Research article

Industrial SME´s management benchmarking in Argentina´s northwestern: a multidimensional approach by specifics indexes definition

Industrial SME´s management benchmarking in Argentina´s northwestern: a multidimensional approach by specifics indexes definition

Resumen

Abstract

A common problem treated in the literature is to know how the firm configures itself according with its competitive and regional environment. These configuration variables can result diffuse and difficult to interpret. In this article a panel of SMEs belonging to four industrial sectors is analyzed: Metal Mechanic, Construction related industries, food industries and large industries.The large industries group is defined as parameter to carry out the benchmarking analysis. In the present work and by media of four indexes definition, related with competitive attitude, process management, production skills and resources costs management, the SMEs panel is descripted and the firms classified. Anbenchmarking analysis is performed in order to visualize the similarities and differences inter-sector in these subjects. The surveys are carried out by the “Maturity grid approach” and statistical analysis are performed to assure the validity of conclusions. The main results of this work shows that metal-mechanic sector perform better than others in all indexes with exception of cost management. Food sector reveals the better performance in cost management, but the competitive attitude is one of the lowest in the panel. All SMEs sectors perform with important differences to large industries panel, but for the cost management index. The main conclusions of this work reveal that there are important differences about firm’s management along the researched sectors. Having in mind the different environments in whichthese firms developed, the “configuration” phenomena manifest in the firms and in the groups, specially marking the differences of the metalwork panel and large industries panel. This kind of research is not evidenced in the literature. In the industry of Tucumán regions no other works of this characteristic was found.

Palabras Clave:

, , ⓘ

Keyword:

Industrial engineering , Industrial SMEs management , Benchmarking ⓘ

Summary

Problem definition

A common problem treated in the literature is to know how the firm configures itself according with its competitive and regional environment. These configuration variables can result diffuse and difficult to interpret. In this article a panel of SMEs belonging to four industrial sectors is analyzed: Metal Mechanic, Construction related industries, food industries and large industries.The large industries group is defined as parameter to carry out the benchmarking analysis.

Methodology

In the present work and by media of four indexes definition, related with competitive attitude, process management, production skills and resources costs management, the SMEs panel is descripted and the firms classified. Anbenchmarking analysis is performed in order to visualize the similarities and differences inter-sector in these subjects. The surveys are carried out by the “Maturity grid approach” and statistical analysis are performed to assure the validity of conclusions 

Findings

The main results of this work shows that metal-mechanic sector perform better than others in all indexes with exception of cost management. Food sector reveals the better performance in cost management, but the competitive attitude is one of the lowest in the panel. All SMEs sectors perform with important differences to large industries panel, but for the cost management index.

Originality and main conclusions

The main conclusions of this work reveal that there are important differences about firm’s management along the researched sectors. Having in mind the different environments in whichthese firms developed, the “configuration” phenomena manifest in the firms and in the groups, specially marking the differences of the metalwork panel and large industries panel. This kind of research is not evidenced in the literature. In the industry of Tucumán regions no other works of this characteristic was found.

Introducción

The main goal of this work is to know how the different sectors of industrials SME of Tucumán province performs according to 4 main characteristic. As it can be seen in (Taticchi, Balachandran, Botarelli, & Cagnazzo, 2008), the lack of resources, the limited cash flow, the dependency of few customers, a fire fighting mentality, the emphasis on current performance, flat organizational structure, means that SMEs require an alternative approach to manage based in performance measures.

In his work, it is aimed at ascertaininghowSMEsfrom different sectors ofthe province ofTucumán, perform. The food industry, the construction related industry and the metalworking industrieswere selected due tothe greatimportance of these sectors tothe study region. In turn,and in order tohave abasis for benchmarking, theanalysis was applied toa pool of large industries,so asto takethe collected data asbenchmarking parameters(Herzog, Tonchia, & Polajnar, 2009).For this group,it is understood thatthe evaluated practices ​​shouldbe sufficiently developedbecause ofthe abilityof large firmsto achievefunctional specialization.

The main SMEs problems to tackle in this work are aligned with (Meunier, 2007)and can be listed as: Competitive attitude, cost management, production management and general process management.

In the research of (Rocha Kachba, Souza Plath, Gomes Gitirana Ferreira, & Forcellini, 2012) the authors relate competitiveness through productivity on Small and Medium Enterprises (SMEs) with the level of quality that these companies are and the market segment they serve. Using a multiple case study and systematic observations in SMEs, they obtain that the quality of the companies is determined by the market segment in which they operate. Quality management is based on the end customer and the view of entrepreneurs look beyond the premises of their companies.

In previous work of (Rodriguez Rey, Boly, Morel, & Forradellas, Performance assets in argentinean industrial SMEs: A two-sector comparison, 2012) it is stated that SME performance referential are very different according to the industry sector, performance measurement is poorly treated. The low tech sector is particularly unattended in this subject and firms are particularly sensible to managerial performance. A set of SMEs belonging to two different sectors – Construction and Foods – are analyzed using an new managerial performance evaluation approach, that use a dynamic approach based in value chain concepts, but including a new framework in which four main concepts are proposed to evaluate the firms performance: Product, Associated services, Information and Operational efficiency.

According to (Kee, 2012) who reviews the concept of Intangible Success factors (ISFs) and Tangible Success Factors (TSFs)  which  are  essential  for  SMEs success, it is found that reasons  for  enterprise success  have  to  do  with  the  intangible  factors. More organizations are paying more attention on ISFs than TSFs as the reasons for enterprise success have to do more with the intangible factors.  The most important ISFs foundare leadership, innovation, entrepreneurial competencies, image and reputation, and organizational culture. SMEs  companies  need  to  transform  themselves  into  highly  competitive  and resilient  organizations  to  stay  ahead  of  the  curve  and  on  the  forefront  of  their  industries. Lastly, the author remarks the importance to identify and leverage on the ISFs for a sustainable competitive advantage in today’s challenging economy.

In earlier works of  (O’Regan, Ghobadian, & Gallear, 2006) it is noticed that considerable  attention  has  been  devoted  to  growth  and performance  of  firms. While the majority  of  literature  in this  area  focuses  on  large firms, research  on  high  growth small firms is underdeveloped. The authors investigate the drivers of high growth in manufacturing SMEs by mean of focus group interviews with managing directors of manufacturing firms. A number of drivers of high growth were identified and investigated in a sample of 207 manufacturing SMEs, obtaining 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. These firms compete largely on the basis of price. 

About evaluating performance, (Chennell, Dransfield, & Field , 2000) states that is necessary to measure at the strategic level to determine external measures driven by stakeholder perspectives of the organization’s performance. A set of Key Performance Indicators is proposed to operate at the tactical level enabling the prediction and management of organizational performance. At the operational level, measures are utilized for monitoring, control and improve the way in which the organization creates and delivers its products.

The present methodology aligns with (Delisle & St-Pierre, 2006) who proposes an approach based in a benchmarking system to evaluate SMEs from an external perspective, in order to produce a diagnosis of their performance and potential. Benchmarking allows SMEs to improve their operational performance thus confirming the usefulness of benchmarking. In fact if the benchmarking approach is tailored to SMEs’ characteristics, an adequate tool can be devised and used to help SMEs increase their performance. In the present research, the PME orientation was have in mind and implemented by four indexes based in simply observable management practices.

The index proposal is based in several works that can be mentioned related with key factors (Rodriguez Rey, Boly, Morel, Camargo, & Forradellas , 2012). About economic intelligence, as basis of performance indicators definition, the models in (Salles, 2006) were taken partially. The multicriteria definition was based in (Morel, Camargo, & Boly, 2012).

The most important results of this work show that companies in the sectors of food and construction operate similarly and with lower performances to metalworking cluster.The latter, generally exceeds the SME sectors analyzed, but its performance is lower than that of large industries. Yet in some ways its performance is pretty close, highlighting the dynamism of this sector.

The breakdown of management practices in the four defined indexes (competitiveness, Cost management, process orientation and production management) is carried out to characterize the sectors analyzed. Also, it can be seen, through benchmarking analysis, the weaknesses and strengths of each sector compared to analogs SMEs sectors and to the sample of large industries in the region.

1. Literature review

1.1. SME Characterization

Micro, small and medium-sized enterprises (SMEs) play a central role in the economy. They are a major source of entrepreneurial skills, innovation and employment. In the enlarged European Union of 25 countries, some 23 million SMEs provide around 75 million jobs and represent 99% of all enterprises.However, they are often confronted with market imperfections. SMEs frequently have difficulties in obtaining capital or credit, particularly in the early start-up phase. (OECD, 2010).

Additionally, smaller firms differ from larger firms in terms of their organizational structures, managerial styles, responses to the environment, and how they compete. SMEs must overcome size disadvantages by creating advantages in flexibility of production, speed of attack, niche strategies focusing on price and quality, and disrupting the status quo through innovation (Bierly III & Daly, 2007).

According to (Salles, 2006) the SME cannot benefit of big volumes of production, economies of scale, etc. They should base their offer on the differentiation, much more than the big companies. Most of the SMEs run in an environment of informality. (Meunier, 2007) States that the SMEs face high degree of financial problems and the typical tools of strategic analysis are not pertinent. The SMEs should think before in surviving rather than grow, so the fight is centered about the vulnerability factors. It is better the SMEs don't face openly to the competition, but rather they look for a niche strategy. SMEs have a necessity of constantly contrast its strategic ambitions against its financial possibilities.

Smaller and especially new firms often lack this organizational capability and, thus, experience running the risk of engaging in managerial undertakings without experience(Rosenbusch , Brinckmann, & Bausch, 2011). SMEs, however, are reported to face a number of impediments to their growth and survival including limited access to financing, limited market power, the lack of management skills, high share of intangible assets, deficient accounting track and insufficient assets(Yoguel & Moori-Koenig, 2000). The scenario of business in that it operates an SME is conditioned by a group of factors, among those that stand out the regulatory frameworks, the rules and political macroeconomic, the industrial strategy and politics, the access to the markets, the degree of complexity of the productive network and the technological and organizational characteristics of the leaders companies in the sector.

1.2. Argentinian SMEs

Argentinian SMEs are mostly familiar ownership. Almost 70% meet these parameters and rise near the 85% in the small firms. The 45% is yet managed by its founders. The familiar characteristic of SMEs impacts over several economic and productivity aspects such as control, expansion, etc. Most of firms aren’t news in the market, they have a vast fund of knowledge. Almost 60% of the firms have a minimal age of 20 years and only 12% are newer than 12 years. The ager SMEs have been developed considerable knowledge stocks about management, technics and relates to engineering, all of them adapted to the uncertain macroeconomic always present in the environment. The newer firms are generally smaller in investment and in workforce size. They tend to be less productivity and operate in the lower layer of the market, where the competitive pressure is weaker. In Argentinian SMEs converges formal knowledge and learning acquired “on the way”. The education level of owners is about 60% media school and only 10% are university graduates with an important level of diversification about the specific scope of the firm. In the low tech firms, this difference accentuates. The great part of learning is achieved by doing and resolving problems. The productivity likening with other firms appears to be significant in the results. The Argentinian SME has a workforce of about 50 stable employees. (Farinelli & Piñero, 2005)

Argentinian SME hasregistered a low level in investment in the last years and a technological path with important interruptions. About 15% of SMEs doses not register an important investment in the last 6 years. The 40% have done a medium size investment (under U$100.000) and the rest have done investment over this amount. The average age of the equipment is about 12 years. Incorporation of new equipment has mainly the goal of cost reduction, increase quality and increase production. (Yoguel & Moori-Koenig, 2000).

In the Argentinian SME the management is strongly centralized and based in abilities linked to manufacturing. The decision making process are centralized and restricted to the owners. In few cases consulting services are used either public or private. Managerial activities are sustained almost totally in manufacturing skills, possible because the experience of founders that usually tends to be the manager. SME tends to diversify its offers as response to the almost constant crisis keeping a high level of horizontal integration.Argentinian SMEs are weakly linked with the regional industrial web due constants change in its offer and target markets. It is not observed in the firms the concentration strategy that allows increase knowledge via specialization. Outsourcing is utilized only faced to demand variation but not as a work division strategy. (Bruera, 2011)

SMEs are almost exclusively oriented to the internal market. Most of SME have tried to export without good results. In part, this occurs due to the administrative difficult that are present in the exportation process. Other strong reason is the existence of a pseudo-service, for example, parts treatment, etc. Argentinian SME are strong business to business oriented. Large proportion of SME does not sell its product to the final market. The other parte sell its products mostly to some external commercialization channel. Most of SMEsdon’t have strategies to medium time. A reduced subset considers as key success factors doing important technical-organizational changes(Farinelli & Piñero, 2005).

The problems facing most competitive firms are completely different from those of concern to the lowest level of competitiveness. The most competitive have difficulty competing in international markets and to incur high costs of logistics, among others. The less competitive, however, receive strong competition in the domestic markets; have problems with decreased profit margins and increased production costs. Beyond business, differences between industrial sectors in terms of competitiveness are important. In the case of sectors that receivestrong competitive pressures from imported goods, high levels of competitiveness are found. (Fundación Observatorio Pymes, 2010)

1.3. Industrial SMEs in Tucumán

In Tucumán there are about 350 industrial SMEs. 80% of industrial companies reside in the Greater San Miguel de Tucumán (Metropolitan area). These are relatively small businesses judging by the number of employees, almost 90% have 50 or less employees. Companies are heavily concentrated in the Food and Drink sector: 55% of Tucumán SMEs is dedicated to this activity. Other items of importance are machinery and equipment and Automotive parts (11%) , base metals and metal products (10.6%).

The Food and Drink Sector has the highest percentage of "new" emerged companies with 40.9% born between 1993 and 2001 and 37.6% after the 2001 crisis.During the years of convertibility (1990s), the birth of companies dedicated to Common metals and Metal Products was very significant, with 51% of total of existents SMEs. By contrast, only 27.2% of the nucleated companies in Chemicals and chemical products, rubber and plastic were opened during the period 1993-2001.

About the formality, the Anonymous Societies (SA) have greater penetration in the category Chemicals and chemical products , rubber and plastic, with 40.3 % of them are organized under this legal form. Among companies with the Basic metals and metal products, and Food and beverages, prevail the uni-personal form with 62.6% and 53.7 % respectively. These two sectors have the lowest degree of formality in their legal organization.

An overwhelming 78% of the industries located in Tucuman are family managed. While this is a common feature of SMEs across the country, Tucumán is above other regions such as the metropolitan area of Buenos Aires.

1.3.1. Construction sector

The construction sector in Argentina, during the last years had a marked expansion in rates of about the 10% annually, depending of the specific areas. Since 2003,construction activityincreased from11,000 to 26,000registered companies,of whichover 90% are small and medium enterprises (SMEs), and grew from 70,000 to500,000 employees, of which 50,000jobswere createdin 2011(Instituto Nacional de Estadísticas y Censos (INDEC), 2010-2011). One of the most important reasons was the unpredictably economy of the next years together with interesting surplus in the agricultural sector and the fall of absolute dollar acquisitive power. This way, the constructions appears as a safe place to invest due the always present idea that real-estate market is a safe place to invest and the prices always go up. In the technological aspect, the construction market is catalogued as traditional. The most of the construction components are in the maturity state in the product life cycle. The firms in the present work belong (almost totally) to the traditional subset (metalwork, windows, doors, ceramics, etc.). Only there is one firm that belongs to the medium tech subset in the sense that works with new materials to make kitchen countertops. Nevertheless, there are within the panel, firms that have implement news technology to its manufacturing process, mostly in the automation area.

In the region where the study was carried out, there is an intense but stable competence. The products are “traditional”, the competence is almost always price intensive, following for the quality intensive. The firms generally don’t sell directly to the final customer; they use the commercial channel of the big construction shops or by media of professionals. Advertising is not well developed, and brand strategy is almost inexistent, the large construction retail companies take care of this issue. The outside competition is weak due the high logistics costs of moving construction material, given to the local products comparative advantages(Ruggirello, 2011).

1.3.2. Food sector

The food sector in the period (2009-2011) was in expansion at rates near 17%(Deloitte, 2011). The reasons in this phenomenon can be found not only to the food consummation increments, but to the level of elaboration in the alimentations products. Today trends (Bio, Diet, regional, additives, etc.) generates value on the food products and increase the sales prices, increasing this way the total sales volume(SAGPyA, 2006).

Theglobal food marketcurrently occupiesa leading role. Food demandis expanding rapidly, driven by the increasein world population, economic growth in emerging marketsand the emergenceof new consumerswith high purchasing power. In developed countriesthere is a growingdemand fordifferentiatedfood: organic  andgourmet.Thesestructural trendsensurea growing marketforArgentine productsand newbusiness opportunities foritspremium food andhighvalue added. The sector is characterizedby a combination oflocal and foreignleading firmswithglobal presence andinnovative small businessesthat exploitmarketniches exclusive. (Deloitte, 2011)

In the interest area, there is an intense competence. This competence includes foreign providers, even internationals. Food preservation and relative low cost in logistics, allows this competition. The firms that are linked to the raw materials of local production (sugar, lemon, berries, etc.) have a comparative advantage to export. The sector is, depending of the final product, of low and medium tech. The internal market is strong with about 3.000.000 consumers in the argentinian northwestern, but some firms open its market to the central zone of the country, with about 25.000.000 of habitants(Instituto Nacional de Estadísticas y Censos (INDEC), 2010-2011).

1.3.3. Metalworking sector

Overall, it can be summarized that in the metalworking cluster of Tucumán,  there are a large majority of companies family-managed and characterized by their small size and working primarily for the sugar sector and citrus (Norte Grande - Programa de competitividad, 2011). On the other hand, there are some relatively large firms that are markedly oriented to the mining sector. There is a large multinational automotive supplier industry, strongly oriented to external markets but almost with no productive links with local companies.

Companies are able to carry out simple product development and / or repair as required. This feature of work "on demand" is crucial for survival. Companies do not have staff specifically assigned to research and development departments. However, they have a workforce with technical skills sufficient to meet such specific customer orders.

Despite the problems mentioned below for SMEs, some companies have been capable to export. Mining companies pull their suppliers towards management processes like the ISO type certifications to ensure product quality. An important part of these firms base their competitiveness on a relationship of trust with their customers and in the geographical proximity with clients in the northwest of Argentina (NOA) . Companies have little linkage with other local institutions, such as universities, government agencies and private consulting firms.

At the provincial level, the manufacturing industry accounted for an average of 19 % of Tucumán GDPs during the period 2003-2007 (Ministerio de economía y finanzas públicas de Tucumán, 2013). According to the economic survey of 2004, the metalworking activity accounted for 20 % of local dedicated to manufacturing, 7% of the jobs held by the manufacturing industry, and 3% of total value added. The metallurgical production accounts, meanwhile, 15% in the industrial total.

According to the (Ministerio de Desarrollo Productivo de Tucumán, 2012), the metalworking sector of Tucumán conforms, at present, nearly 300 establishments (mostly SMEs), which employ about 3,000 people in assembly and production oriented mainly to the local market. As for exports, shows that in 2010, exports of industrial manufactures accounted for 29 % of the value of provincial exports, with an increase of 76% of the value of these exports over 1998.

1.3.4. Large industries

The GDP (Gross Domestic Product) of Tucuman represents about 2.1% of GDP in all Argentina. This makes Tucumán the province with largest production capacity in the northern region of Argentina. The impact of economic activities in the Tucuman´s PBG is as follows: Primary or extractive 10.2%, Industry 23.8% and Services 66%(Ministerio de Desarrollo Productivo de Tucumán, 2012).

In general, Argentinian northwester the region is relatively small firms predominant. About 88% of industrial SMEs in the province have 50 employees or less.The main exporting industrial complexes in the province are:

• Fruit sector, comprising derivate of lemon, strawberries, blueberries and other fruits
• Sugar Sector, which comprises all types of exported sugar, alcohol and candy and other goodies
• Automotive Sector, parts, accessories and vehicles
• Pulp and paper industry, paper and cardboard
• Textiles

Among the biggest companies in the province, nearly 50 % are sugar factories and distilleries. Of the remaining 50%, it can be said that is divided proportionally between the sectors Food, Textile, Construction and Citrus derivate(Fundación Observatorio Pymes, 2010).

1.4. Performance measurement in SME

In recent years, literature has identified the increasing complexity of small and medium-sizedenterprises (SMEs) and highlighted their sensitivity to differences in managerial culture andmanagement systems(Garengo, Biazzo, & Bitit, 2005). Research has shown that performance measurement systems (PMSs)could play an important role in supporting managerial development in these companies. Constrain to apply PMS in manufacturing SMEs are defined, e.g. lackof financial and human resources, wrong perception of the benefits of PMS implementation,short-term strategic planning.PMSs should support SMEs to manageuncertainty, to innovate in their products andservices, and to sustain evolution and changeprocesses.PMS could support the decision-making processes in SMEs and help themimprove their management processes andstrategic control.

In addition, SMEstend to have poor strategic planning and donot fully understand what their critical successfactors are new technologies help to reducethe costs of implementing PMS. The mains difficulties to SMEs adopting performance measurement are lack of time for non-operational activities and the weak understanding of topmanagers in the PM project. Even if general models were applied correctly, they would be inadequatefor the particular characteristics of SMEs, like can be the Balanced Scorecard. Generally there is a poor alignment betweenstrategy and measures.

Performance measures usually focus on past activities and in the control dimension. SMEs with a quality culture place more attention on indicators, probably because quality programs. Despite the recognized importance of performance measurement in SMEs, there are almost no models specifically aimed to SMEs.SMEs are characterizedby poor strategic planning and their decision-making processes are not formalized.SMEs require approaches that respond to theirspecific needs and are efficient and easy to implement.

• The design of PMSs for SMEs must consider strategy, but with strong focus on operational aspects, since these are the aspects that are critical for the success of SMEs.
• Alignment between strategy and performance measurement is particularly important in SMEs due the lack of formalized strategy, and implementing a PMS could promote the definition or formalization of business strategy.

About balance, scholars take different approaches to balance; balancebetween internal and external measures, in measures different organizationallevels, etc. Balanced models can be defined as models that adopt different perspectives ofanalysis and manage them in a coordinatedway. In the present work, balance between strategic and operational actions is proposed. This way, two indexes related with strategic issues are proposed (Competition and costing) and two indexes with operational focus (Production and process management).  

Lastly, about clarity and Simplicity, It is marked that the PMS has to have the following characteristics:

• Clear definition and communication of the fixed objectives.
• Careful selection of the measures to be used.
• Clear definition of measures.
• Clear definition of how to gather and elaborate data.
• Use of relative instead of absolute measures.
• Definition of how the processed information has to be presented.

According to the literature, SMEs need asimple PMS that can give the managementfocused, clear and useful information. The number ofmeasures used should be limited(Bierly III & Daly, 2007).

1.5. Benchmarking

Benchmarking for best practices was first implemented by Xerox in 1979 and has been applied in almost all operational and managerial areas by numerous researchers (Hurmelinna, Peltola, Tuimala, & Virolainen, 2002). The process of Benchmarking implies improving performance by continuously identifying, understanding (studying and analyzing), and adapting outstanding practices and process found inside and outside the organization and implementing the results (Zairi & Jarrar, 2010). Today, benchmarking is wide used as decision making tool in areas such as supply chain (Garcia, Marchetta, Morel, Camargo , & Forradellas, 2012); manufacturing, commerce and in innovation field (Radnor & Robinson, 2000), (Hurmelinna, Peltola, Tuimala, & Virolainen, 2002), (Herzog, Tonchia, & Polajnar, 2009).

To explore the relationship between technological innovation capability and competitiveness, (Guan, Richard , & Kam Mok , 2006) have used the  multi-objective DEA projection model to benchmark competitiveness in a set of electrical manufacturing firms in China. To determinate the relationship between strategic alignment and business performance, (Sánchez, Lago , Ferràs , & Ribera, 2011) have developed a model and applied it to electronic industry, determination the innovation profile of the sample. In Finland, (Hurmelinna, Peltola, Tuimala, & Virolainen, 2002) have used benchmarking to compare the performance of the buyer-suppliers relationship in high tech industry.

2. Methodology

2.1.Enterprise panel

In this research a panel of 33 enterprises was approached. Of these, 28 are SMEs and the others 5 can be considered as large enterprises. This last were utilized to construct the index values considered as parameters.

The panel of companies studied is described below:

Construction Sector

Soil preparation (3)

Facilities (5)

Operational Auditing (1)

Factory supplies (2)

Total (11)

Large industries Sector

Journal (1)

Refineries and distribution of oil (2)

Mining (1)

Pulp and paper (1)

Total (5)

Food Sector

Breads and pastas Factory (3)

Fish Derivatives (1)

Sweet Industry (2)

Balanced food (1)

Canned (2)

Services (1)

Total (10)

Metalworking

Industrial facilities (2)

Frames (3)

Specials services (2)

Total (7)

2.2 Practices and Indexes

The 18 management practices measurement was done utilizing the maturity grid approach (Maier, Moultrie, & Clarkso, 2012)and by media of asurvey. Then, the practices are aggregated into the four indexes by multicriteria approach (González, Camargo, Nemery, & Sepúlveda, 2010).

In the maturity grid, a central statement was proposed and included in each of the management practices. The methodology of expert panel was used to determinate the states of the grid and to include a central one that stays the “expected” value of the response(Maier, Moultrie, & Clarkso, 2012). This way, a typical enterprise would have a central profile in which all the management activities could be done in a“standard” way. That is, of course, strongly dependant of the size of the firm. In small firms in which all the functions are not necessarily defined, the activity could be not have an specific responsible, but that doesn´t mean that the activities are not performed.

MainProductioncostsmanagement

2.3. Indexes construction by aggregating practices

According to (Assielou, Morel, & Boly, 2002) the outcomes of the practices were analyzed. It is important to define these outputs in a unique way and in a evaluable way. According to (Morel, Camargo, & Boly, 2012), activities represent the aptitude and efficacy that the firm has to use its resources to obtain results. These are not easily observable and barely formalized in the SMEs. These doesn´t have enough traceability to can identify a posteriori. By the Expert Panel methodology (Hsu, 2007), the weights for the practices where defined and the positions in maturity grids were assigned. Always the worst case was valued as cero and the best, as “1”. The “standard value takes the “0,5” value and the others 0,25 and 0,75 depending of the relative position.

3. Results

In the following graphics, it is possible to see the results of the research.

Figure 3.1: Competitive attitude Index by sectors

In the Figure 3.1 it is possible to note that Large Industries perform better, followed by Metalwork’s companies

Figure 3.2: Process orientation Index by sectors

Figure 3.3: Production skills Index by sectors

Figure 3.4: Cost management Index by sectors

Table 3.1 Competitive Attitude Index – Significance of differences

Table 3.2Process OrientationIndex – Significance of differences

Table 3.4Cost ManagementIndex – Significance of differences

4. Conclusions

As we can see in the figure 3.1, the metalwork sector performs better in competitive attitude than others sectors, but large industries. This last consideration will remain in all other indexes. About process orientation, construction sector perform better than others, maybe because the “project oriented” profile that is typical in these sector. Anyway, there are no significant differences.

About cost production skills, metalwork’s enterprises again perform better than others, may be due the relative technological intensive of the equipment in the sector, according with the mining industry requirements.

About statistically significance of differences, it is possible to observe that large enterprise perform better than SMEs in almost all the defined indexes. It is aligned with the results of (Salles, 2006), and (Meunier, 2007), among others. The lacks of strict functionalization in the day to day task takes the SMEs to avoid accumulate experience in the management of certain activities.

In the case of cost management, the results obtained are not aligned with the classical literature. Theoretically, large firms would have better cost management than average SMEs. In this case, the differences can be due that in the large enterprise panel are included several enterprises that are subsidized by the National State, in order to industrial activity promotion. 

To conclude, it is possible to observe that clustering activity in an industrial sector can improve the performance of individual enterprises. The metalwork cluster has a double impulse for this performance: One (and may be the most important) the mining sector who, in order to fulfil the international requirements, ask for constant quality improvement to its providers. The other important impulse comes from the relatively strong competence generated for the large industries that are very cost sensitive (like sugar industry) and generates the need of an important cost management, beside industrial skills(Robert, Pereira, Kataishi, & Yoguel, 2012).

About process orientation (Figure 3.5) we can see that is the index less developed in the SMEs panel. This fact presents an important opportunity to obtain competitive advantages.

5. Limits an further research

The limitations of this work are mainly related with the number of enterprise analyzed in each sector. It would be necessary to increment the number of enterprises to obtain conclusive results. In other, the lineal scale utilized to evaluate the practice intensity could be no adequate to compare different sectors.

Other limitation of this research is about the lack of information about the size of the firms, the evolution of annual sales, the geographic emplacement, and other information that can be useful to understand the performance phenomena. 

For future researches, it would be interesting to relate this four defined indexes with enterprise growth and exportation capabilities, in order to ensure the validity of conclusions as recommendations for SMEs that are in the international commerce path.

Bibliografía - Bibliography

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Industrial SME´s management benchmarking in Argentina´s northwestern: a multidimensional approach by specifics indexes definition

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Ciencia y Técnica Administrativa - CyTA