Measuring the effectiveness of managerial action in SMEs: An empirical analysis of management's response to industry competitive forces

Abstract

Purpose

The paper's purpose is to investigate the direct and indirect effects of industry competitive forces on strategy‐making and performance in small‐to‐medium‐sized manufacturing companies.

Design/methodology/approach

The paper's approach is a survey design with structural equation modeling used for hypotheses testing.

Findings

The findings provide strong support for the mitigating role of managerial action through the strategy‐making process and indications that this is true regardless of small‐to‐medium‐sized enterprise (SME) size. Also, automotive‐manufacturing SMEs seem to exhibit higher levels of competitive factors compared with non‐automotive manufacturing SMEs.

Research limitations/implications

The major limitation of this research is that the survey was taken in the Mid‐western USA and involved only SME manufacturing organizations. The research should be extended to other geographic regions, industry types, and larger organizations.

Practical implications

Many small company managers feel that they have little impact on industry‐wide macro‐economic and industry‐specific forces. This research indicates that managers in SMEs can mitigate some of the negative effects of industry competitive factors through strategy‐making activities.

Originality/value

This research is unique in several ways. It is the only research that has clearly identified and successfully measured the impact of managerial action in SMEs. It demonstrates that managerial action can be measured by comparing the direct and indirect effects of industry competitive forces on performance. It further identifies the need for a self‐assessment tool to measure the effectiveness of managerial action of top managers in SMEs.

Citation

Metts, G.A. (2007), "Measuring the effectiveness of managerial action in SMEs: An empirical analysis of management's response to industry competitive forces", Management Research News, Vol. 30 No. 12, pp. 892-914. https://doi.org/10.1108/01409170710833330