Nehete Rupendra Sharad

R S Nehete VJTI
Friday, November 18, 2011
FACTORS INFLUENCING THE PERFORMANCE OF SMALL SCALE AND MEDIUM SCALE FIRMS IN AND AROUND MUMBAI
Name of Student : Name of Guide : Name of Co-Guide:
Nehete Rupendra Sharad Dr. B. E. Narkhede Dr. S.K. Mahajan
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CONTENTS
Part 1: INTRODUCTION Chapter One: i) ii) iii) iv) Introduction Background to the Research Research Problem Justification For The Research Scope of the Study 02
Part 2:
Literature Review Chapter Two: Operation Level Factors Chapter Three: Entrepreneurial Skills Research Framework and Method Chapter Four: Theory Development i) Development of Independent Constructs ii) Development of Dependent Constructs iii) Organizational Level Factors and Performance iv) Summery Chapter Five: Research Methodology Chapter Six: Research Methods Analysis and Results
04 05 14 19 19
Part 3:
24 32 38
Part 4:
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INTRODUCTION

This study examines the relationship between the operational level factors and the operational performance for small and medium scale enterprises. The entrepreneurial skill needed to operate the SMEs is also important as these industries are entrepreneur specific so this issue is also taken in this research for study. The exploratory study is carried out to formulate the theoretical basis for operational level factors important for SMEs and their operational performance (priorities). There after the model is formulated based on the research objectives and the hypothesis coming out of literature review. The model is tested by structural equation method using AMOS 7 software to find out the relationship between observed and unobserved (latent) variables. The second research problem of entrepreneurial skills is also studied through exploratory study as well as statistical analysis.
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RESEARCH PROBLEM
What are the key operation level factors important for business performance of SMEs? What are the skills important for business performance of SMEs?
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OBJECTIVES
To determine the operational level factors that influences the business performance of SMEs. To find out the key operational level factors influencing the business performance of SMEs. To determine the skills that influences the business performance of SMEs. To determine the key skills that influences the business performance of SMEs
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LITERATURE REVIEW
Definition of MSM Enterprises Type of Enterprise Investment in plant and machinery/equipment (excluding land and building)
Manufacturing Enterprises
Micro Small Medium Up to Rs. 25 lakh More than Rs. 25 lakh and up to Rs. 5 crore More than Rs. 5 crore and up to Rs. 10 crore
Service Enterprises
Up to Rs. 10 lakh More than Rs. 10 lakh and up to Rs. 2 crore More than Rs. 2 crore and up to Rs. 5 crore
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OPERATION LEVEL FACTORS
Skinner conceived a model for manufacturing strategy in which the competitive environment suggest a basic business strategy which in turn suggest the manufacturing mission or strategy. This mission can be encapsulated in to choices made with respect to four competitive priorities: cost, quality, delivery and flexibility. The design of the manufacturing system can be made to fit the strategy by making appropriate tradeoff or decisions in key areas. Further, Skinner suggested five areas where tradeoff decisions had to be made to assure a fit between business strategy and manufacturing: 1) plant and equipment 2) production planning and control 3) labor and staffing 4) product design/engineering; and 5) organization and management Bryan D. Prescott (1995) has presented ten essentials for business success such as customer centered organization, customer centered leadership, customer centered strategy, management of people, training and developing people, management of resources, process control and improvement, customer satisfaction, employee satisfaction and; community satisfaction.
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OPERATION LEVEL FACTORS
Hayes and Wheelwright (1984) have proposed that congruency among operations managers should exist at two levels. They should agree on (1) where the organization is trying to go (competitive goals or priorities) and (2) the day-to-day decisions that involve trade-offs among priorities and that, over time, create a pattern of manufacturing strategy. Various manufacturing practices such as TQM, JIT etc. are followed in industries to excel in organizational performance. The objective of the practices, as management commitment and training to workers, is to produce improvement in operative and business performance (Powell, 1995). Literature review is carried out to find out the operation level factors and are examined for six factors such as PC =Process control and improvement, MR=Management of resources, MP=Management of people, TD=Training and developing people, TW= Team work, PS=Partnership with suppliers
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CONCEPTUAL FRAMEWORK FOR THE THESIS
1. Process control & improvement 2. Management of resources 3. Management of people 4. Training & developing people 5. Team Work
Operational performance Growth in Productivity Cost, Quality, Flexibility, Delivery
6. Partnership with Suppliers
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The first construct process control and improvement refers to the productivity and flexibility are as good as, or better than, the best of competition; processes are under control and innovation and continuous improvement are encouraged (Bryan D. Prescott, 1995, Skinner W.,1974, Haynes R.H., Wheelwright S.C., 1984, T. J. Hill ,1992, Eve D. Rosenzweig, and George S. Easton, 2010). The second construct management of resources refers to utilization of resources is on a par with the best of the competition and technology is effectively used to improve productivity and flexibility (Bryan D. Prescott, 1995, Haynes R.H., Wheelwright S.C., 1984, Eve D. Rosenzweig, and George S. Easton, 2010). The third construct management of people refers to the employing flexible leadership style, insist on personal responsibility for quality and provide the tools, information, empowerment, and support required for people to participate in a quest for excellence in all aspect of the business (Bryan D. Prescott, 1995, Skinner W.,1974, Haynes R.H., Wheelwright S.C., 1984, T. J. Hill ,1992, Buffa,1984, Fine & Hax, 1985, Peter T. Ward et.al.1990, Eve D. Rosenzweig, and George S. Easton, 2010)
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The forth construct training & developing people refers to the supply of qualified, competent and flexible people which are sufficient to meet operational demands and contingencies and training is cost effective and based on company standards (Bryan D. Prescott, 1995, Fine & Hax, 1985, Ricardo M. Pino 2007, Eve D. Rosenzweig, and George S. Easton, 2010). The fifth construct team Work refers to the cumulative actions of the team (group of people) during which each member of the team subordinates his individual interest and opinions to fulfill the objectives or goals of the group (Besterfield Dale H. et.al., 2003, Flynn Barbara B; Sakakibara Sadao; Schroeder Roger G., 1995, Eve D. Rosenzweig, and George S. Easton, 2010) The sixth construct supplier partnership refers to long term commitment to achieve quality, increased efficiency, lower cost, innovation and continuous improvement of products and services between two or more organizations (Ricardo M. Pino, 2007, Eve D. Rosenzweig, and George S. Easton, 2010)
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Table 4: operation level factors studies
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OPERATION LEVEL FACTORS STUDIES

Authors Powell, T.C. (1995) X PC X MR X MP X TD TW X PS
Ahire, S.L., Golhar, D.Y., Waller, M.A (1996)

John Miltenburg (2008) Samson, D., & Terziovski, M. (1999) Huarng, F., & Cheng, Y. (2002) Li, J.H., Anderson, A.R., & Harrison, R.T. (2003) Lagrosen S. (2002) Agus, A. (2005) Li, J.H., Anderson, A.R., & Harrison, R.T. (2003) Sadao Sakakibara, Barbara B. Flynn, Roger G. Schroeder(1993)
X
X X X X X X X X
X
X X X X X X X X
X
X X X X
X
X X X X X
X
X X X
X
X
X X
X X X
X X X
X X
J. Ukko, J. Tenhunen, H. Rantanen(2007) Honggeng Zhou et.al.(2008) X
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OPERATION PERFORMANCE OR PRIORITIES
Skinner (1974) described common competitive performance criteria for manufacturing strategy such as short delivery cycles, superior quality and reliability, dependable deliveries, fast new product developments, flexibility in volume changes and low cost. Hayes and Wheelwright (1984) have defined this term as price (cost), quality, delivery dependability, and flexibility. Ferdows and De Meyer (1990) identified four dimensions: cost, quality, dependability, and flexibility. Corbett and van Wassenhove (1993) point out that competitive capability represents, to a great extent, product, place, and price dimensions. Product refers to the physical dimension, such as quality. Place includes delivery issues and the availability of products. Price refers to the amount a customer pays for the product or service. Additionally, they state that these measures of capabilities have their counterpart in terms of competencies in the sense that capabilities are outward looking while competencies are inward looking. As an example, the counterpart of price is cost.
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OPERATION PERFORMANCE OR PRIORITIES
Wood et al. (1990) examined the dimensions of manufacturing capabilities that focus on the following capabilities: low price, high product performance, high durability, high product reliability, short delivery time, delivery on due date, product customization, number of features, product cost, conformance to design specifications, improved manufacturing quality, cost, on-time delivery, product cost, quality consistency, quality perceived by customer, and product price Vickery et al. (1993) suggest a list of production competence characteristics including product flexibility, volume flexibility, process flexibility, low product cost, delivery speed, delivery dependability, production lead time, product reliability, product durability, quality, competitive pricing, and low price. Driven by its business strategies, a firm sets competitive priorities and develops action plans. As action plans are implemented, manufacturing competencies are developed and these competencies allow a firm to build manufacturing capabilities that enable them to compete in the market (Koufteros et al., 2002).
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OPERATION PRIORITY STUDIES
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LITERATURE REVIEW ON ENTREPRENEURIAL SKILLS
Business success is related to the achievement of goals and objectives. The different stakeholders may have different goals and aspirations for the enterprise, and they may change over time Jennings and Beaver (1997, 67 - 68) suggest that it would be appropriate to regard an entrepreneur as the primary stakeholder and to consider how she or he might define success or failure Some researchers have argued that success is driven by the entrepreneurial orientation (Covin & Slevin 1991; Lumpkin & Dess 1996; Wiklund & Shepherd 2004) According to Lumpkin and Dess (2001), the concept of entrepreneurial orientation consists of five dimensions: autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness. According to de Koning and Brown (2001), the entrepreneurial orientation is positively associated with opportunity alertness.
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Shane (2000) has discovered that people recognize the opportunities related to the information and knowledge, they already possess. Small business success has often been classified into three categories of antecedents: the individual characteristics of the owner-manager, firm characteristics and environmental characteristics (Cragg & King 1988; Rutherford & Oswald 2000). Beal (2000) provides a similar model. He emphasizes that both external and internal alignment influence a firms performance. The external alignment means the alignment between the competitive strategy and the industry life cycle stages, and its effect on the performance. The internal alignment means the competitive strategy and the small business managers functional experience and its effect on the performance. According to Jennings and Beaver (1997), a popular belief is that superior performance and competitive advantage in the smaller firm is invariably equated with successful business development culminating in exceptional return on the investment, sales growth, volume, profit and employment.
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MODELS OF FIRMS SUCCESS
Van Vuuren and Niemen (1999) developed a three dimensional model in which entrepreneurial performance is a function of motivation times entrepreneurial and business skills, as shown below E/P = aM x bE/S x cB/S
E/P is defined as increase in entrepreneurial performance which is based on the starting of a business, utilizing an opportunity and growth of the business idea. M = Motivation ,this includes inner control, persistence, leadership, decisiveness, determination and sheer guts, achievement imagery, ability to inspire, ability to overcome obstacles or blocks, ability to get help, reaction to success or failure. E/S = Entrepreneurial skills cover the ability turn their business idea into feasible business opportunities, to start and to grow a business enterprise. It includes creativity, innovation, risk taking, and the ability to take successful entrepreneurial role models and identification of market opportunities. B/S = Business skills covers ability to formulate business plans, financial, marketing, operational, human resources, legal communication and management skills. a,b,c are constant coefficient.
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Wickham (2001) stated the entrepreneurial performance results from a combination of industry knowledge, general management skills, people skills, and personal motivation. It can be represented as; Performance = W (industry, management, interpersonal, motivation)
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Ucbasaran et al (2004) identified three distinct capabilities that the entrepreneur requires to succeed: The entrepreneurial role, which assist with business development. The managerial role, which assists functional, needs which include human resources management, marketing, operations, administration, finance and planning. The technical role, which needed for functioning and producing products. Ucbasaran et al model can be represented in mathematical form as; Success = U (E/S, B/S, Technical)
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Darroch and Clover(2005) model describes SME success as a function of preference for self employment, motivation, entrepreneurial skills(energizing behaviours) and business skills, moderated by background and firm level factors. Their model can be represented in mathematical form as; Success = D (motivation, E/S, B/S)
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Perks and Struwig (2005) list personal, technical, business operations and management skills as the four categories of skills that are needed to ensure entrepreneurial success. Their model can be represented in mathematical form as; Success = P (personal, management, B/S, Technical)
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INTEGRATATED MODEL
Considering all the above model an integrated model can be formulated which explains entrepreneurial performance is dependent on the availability of product differentiation competencies and enterprising competencies and functional competencies. Product and service differentiation is the ability to ensure that the product or service is produced at an acceptable quality. This solely depends on technical skill. Entrepreneurial competencies depend on entrepreneurial and personal skills. Functional competencies assist the entrepreneur to function the business and find the balance between opportunity, resources, and the entrepreneurial team. Functional competencies depend on business skills. E/P = (a.P/S x b.E/S) x c.(B/S) x d.(T/S) Where: E/P is increase in entrepreneurial performance, P/S is personal skills, E/S is entrepreneurial skills, B/S is business skills, and T/S is technical skills
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MODELS OF FIRMS PERFORMANCE BASED ON ENTREPRENEURIAL SKILLS

Model by Glancey et al(1998) Van Vuuren and Niemen (1999) Wickham(2001) Erikson (2002) Man et al model Ucbasaran et al(2004) Darroch and Clover(2005) Perks and Struwig (2005) Combined model Model summery Increase in performance = G (traits, motivation, management) x h(market) E/P = aM x bE/S x cB/S Performance = W (industry, management, interpersonal, motivation) Performance = E (opportunity) x M x (B/S + opportunity-id x resource) Performance = G (firm competitive scope) x M (O/C,E/C) Success = U (E/S, B/S, Technical) Success = D (motivation, E/S, B/S) Success = P (personal, management, B/S, Technical) E/P = (a.P/S x b.E/S) x c.(B/S) x d.(T/S)
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SKILL NEEDED TO IMPROVE ENTREPRENEURIAL PERFORMANCE Personal skills Business management skills Entrepreneurial skills Technical skills.
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SKILL NEEDED FOR IMPROVING ENTREPRENEURIAL PERFORMANCE

Personal skills(P/S) Business management skills (B/S) Key skills Marketing mgt. Financial mgt. Human resource mgt. Supportive skills General management ICT skills Legal Networking Operational Planning Research & development Business system Value chain management Entrepreneurial skills(E/S) Technical skills (T/S)
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Key skills Motivation achievement)
(need
for
Key skills Opportunity recognition Ability to gather & control resources Supportive skills Creativity Innovation Role model interpretation Calculated risk taking
Key skills Ability to use tools, procedure & techniques knowledge of industry its standard & practices
Supportive skills Adaptability to change Communication Decision making Negotiating skill Learning ability Numeracy Problem solving Time management
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RESEARCH PROPOSITIONS (HYPOTHESIS)

H1: Process control and implementation is positively related to operational priorities of SMEs. H2: Management of resources is positively related to operational priorities of SMEs. H3: Management of people is positively related to operational priorities of SMEs. H4: Training and developing people (continuous improvement) is positively related to operational priorities of SMEs. H5: Partnership with supplier is positively related to operational priorities of SMEs. H6: Teamwork is positively related to operational priorities of SMEs. H7: Operational priorities have a strong impact on growth in productivity. H8: An operational priority mediates the operational level factors and operational performance.
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o o o o o o o
Based on entrepreneurial skills required to run the SMEs and in accordance with second research problem of this study following hypothesis can be proposed; H9: The following skills are not likely to be considered as key skills: Proposition 9.1 Marketing Proposition 9.2 Tehnical Proposition 9.3 Motivation Proposition 9.4 Human resource Proposition 9.5 Opportunity identification Proposition 9.6 Finance Proposition 9.7 Gathering of resources
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o
o o o o o o o o o o o
H10: The following supportive skills are not likely to be considered as important supportive skills: Proposition 10.1 Numeracy and literacy Proposition 10.2 business system Proposition 10.3 computer literacy Proposition 10.4 operations management Proposition 10.5 strategy and business planning Proposition 10.6 Risk taking Proposition 10.7 Life skills Proposition 10.8 Communication Proposition 10.9 Business linkages Proposition 10.10 Legal Proposition 10.11 Research and development Proposition 10.12 Supplier management Proposition 10.13 Role models
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RESEARCH METHODOLOGY
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QUESTIONNAIRE: CONTENT, DESIGN, AND STRUCTURE
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The final questionnaire has total 20 question some of which are subdivided in to sub questions. Question number 16 assesses operational level factors necessary for business performance which consist of total 75 sub questions rated on a six point Likert scale. Also there is one question number 17 which consist of five sub questions to assess the operational performance. Question number 18 consists of 20 sub questions to assess important skills required for business performance, which is assessed based on whether not very, moderately, very, and extremely important basis.
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SETTING AND DATA COLLECTION
The initial sampling that is list of SMEs in Mumbai and nearby areas such as Thane and NaviMumbai is obtained from the DIC, confederation of Indian industries and the Maharashtra chamber of commerce. The criterion of selection is the turnover of industry as per the definition of SMEs in Indian context. This left a final list of 2100 sampling units which includes metal processing and machinery manufacturers.
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PROCEDURE
Anticipating 15-18 percent response rate postal questionnaires were sent to 1560 owners. The questionnaire was addressed personally to the CEO or owner of each firm. In the first six weeks, 231 SMEs responded, a rate of 14.80 percent.
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DATA ENTRY
Each business owner was required to make responses on the questionnaire, which were coded and manually entered into SPSS version 15.0. Accuracy of the data file was ensured by careful proofreading of the original data against the computerized data file, as well as examination of descriptive statistics and graphic representations of the variables
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DEVELOPING AND SPECIFYING MEASURES
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CONSTRUCTS MEASURED BY THE SURVEY INSTRUMENT
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ANALYSIS AND RESULTS
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RELIABILITY AND VALIDITY ANALYSES
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CORRELATIONS AND CRONBACH ALPHA
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RESULTS FOR STRUCTURAL MODELING

AGFI=.824 CFI=.921 GFI=.936 RMSEA=.048
.32
Chi square=27.776 df=24 p=.270
.25
e6
.00
ps
e5
.00
tw
e4
.00
Td
e3
.00
mp
e2
.00
mr
e1
pc
.00 .22 .03 .04 -.06 -.18 .02 -.06 -.16 .18 -.10 .23 .10 -.09.12 .01 -.08 -.14 -.02 .11 .00 .10 .09 .22 .16 -.25 .30 .22
.09
e8
cost
delivery e9
.29 -.27 -.06
flex e10
.22 .45
quality e11
.29
Productivity
e12
The structural equation modeling approach is employed to test the hypothesis and to gain interpretational clarity of the relationships among the constructs. The figure shows the path analysis model for the constructs. The overall fit for the model was very good chi square=27.776; df=24; CFI=0.921; RMSEA=0.048; GFI=0.936 and AGFI=0.824).
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PATH COEFFICIENTS OF THE MODEL

Impact of Path coefficient -.10289642 .29965303 .16153149 .18115451 .05661217 -.24941077 .01111151 .22799770 -.17514994 .21973219 .11225527 .11980642 -.05878985 -.00364437 -.13722079 -.08715154 .21592144 -.07625419 -.15656011 .03600243 .03135462 -.02490837 .09528353 .01571512 .28846117 .44590453 .21791484 -.05576850
Process control and implementation on

Cost Quality Flexibility Delivery
Management of resources on
Management of people on
Training and developing people on

Partnership with supplier on

Teamwork on
Cost on
Growth in productivity
Quality on
Flexibility on
Delivery on
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HYPOTHESIS
H1: Process control and implementation is positively related to operational priorities of SMEs. For this hypothesis to be supported, at least one significant path from the process control and implementation to the operation priority should exist. The result from table shows that all the path except cost are positive and supporting the hypothesis. H2: Management of resources is positively related to operational priorities of SMEs. Management of resources not significantly affects the cost, quality and flexibility but affects significantly delivery of operation priority. So this hypothesis is supported. H3: Management of people is positively related to operational priorities of SMEs. Quality, delivery and flexibility is significantly affecting the operation priority while cost is not affecting significantly, so this hypothesis is supported.
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H4: Training and developing people is positively related to operational priorities of SMEs. This hypothesis is not supported as no path significantly affects the operation priority. H5: Partnership with supplier is positively related to operational priorities of SMEs. This hypothesis is supported as cost is affecting operation priority significantly while others not so significantly. H6: Teamwork is positively related to operational priorities of SMEs. This hypothesis is not supported as none of the component of operation priority is significantly affected by teamwork. H7: Operational priorities have a strong impact on growth in productivity. Cost, quality, flexibility are significantly affecting growth in productivity while delivery not affecting significantly, so this hypothesis is supported.
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AGFI=.857 CFI=1.000 GFI=.920 RMSEA=.000
.00
operation level factors

.28 -1.00 .08
Operational performance
e13
.43 .05 .23 .34 .67 .30
operations priority
-.12 1.45 .01 2.10
.08
e7
-.04 .00
.02 .00
Productivity
.01
.18
ps tw
.00
Td
.05
mp
.11
mr
.45
pc
cost delivery flex

.09
quality e11
.45
e6
e5
e4
e3
e2
-.31
e1
e8
e9
e10
e12
-.33
.25 -.25 .16
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.00
1.00

.23 .05
e13
.43 .05 .22 .33 .67 .32
operations priority
-.08 1.76 .01 3.08
.00
e7
-.04 .00
.05 .00
Productivity
.00
.19
ps tw
.00
Td
.05
mp
.11
mr
.45
pc
cost delivery flex

.10
quality e11
.44
e6
e5
e4
e3
e2
-.33
e1
e8
e9
e10
e12
-.33
.25 -.26 .18 .15
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.00
.79

.47 -1.08 .22
e13
.42 .06 .25 .34 .67 .32 -.20
operations priority e7
.85 .04 .73 -.09 .01 -.01 .00
.21
.04
Productivity
.17
ps tw
.00
Td
.06
mp
.12
mr
.45
pc
cost delivery flex

.10
quality e11
.46
e6
e5
e4
e3
e2
-.33
e1
e8
e9
e10
e12
-.35
.23 -.21 .19
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1) There is a significant difference between the performances of models A and C. The 2 (MAMC) is .672, which is significant in 2 (DF=1, P<0.05). (2) There is no significant difference between the performance of models B and C. The 2 (MBMC) is .432, which is not significant in 2 (DF=1, P<0.05).
When the modification indices are examined for model A based on model B, the indices suggest that there exists a relationship between operation level factors on operational performance. When the modification indices are examined for model C based on model B, the indices suggest that there is no relationship between the operational priority and operational performance. The results of model B support that operation level factors have direct relationship with operation priorities. The path coefficient is .23 where the statistical significance at p<.001. The path coefficient between operation level factor and operational performance is 1.00 which is also significant at the level p<0.001.
PERFORMANCE OF THREE MODELS
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H9: The following skills are not likely to be considered as key skills: Proposition 9.1 Marketing Proposition 9.2 Technical Proposition 9.3 Motivation Proposition 9.4 Human resource Proposition 9.5 Opportunity identification Proposition 9.6 Finance Proposition 9.7 Gathering of resources
H10: The following supportive skills are not likely to be considered as important: Proposition 10.1 Numeracy and literacy Proposition 10.2 business system Proposition 10.3 computer literacy Proposition 10.4 operations management Proposition 10.5 strategy and business planning Proposition 10.6 Risk taking Proposition 10.7 Life skills Proposition 10.8 Communication Proposition 10.9 Business linkages Proposition 10.10 Legal Proposition 10.11 Research and development Proposition 10.12 Supplier management Proposition 10.13 Role models
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KMO AND BARTLETT'S TEST
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .576
Bartlett's Test of Sphericity
Approx. Chi-Square
df Sig.
1296.428 190 .000
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ROTATED COMPONENT MATRIX
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CRONBACH ALPHAS
Cronbach alphas for factor 1, 2 and 3 are acceptable. On the other hand for factor 4 and 5 was not acceptable as it is negative. Low Cronbach alphas and eigenvalue<1 indicate low validity and reliability of the factor. Normally such a factor would be excluded in a research study. We have decided to include the 4th and 5th factor because the eigen value is more than 1 and it is identified in literature as important skills.
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THE CHI-SQUARE TEST

Skill variables Business linkage Communication
Creativity Human resources Life skills Literacy Operations Risk taking Resources Planning Technical Motivation Role models Marketing Financial Computer literacy Legal Research & Development Value chain Business system
Successful group Mode Very rately 21.12 71.83 40.84 33.00 . 14.08 42.25 38.02 4.22 32.39 49.29 Not at all 5.63 11.26 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 7.04 5.63 23.94 5.63 11.26 5.63 9.85 19.71 25.35 5.63 12.67 22.53 29.57 23.94 9.85 29.57 26.76 23.94 52.11 29.57 43.66 39.43 25.35 54.92 54.92 47.88 56.33 52.11 46.47 47.88 71.83 43.66 57.74 59.15 23.94 52.11 36.61 46.47 57.74
Extre mely 1.40 14.08
Not at all 20.20 39.34
Less successful group Moder Very Extre ately mely 22.12 42.10 15.48 28.10 26.18 6.38
Chi- square
P value
46.127 18.070
<0.0001 <0.0001
5.63 14.08
19.71 14.08 40.84 25.35 19.71 18.30 22.53 12.67 21.22 8.45 11.26 12.67 8.45 8.45 5.63
42.18 40.12
21.10 27.15 13.48 21.10 18.20 18.10 5.63 19.48 38.12 15.48 17.10 39.32 31.32 19.48 38.12 21.10
28.80 27.80
22.43 28.18 18.30 27.43 24.12 29.40 8.63 18.30 30.80 16.30 23.30 28.10 28.10 18.30 34.80 25.43
16.12 17.74
30.40 30.10 39.12 30.40 38.10 37.20 44.88 39.12 19.74 39.12 34,12 22.40 30.40 39.12 19.74 31.40
12.90 14.34
26.07 14.47 27.10 21.07 19.48 15.30 40.84 21.10 11.34 27.10 25.48 10.18 10.18 21.10 7.34 22.07
27.310 33.958
37.676 39.479 43.310 42.859 32.493 25.620 25.732 83.761 21.563 47.479 49.169 11.268 36.437 26.859 37.451 89.169
<0.0001 <0.0001
<0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001 <0.0001
Confidence interval: 95%
=0.05
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H9: The following skills are not likely to be considered as key skills: Proposition 9.1 Marketing - rejected Proposition 9.2 Technical - rejected Proposition 9.3 Motivation- rejected Proposition 9.4 Human resource - rejected Proposition 9.5 Opportunity identificationrejected Proposition 9.6 Finance- rejected Proposition 9.7 Gathering of resourcesrejected
H10: The following supportive skills are not likely to be considered as important: Proposition 10.1 Numeracy and literacy rejected Proposition 10.2 business system- rejected Proposition 10.3 computer literacy- rejected Proposition 10.4 operations managementrejected Proposition 10.5 strategy and business planning- rejected Proposition 10.6 Risk taking- rejected Proposition 10.7 Life skills- rejected Proposition 10.8 Communication- rejected Proposition 10.9 Business linkages- rejected Proposition 10.10 Legal- rejected Proposition 1011 Research and developmentrejected Proposition 10.12 Supplier managementrejected Proposition 10.13 Role models- rejected
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The extremely important factor for SMEs is seems to be the operations (40.84%). The majority of SMEs considered 17 of the 20 skills categories to be very important (43.66%71.83%). Computer literacy (52.11%), creativity (42.25%) and communication (40.84%) are moderately important to the SMEs, while computer literacy (23.94%) is not very important to the SMEs.
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GENDER DISTRIBUTION OF SUCCESSFUL SMES
19%
Male Female
81%
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GENDER DISTRIBUTION OF LESS SUCCESSFUL SMES

16%
Male Female
84%
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AGE OF RESPONDENT
Respondent Group Successful Less successful Frequency Mean Median Std. deviation 10.33 12.67 Minimum Maximum
164 67
43.40 40.54
42 40
22 19
70 80
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EDUCATION BACKGROUND
The majority of the successful groups were on average more educated than the less successful group whose large majority have only matric and below. More than 58 percent of the successful SME respondents were of B.E. background with M.B.A. or M.E. qualification. It can be stated that successful SMEs are led by managers with education level above matric mostly graduates, while less successful SMEs have education level at matric or had other qualification.
40 35 30 31 27 22 17
38
25 20
15 10 5 0 3
16 11
6 1 4 7 3 Less successful Sucessful
11
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WORK EXPERIENCE OF THE RESPONDENTS

60
51
50 43 40 36
30
Less successful Sucessful
20
19 17 12
13
9
10
More of the successful groups (51%) had on average worked more than 6 years prior to starting their own business as compared to the less successful group whose majority (43%) indicated they had two or less years of experience It can be stated that successful SMEs are led by mainly managers with more than 4 years of work experience while less successful SMEs have less than 4 years experience.
0 0 to 2 yrs 2 to 4 yrs 4 to 6 yrs > 6 yrs
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NUMBER OF YEARS IN BUSINESS

successful
The number of years in business was three years or more for the successful SME sample. Figure 6.5 shows all the successful SMEs were 3 or more years old. Figure 6.6 shows 35% less successful SMEs were of less than 3 years old, while 65% of SMEs were 3 or more than 3 years old.
<3 yrs 3 or more yrs
Less successful
35% <3 yrs 3 or more yrs 65%
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NUMBER OF EMPLOYEES
Average number of peoples employed by successful SMEs was 41 while those employed by less successful employees was 4.
Number of employees Successful Less successful
Frequency 164 67
Mean 41.40 4.54
Median 23 2
Std. deviation 62.24 7.65
Minimum 6 3
Maximum 290 110
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ANNUAL INCOME
The majority of the respondents in the successful samples indicated that their annual turnover was more than 1 crore rupees. In contrast most of the less successful SMEs were under 1 crore rupees with the majority earning less than 50 lakhs rupees.
60 53 50 42 40 43 39
30
Less successful Sucessful
20
18
10 4 1 0 < 50 50 to 100 1 to 5 Lakhs Lakhs Crore 5 to 10 Crore > 10 Crore
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FORM OF BUSINESS
The majority of respondent in the successful SME sample had all formally registered and either private limited or limited companies, while majority of the firms are from other category that is not registered category.
60 55 52 50
40
36 32
30 Less successful 20 12 10 5 2 0 4 2 2 Sucessful
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MEANS OF SMALL AND MEDIUM SCALE INDUSTRIES.

Construct Mean Small scale industries 4.79
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Std. Deviation Manufacturing functions: Process control and implementation (Pc) 5.03 1.374
Medium scale industries 5.21
Management of resources (Mr) Management of people(Mp) Training and developing people ( Td ) Partnership with supplier (Ps) Teamwork (Tw) Operation priorities: Cost Quality
4.44 4.66
1.468 .935
4.23 5.00
4.59 4.40
4.69
5.00 5.27 3.80 3.49 3.94 3.70 3.71
1.113
1.239 1.346 1.257 .992 1.293 1.407 1.335
4.35
4.60 5.09 3.92 3.10 3.71 3.05 3.35
4.95
5.30 5.40 3.70 3.79 4.11 4.19 3.98
Flexibility
Delivery Growth in productivity
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COMPARISON OF MEANS OF OPERATIONS PRIORITIES.

4.5 4 3.5 3
2.5
Small scale industries 2 1.5 1 0.5 0 Cost Quality Flexibility Delivery Growth in productivity Medium scale industries
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COMPARISON OF MEANS OF MANUFACTURING FUNCTIONS

6 5
3 Small scale industries Medium scale industries 2
0 Process control Management Management and of resources of people(Mp) implementation (Mr) (Pc) Training and developing people ( Td ) Partnership Teamwork (Tw) with supplier (Ps)
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PUBLICATIONS

National Conference Presented a paper on related literature review entitled Technology, Innovation and Entrepreneurship Development: A Critical Review in PRODOLOGY a National level paper presentation competition conducted by Production Engineering Department V.J.T.I. Mumbai on 28th-29th March 2009. Presented a paper on related literature review entitled Industrial Sickness: Concept, Causes, Consequences and Remedial Measures, at CEOs conference by IIIE, at Manali on 23rd -24th May 2009. The same paper is published in industrial engineering Journal of IIIE in July 2009 special issue(ISSN 0970-2555) Presented a paper on related literature review entitled HRD strategies for effective implementation of benchmarking in SMEs, at national conference on recent trends in engineering and technology at Agnel polytechnic, Vashi, on 3031 Oct.2009. Presented a paper on related literature review entitled Productivity Enhancement through Industrial Safety as a Tool for Motivation of Employees at 51st NATIONAL CONVENTION OF INDUSTRIAL ENGINEERS & National Seminar on 'INDUSTRIAL PRODUCTIVITY,SAFETY ANDDISASTER MANAGEMENT' Organized by the Indian Institution of Industrial Engineering, Nagpur Chapter on 4-5 December 2009. Presented a paper on Total Productive Maintenance: a critical review at the national conference held at Ramdeobaba Kamla Nehru college of engineering, Nagpur held on September 24-25, 2010. A paper presented at the National Conference to be held at Tiwari college of Engineering on Improving the Process Capability of a Edm Operation by the Application of Statistical Techniques, on 11 March 2011. A paper presented on Key Skills for Business Performance of SMEs at the National conference to be held at sinhagad institute of administration and Computer management, Lonawala held on 25-26 February 2011.The proceedings are published under ISBN:978-93-5024-792-1.
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PUBLICATIONS

International Conference Presented a paper on related literature review entitled Factors Influencing Performance of Small and Medium Scale Technological Industries, in GLOWGIFT 09 conference at NITIE,Powai on 12-14 Nov. 2009 Presented a paper on related literature review entitled Factors influencing the survival and growth of small and medium industries in Mumbai and suburban region,in 13th SOM conference at IIT,Chennai on 20-21 December 2009 Paper Publication (National/ International) A paper entitled Industrial Sickness: Concept, Causes, Consequences and Remedial Measures, is published in industrial engineering Journal of IIIE in July 2009 special issue (ISSN 0970-2555) A paper published in Expression a CSR journal on titled CSR and SMEs: perceptions and Initiatives, published in issue 2 April-October 2011 ISSN 2229-4384 An international paper accepted and to be published in International Journal of Engineering Science and Technology on Investigation of Entrepreneurial Skills for Better Performance of Manufacturing SMEs in July 2011 issue ISSN 0975-5462. An international paper under review in International Journal of Production Economics on Manufacturing functions and plant performance: an empirical study in manufacturing SMEs in Mumbai ISSN 0925-5273. An international paper under review in International Journal of Manufacturing Technology and Management on Manufacturing functions and plant performance: an empirical study in manufacturing SMEs in Mumbai ISSN 17415195, ISSN 1368-2148.
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THANK YOU
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Nehete Rupendra Sharad

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Friday, November 18, 2011

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