Competitive Strategies for Small and Medium Enterprises

This chapter addresses the question: “What is a successful management model for SMEs to compete in turbulent environments? After an introduction into the universe of SMEs a model of a “Dynamic SME” is developed integrating the results of the 4 year European-Latin American action research project www.​dynamic-sme.​org. Based on a literature review, empirical data, case studies and action research findings strategies and practices of a “dynamic SME” are discussed. This chapter also serves as an introduction to the book relating the following chapters to the Dynamic SME model.

This chapter discusses the role and importance of dynamic capabilities for SMEs, considering how these capabilities can assist adaptation and resilience to maintain competitiveness in turbulent environments. The Dynamic Capabilities approach aims to understand the sustainability of competitive advantage in rapidly changing contexts, considering the resources and the company’s capabilities in adapting to its environment. Turbulence, instability and difficulties coming from the external environment can impact on the growth potential and survival chance of Small and Medium Enterprises (SMEs). In this context, the term Organizational Resilience incorporates strategic actions to maintain and adapt the organization in its environment. The chapter proposes an integration between the concepts and establish the initial steps to develop Dynamic Capabilities and Organizational Resilience, especially for SMEs.

XENON Automatisierungstechnik GmbH have been developing and manufacturing machines and plants for automation of production processes for more than 20 years. Customers from the automotive, electronic, photovoltaic and medical technology sector all around the world appreciate the performance and reliability of the customized production plants from XENON. Founded in 1991, XENON won their first innovation award in 1995: “The Big Award of the Medium Sized Businesses”. Since 1995, the special machinery manufacturer regularly received awards for its innovation capabilities. The last important acceptance was received in 2014 with the “Infineon Preferred Supplier Award” and the “Preferred Supplier of Bosch Group” award. XENON are now ranked as one of the leading providers of complex turn-key automation plants in Germany and Europe. Ever since, the company has been characterized by constant growth. Having started in 1991 with only 11 employees and today employing 170 workers, mostly engineers, the company targets high end technologies in automation. Only in 2009 and 2010, during the financial crisis, did the turnover declined temporarily. However the company was able to keep up the number of employees even during these difficult years. Due to their specialized skills, staff was not considered as dispensable. The crisis even gave the chance for XENON to hire talented new engineers and technicians from other companies. Since 2011 the growth rate has been stronger than it has ever been before and in 2014, turnover reached 24 million Euros; more than a doubling in comparison to 2009. This growth would not have been possible without globalization. Growth here included creating subsidiaries in China; firstly in Hong Kong (2009) and later in Suzhou near Shanghai (2013). A subsidiary in Mexico may eventually follow.

This paper sets out to answer the following: “What are the dimensions of organizational and national culture which support organizational learning for the efficient handling of turbulent situations?” Organizational learning processes which develop dynamic capabilities to meet the business environment changes and turbulences are taking place in the context of national, organizational and other environmental factors; summarized as cultures. The moderating effects of national, organizational and learning culture on organizational learning are explored in a literature review. Some results of an exploratory study about barriers to organizational learning are discussed as a possibility to integrate cultural aspects in SME management approach. Our goal is to contribute to a conscious balance between a focus on the inner world of a company and the external world. Research focuses on the creation of awareness, the operationalization of culture as a moderator, and techniques to embed this approach into business processes. This study shows the importance for managers to know that they are acting and managing in a certain cultural dimension, that currently managers are not often consciously aware of. Today, company values and their manifestations are frequently not respected as an important resource to handle turbulent situations. Knowledge about external and internal spheres of culture could be a success factor for SMEs.

In this chapter you will learn how creativity is a key element to deal with challenges that SMEs must overcome to innovate. For this purpose, the innovation challenges in SMEs are reviewed, the concept of creativity and its relationship with organizational innovation is discussed. A five-step approach to act creatively producing innovative propositions is presented. Finally, a creativity check for SMEs based on the Need for Closure Scale invites to a self-assessment.

This chapter highlights the importance of SMEs and New Technology Based Firms (hereafter NTBFs) for sustainable economic development and discusses the need to incorporate dynamic resources and capabilities to facilitate their performance under the current economic scenario of crisis and change. Focus is placed on the strategic role of intellectual capital, through the leverage of creative and innovation capabilities, to strengthen and develop firms; thus emphasizing the micro-strategic perspective of dynamic capabilities in innovation processes of NTBFs. In addition, an evaluation of the role that Intellectual Capital Reports (ICR) play in this process and in the development of core competences, through implementation in almost 100 NTBFs located in science and technology parks of Madrid, is presented.

This chapter aims to determine which dimensions of the Management Excellence Model^® (MEG) can contribute to the growth of micro- and small enterprises. The research corresponds to 1006 small and micro-enterprises of Santa Catarina (Brazil), being representative of sector and region. Findings suggest there are dimensions and control variables which impact positively on the growth of the investigated enterprises. Dimensions that can disrupt this growth were also found, highlighting aspects that deserve more attention from entrepreneurs.

Sometimes it happens that a complete machine standstill occurs in a power plant because a special component, perhaps a shaft, has broken or been damaged. The cost of such a standstill is high and therefore the pressure to supply this high precision component in a very short time is even greater. However, it is usually impossible to source high quality components for gas or steam turbines from active inventory. They have to be manufactured as individual items according to customer requirements. Due to quality conditions, special materials are needed with certain specifications which must be provided by a few selected specialized suppliers. This alone takes up more time than any power plant operations manager facing machine standstill would want.

This chapter presents a brief profile of Argentina describing its economic and social history over the past 70 years. An overview of human and economic development data is presented and highlights various economic indicators surrounding the turbulent country situation. Its purpose is to contribute to understanding the evolution of the social climate and economic trends applied by successive governments. The second part discusses the impact of the highly volatile economy on SMEs. A descriptive and detailed table in the Annex presents a summary of the main political, economic and social developments since 1946 until today.

In this chapter you will learn which strategies and measures SMes take to survive crisis. Cases from a sample of 25 companies located in the surrounding area of Argentina’s third biggest city, Rosario, are presented. These SMEs have survived all major crises in the past 15 years and thus, have demonstrated their ability to cope with economic turbulences successfully. In the current economic crisis, many European SMEs are struggling to survive and it seems appropriate that some of these strategies could be applied in the European context. This chapter forms a “trilogy” with the previous chapter on Argentinan economic development and the following chapter which explores the role of owner/mangers in turbulent environments.

This exploratory study of owner-managers’ handling of turbulent situations (TS) in four Argentine SMEs during 2014 gives insight into organizational learning processes. Significant differences between managers are shown in respect to approaching turbulent situations. The development of a cognitive map for turbulent situations, in combination with managers' motivation to engage in turbulent situations; their acceptance of these circumstances as a special task, which can be learned; their understanding of the ‘right’ time for learning; and, the goal they want to achieve (spontaneous adaptation or embedded intelligence), are discussed as important preconditions to develop learning mechanism for handling TS. This chapter concludes by making suggestions of how SMEs can be supported in TS.

This chapter presents the concept of “vulnerability” and a vulnerability analysis for Small and Medium-sized Enterprises (SMEs) to assess the multiple risks firms might suffer from during economic and financial downturns depending on their management systems and financial health. SMEs can be more flexible and react faster than large firms but, unlike their larger counterparts, most of them do not have at their disposal effective management systems and tools to ensure their sustainability. In a context of economic and financial crisis, an emergency plan for vulnerable SMEs has been carried out in the Basque Country, Spain to address this issue using a vulnerability analysis model.

This chapter presents a knowledge risk management framework. In turbulent times organizations of all sizes are required to be even more prepared to make necessary changes in their business strategies. Access to knowledge that is relevant and up-to-date is critical in meeting this challenge. Knowledge however is not always positive, i.e. something of value, but has a negative side as well. This situation can be tackled with a knowledge risk management approach that addresses knowledge from a holistic point of view. Therefore this approach supports companies in better managing their critical knowledge to master present and future business challenges. The aim of this chapter is to introduce knowledge risk management and its contribution to meeting these challenges. Regarding Knowledge management tools refer to the following chapter.

This chapter presents selected Knowledge Management (KM) toolkits and individual tools that have been developed to provide structured ways of acquiring, creating, sharing, using and protecting knowledge resources. Endowed with scarce resources small and medium sized enterprises (SMEs) have to manage tacit and explicit knowledge efficiently to survive and grow in a rapidly changing business environment. Managing knowledge is a prerequisite to developing dynamic capabilities. While it is widely accepted that knowledge is a key factor for success, companies need tools and routines to manage their knowledge assets adequately in practice. The 12-Point-Programme at the end of the chapter provides guidance on how to develop KM practices for enhancing competitiveness in turbulent situations.

This paper describes how the owner and manager of an argentine SME could, after attending a workshop on the methodology “Learning to grow”, implement a low cost strategy to empower his workers through a combined process of learning and doing undertaking a series of short, concrete and controllable projects to improve work organization and working conditions with a positive impact on motivation and productivity.

This chapter shows how the methodology “Learning to Grow” contributed to sustaining competitiveness by improving the innovative capabilities of 11 SMEs of the textile sector in southern Brazil. In addition, the chapter discusses the critical success factors for the implementation of the methodology and provides a transfer model for its implementation in new contexts.

This chapter presents some results of the implementation of the Collaborative Networks / Virtual Enterprise approaches in a group of mold-maker SMEs in the South of Brazil as a means to enhance their competitiveness. Working in collaboration more formally and intensively with each other leverages SMEs to better handle variable, on-demand and larger customer requests, thanks to the larger scale and wider pool of competences that companies get when working together. Those approaches allow SMEs to share resources, knowledge, risks, costs and benefits. This article also stresses the main obstacles and issues that have to be dealt with when implementing this strategy as well as good practices from a number of equivalent examples all over the world.