguraton of basc and globalzaton-specfc factors durng the perod of economc crss Basc factors [human resources development, busness and marketng strateges, sze of company, access to fnance, age, educaton and gender of the entrepreneur] Globalzaton-specfc factors [nnovaton actvtes, nternatonalzaton, ownershp of trademarks and patents, nformaton and communcaton technologes] Prob (LR statstc) = 0% Prob. Ch-Sq (H-L statstc) = 97% Specfcty=95% Senstvty=29% % correct predctons=77% Prob (LR statstc) = 5% Prob. Ch-Sq (H-L statstc) = 8% Specfcty=95% Senstvty=11% % correct predctons=72% SME performance [lack of decrease n sales/ ref. decrease n sales] Fgure 3. Evdence on the confguraton of basc and globalzaton-specfc factors durng the perod of post-crss recovery Basc factors [human resources development, busness and marketng strateges, sze of company, access to fnance, age, educaton and gender of the entrepreneur] Globalzaton-specfc factors [nnovaton actvtes, nternatonalzaton, ownershp of trademarks and patents, nformaton and communcaton technologes] Prob (LR statstc) = 0% Prob. Ch-Sq (H-L statstc) = 48% Specfcty=95% Senstvty=26% % correct predctons=71% Prob (LR statstc) = 0% Prob. Ch-Sq (H-L statstc) = 72% Specfcty=90% Senstvty=27% % correct predctons=69% SME performance [lack of decrease n sales/ ref. decrease n sales] The estmaton of logt models for both perods let to the confrmaton of the jont sgnfcance of the regresson coeffcents n front of the basc factors for SME compettveness. Durng the perod of economc crss, only the mplementaton of busness and marketng strateges had a sgnfcant ndvdual mpact on busness performance. Ths fndng s consstent wth recent research: accordng to Bloom et al. (2012: 617), the qualty of management practces appears to become more mportant durng the crss perod. In the perod of post-crss recovery only the development of human resources and the sze of the company had a sgnfcant nfluence. Predcton classfcaton of the estmated models s used to accept or reject H 2. 11

12 Busness Systems Revew, ISSN: For the perod of economc crss, evdence shows rather low levels of senstvty of the model wth globalzaton-specfc factors compared to the model wth basc factors. The percentage of the correct predctons s also smaller n the case of the globalzaton-specfc factors (Fg. 2). In addton, as dscussed above, the econometrc results do not ndcate a robust relatonshp between globalzaton-specfc factors and busness performance. The emprcal data ndcate that the basc factors have a domnant role n determnng busness performance n a perod of economc crss. For the perod of post-crss recovery, only slght dfferences between the basc and the globalzaton-specfc factors are observed n the values of specfctes, senstvtes 12 and share of correct predctons (Fg. 3). Econometrc results show that both factors seem to be equally mportant and none of them has a domnant role for the busness performance. Therefore, the emprcal analyss allows us to accept H 2 the confguratons of the two types of factors wth respect to SME performance dffer n the two perods. 6. CONCLUSION A major fndng of the research s that the assumed jont sgnfcance of globalzaton-specfc factors for achevng better busness performance may not be vald for all of the busness cycle phases. In tmes of economc slowdown, the globalzaton-specfc factors may not have a sgnfcant mpact on SME performance, unlke the more tradtonal basc factors. Although consdered as fundamental for md-term busness success, nnovatons, nternatonalzaton, etc. may not contrbute for present busness performance n a perod of crss. Once the economy starts recoverng, globalzaton-specfc factors may become of sgnfcant mportance for SME better performance. The basc factors for SME performance reman crucal both n tmes of economc crss and recovery. In tmes of crss when the access to fnance was aggravated and accompaned by a hgh level of nter-company ndebtedness and decreased sales, the short run busness success requred more effcent use of avalable tangble and ntangble resources lke human resource, busness and marketng strateges, etc. A possble explanaton of the obtaned results concernng the confguraton of the factors could be related to the country or SME sector stage of development. It mght be that these confguratons are typcal for the effcency-drven economes, and not for nnovaton- or factorsdrven ones (Porter et al., 2002), but ths hypothess needs further testng. Our proposton of two types of factors for SME compettveness (globalzaton-specfc and basc) does not mply the ntroducton of entrely new factors, but a new perspectve on the tradtonal dvson of nternal, external, and entrepreneur-specfc factors. These factors have not prevously been studed together n terms of ther jont effects on SME performance. Our research fndngs provde emprcal evdence on the role of globalzaton-specfc factors for SME compettveness. The proposed conceptual model allows a further analyss of the confguraton regardng SME performance n dfferent economc contexts (growth, economc crss, and postcrss recovery), n dfferent sectors and countres, etc. Thus, n our opnon, the research fndngs contrbute to the better understandng of the factors of SME compettveness. The smultaneous usage of the SCP/IO concept, the RBV approach (partcularly, the dynamc capabltes paradgm), and the confguraton theory allows the development of a more complex confguraton 12

13 Busness Systems Revew, ISSN: of sgnfcant organzatonal elements, on the one hand, and the ntegraton of components from the external envronment, on the other. The emprcal evdence on the factor confguratons can serve both busnesses and SMEs polcy makers, as they suggest context-specfc measures and polces. There are at least three practcal mplcatons of ths research. The frst relates to the possblty that the economc crss contnues. In such an envronment, the competent SME management should strve to develop new combnatons of assets and sklls whch guarantee the effcent workng of the key compettveness factors. The second mplcaton concerns the mprovement of the SMEs postonng n the global economy as globalzaton opens new opportuntes to access nternatonal markets. The thrd mplcaton concerns the opportuntes to mprove publc polces for SME development. In ths respect the obtaned results could enhance the deployment of nnovatve approaches toward the mprovement SMEs compettveness. The nterpretaton of results should be performed wth cauton due to the small sample szes for the two perods. Other lmtatons stem from the prevalence of mcro enterprses n the 2011 sample (the perod of economc crss) snce mcro frms are typcally less developed wth respect to globalzaton-specfc factors. Another lmtaton comes from the fact that SME behavour was tracked only n two consecutve years, whch happened to represent a perod of crss and postcrss recovery. Observatons over longer perods could contrbute to the better understandng of the roles of these two types of factors n the dfferent phases of the busness cycle. As t s evdent from table 4 n the Appendx, Cronbach s α of ndexes for SME compettveness n some of the cases are not suffcently hgh, whch lmts the scope for makng nferences. A lmted number of varables were used to test the sgnfcance of basc and globalzaton-specfc factors. Fnally, the dstrbuton of the ndex values ndcates sgnfcant dynamcs over a perod of one-two years. Those dynamcs could be explaned by the relatve underdevelopment of the SME sector accompaned by the hgher rate of convergence to the average levels of compettveness n the EU. If there s a sgnfcant progress n the factors for compettveness over the short run, ther mpact on SME performance may become more szable. In spte of the lsted data lmtatons, the emprcal analyss reveals nformatve evdence on the role of factors for SME compettveness durng perods of crss and post-crss recovery. ACKNOWLEDGEMENTS Ths work was supported by the project BG051PO001/ Scence and Busness, fnanced by the OP Human Resources Development under the European Socal Fund. REFERENCES Álvarez, I., Marn, R., Fonfría, A. (2009). The Role of Networkng n the Compettveness of Frms. Technologcal Forecastng & Socal Change, 76(3): Ambastha, A., Momaya, K. (2004). Compettveness of Frms: Revew of Theory Frameworks and Models. Sngapore Management Revew, 26(1):

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18 Busness Systems Revew, ISSN: Zahra, S. A., Matherne, B. P., Carleton, J. M. (2003). Technologcal resource leveragng and the nternatonalzaton of new ventures. Journal of Internatonal Entrepreneurshp, 1(2): APPENDIX Table 3. Questons on SME compettveness ncluded n the survey questonnare and ndex formulae No Type of factor Factors for compettveness Questons 1 G Innovatons Research and development ndcators (R&D): SME establshment of nnovaton nfrastructure (yes or no): 1. avalablty of R&D unt; 2. avalablty of specalzed staff for R&D; 3. applcaton of research fndngs of research nsttutes/fellows; 4. professonal tranng of R&D specalzed staff; 5. keepng and updatng a professonal lbrary; 6. cooperaton wth nsttutons n educaton and scence; SME development of new products (yes or no): 7. ssung of new products on the market; 8. mprovement of exstng products; 9. development of new products to be launch on the market soon. 2 G Internatonalzaton SME partcpaton n specalzed nternatonal trade events (yes or no): 1. exhbton/fars n Bulgara; 2. exhbton/fars abroad; 3. cooperatve stock exchange; 4. nternatonal busness forums; 5. busness delegatons. SME nternatonal trade actvty: 6. avalablty of exports and mports (yes or no); 7. share of exports n the total output (%); 8. share of export sales n the total turnover (%). Index formula Index Innovaton Actvtes (IRD) = R & D Infrastrucutren, n max R & D Infrastructure n 1 n R & D Products n, n max R & D Products n n R & D Infrastructure n, s an ndcator takng values of 0 or 1 wth respect to the avalablty of nfrastructural component n n company. max R & D Infrastructure n n s the maxmum possble value for the sum of all ndcators for the varous nfrastructural components (t s equal to the number of the R&D nfrastructural components used). The notaton for R&D Product s analogcal. Index Internatonalzaton Actvtes (INT) = PR EX 2 PR s ndcatng for the level of partcpaton of the frm n nternatonal trade events (promoton actvtes) so that: PRn, n PR max n PRn PR n, where, s an ndcator takng values of 0 or 1 wth respect to the partcpaton n promoton actvty n n company I, and 18

19 3 G Trademarks and patents 4 G Informaton and communcaton technologes SME ownershp of trademarks and patents (yes or no): 1. n home country; 2. abroad, 3. forthcomng regstratons n home country; 4. forthcomng regstratons abroad. 5. SME avalablty of suffcent fnancal resources (yes or no) 6. for regstraton of trademark, 7. patent; 8. other ntellectual property. SME awareness wth respect to (yes or no)*: 1. value and opportuntes of the brand, 2. procedures for regstraton of ntellectual property n the EU. SME applcaton of ICT (yes or no): 1. mplementaton of management nformaton systems CMS type; 2. mplementaton of management nformaton systems SCM type; 3. mplementaton of management nformaton systems ERP type; 4. mplementaton of management nformaton systems other type; 5. avalablty of company s webste; 6. avalablty of onlne sales of company s products; 7. avalablty of onlne payments; 8. avalablty of electronc Busness Systems Revew, ISSN: max PR n n s the maxmum possble value for the sum of all ndcators for the varous promotonal actvtes (t s equal to the number of promotonal actvtes). EX s ndcatng for the level of exportng actvtes n the frm so that: I E Eo Et EX w1 w2 2 2 Where w 1 and w 2 are weghts whose sum equals 1 (here we assgn them values of respectvely 0.4 and 0.6). I and E ndcate for mport and export actvtes n the prevous year n frm. Eo s the share of export n total output n frm, and Et s the share of turnover that comes from exports. Index Trademarks and Patents (ITP) = TPn, n w1 maxtp n n 100* Fnn, n w 2 max Fnn n TP n, s an ndcator takng values of 0 or 1 wth respect to avalablty of regstered ntellectual property n n frm. Fn s analogcal ndcator whch measures the extent to whch the SME can fnance the regstraton of trademarks and patents. w 1 and w 2 are weghts, whch sum equals 1 (here we assgn them values of respectvely 0.6 and 0.4). Index Informaton and Communcaton Technologes (ICT) = e n, sysn, 1 n n max e n max sysn n n e n, s an ndcator takng values of 0 or 1 wth respect to the usage of nternet technology n n company. max e n n s the maxmum possble value for the sum of all ndcators for the varous nternet technologes (t s equal to the number of technologes n the 19

20 5 B Access to fnance 6 B Human resources development 7 B Busness and marketng strateges sgnature of the managers of the company. SME usage of the followng fnancal nstruments (yes or no): 1. nvestment bank loan; 2. bank loan for workng captal; 3. bank loan for specal purpose; 4. overdraft; 5. credt card; 6. fnancal leasng (for purchase of equpment, automobles, etc.); 7. venture captal; 8. loan from famly and frends; 9. means of the owner(s) of the company; 10. other fnancal nstruments*; 11. EU pre-accesson fundng; 12. EU structural fundng**; 13. government funded programs; 14. thrd party government programs**; 15. other support receved*. SME mplementaton of polces to mprove staff qualfcatons (yes or no): 1. manager s confrmaton that staff qualfcatons s hgh; 2. provded tranngs wthn the frm; 3. provded external tranngs n management and sales; 4. provded external tranngs n the man professonal feld of the company; 5. foregn languages courses*; 6. provded tranngs n ICT usage; 7. other tranngs*. SME avalablty of busness and marketng strateges (yes or no): 1. Short term busness plan (1-2 years horzon); 2. Medum term busness plan (3-5 years horzon); 3. Long term busness plan(over 5 years horzon)*; 4. Developed marketng strategy; Busness Systems Revew, ISSN: questonnare). The notaton of sys stands for the mplementaton of management nformaton systems and s analogcal. Index Access to Fnance (IAF) = Fnancal nstrument n, n 100 max Fnancal nstrument n n Fnancal nstrument n, s an ndcator takng values of 0 or 1 wth respect to the avalablty of fnancal nstrument n n company. max Fnancal nstrument n n s the maxmum possble value for the sum of all ndcators for the varous fnancal nstruments (t s equal to the number of the fnancal nstruments). Index Human Resources Development (HRD) = w1 HR Tranng n, 100* n w 2 maxtranng n n HR s an ndcator for hghly qualfed staff wthn the frm (as assessed by the Tranng n manager)., s an ndcator takng values of 0 or 1 wth respect to tranng actvty n n company. max Tranng n n s the maxmum possble value for the sum of all ndcators for the tranng varous actvtes. w 1 and w 2 are weghts, whch sum equals 1 (here we assgn them values of respectvely 0.4 and 0.6). Index Busness and Marketng Strateges (BMS) = Plan n, M n, 1 n n max Plan n max M n n n 20