buy term paper: Entrepreneurial Competencies and SME Performance

Firm performance or efficiency is the most important qualitative characteristics of management at all levels. It is a measure of production activity on the distribution and processing of various resources (tangible and intangible) (Man, 2002; Peters, 2006; Phusavat, 2007). Performance can be measured through the coefficient – the ratio of results at the output of the resources and at their entrance.
The problem of performance is in general is not new; it exists in varying interpretation from the period of appearance of material production and reflects the relationship of production relations of a particular type of production. Under the conditions of market relations, when the results of one market actors depend on the clarity and coherence of other actors, the problem of efficiency is a decisive one.
The system of performance indicators should provide a comprehensive assessment of the usage of all enterprise resources and contain all the general economic indicators. General indicators primarily reflect the final results of production and implementation of strategic tasks. Functional indicators are used to analyze and identify the effectiveness of reserves, eliminate bottlenecks in production.
As a multidimensional phenomenon, performance can be measured by the following 4 groups of indicators (Phusavat, 2007):
1. General indicators of economic efficiency (the rate of output growth, overall profitability and its growth, etc.);
2. Labor efficiency indicators (growth rate of labor productivity, share of growth in output as a result of productivity growth, etc.);
3. Indicators of fixed assets, operating assets and capital investments (capital productivity ratio, growth of operating assets to the growth of commodity output, the relative savings of production capital funds, working capital turnover, payback period of capital investment, etc.);
4. Performance indicators of material resources (relative savings of material costs, decrease of specific consumption of materials, etc.).

Table 2 showing mostly used financial performance measures

Source: taken from the research of (Thi, 2009)

Table 3 showing financial and nonfinancial measures

The provided indicators reflect the combined result of entrepreneurial activity. They are aggregated by many factors and may, in fact, be called generalizing. However, entrepreneurship includes a number of relatively independent activities: industrial, financial, commercial, communication, each of which has a direct impact on the results and thus, largely determines the performance of the entire business system. Each activity creates its own results, calculated in the indicators, reflecting the performance of individual business subsystems.

If for evaluating the performance of the financial subsystem it is possible to use a set of indicators and parameters such as income from operations, cost of sales, net income excluding share of profit of associated companies, net tax before taxation and others, for a subsystem like the manufacturing one it is appropriate to suggest the following additional indicators (Peters, 2006; Phusavat, 2007): buy term paper
• production efficiency calculated by the type of resource output;
• labor productivity;
• profitability;
• measure of the effectiveness of industrial relations;
• system of indicators reflecting the efficiency of production management;
• indicator of the efficiency of HR management;
• system of indicators characterizing the efficiency of use of production and marketing information and others.
The effectiveness of commercial subsystems can be assessed using ratios that make up the volume of product sales and expenses for the organization of its marketing and promotion, as well as indicators expressing coherence, interdependence and complementarity of the various elements of supply chain:
• indicator of the effectiveness of various sales channels, marketing systems, and intermediaries;
• system of indicators reflecting the effectiveness of sales network;
• index of reliability of intermediaries selection;
• system of indicators reflecting the effectiveness of sales and marketing information;
• indicators of the extent to which supply chain goals comply with objectives of marketing;
• duration of the implementation period (in relation to the cost of the marketing);
• indicator of the relative value of the profit in the total turnover.
Speaking separately on the effectiveness of communication subsystem, it must be emphasized that it is, in this case, not the whole system of market communication (effectiveness of various communication links is evaluated in different subsystems), but the communication between producer and consumer. This subsystem can use the following additional performance indicators (Steenkamp, 2010):
• effectiveness of advertising (economic and socio-psychological);
• effectiveness of sales promotion;
• system of indicators of exhibitions;
• effectiveness of use of various means of advertising influence
• effectiveness of motivation study;
• system of indicators that reflect the information components;
• effective use of tools for creating public opinion about the company and its products.
The index image of the enterprise deserves special attention. It can be used as an indicator of the result not only in the communicative subsystems, but in some cases and in relation to the entire system of entrepreneurship. For example, if a business entity is guided by the concept of socio-economic marketing and suggests operating in the long run, it can build target settings based on the need to strengthen consumer’s trust, to acquire the necessary social status and public recognition. In this case, the assessment of its performance can be performed through the characteristics that reflect its image (Steenkamp, 2010; Bhat, 2004; Man, 2002).
The disadvantage of such assessment is unavoidable conventionality of the resulting indicators obtained with the help of the expert method. It can be reduced by the full use of norms and rules pertaining to expert modeling.
A key factor in the development of small and medium sized businesses is innovation. The success of innovation management depends on the ability of the enterprise to create a stimulating internal and external framework conditions for innovations. Innovations include all changes, which were first applied at the enterprise and bring it certain concrete economic and/or social benefits. Therefore, innovation means not only introducing a new product to the market, but also a number of other innovations: new or improved products (product innovations), new or enhanced services (innovation services), new or improved production processes and technologies (process and technological innovations); social change at the enterprise (social or staff innovations), new or improved production systems (Phusavat, 2007).
The increase of turnover and production at small and medium-sized enterprises critically depend on innovation. The prerequisite for the survival of these companies on the market are new and improved products and services. Accelerating changes in customer requirements, changing quality requirements, short product life cycles and increasing rate of its renewal lead to the necessity of the reconsideration of production programs of small and medium-sized enterprises. Innovations become a key strategic parameter of development of any enterprise and the economy as a whole.
Innovation management covers all the strategic and operational objectives of management, planning, organization and control of innovation processes in the enterprise. In a broad sense, it should be understood as change-oriented management. Such management is different in its essence from the decision-making processes in other productive areas, because innovative solutions are not routine, but imply a broad understanding of enterprise and creativity of workers (Phusavat, 2007; Jeppesen, 2005; Jones, 2003).
The tasks of innovation management include: planning of innovation activities of the organization; mission formulation (innovation-orientation of the organization); the definition of strategic directions of innovative activity and setting goals in each of them; the choice of optimal development strategy for each direction of innovation; organization of innovative activity; motivation of participants of innovative activity; systematic evaluation of innovation.
The innovation process requires strategic planning and market-oriented management. In general, business performance can be evaluated not only by the size of the profit, but also by changes of the market value of the enterprise.
The economic efficiency of production refers to the degree of utilization of productive capacities, which is indicated by the relation of the results and costs of social production. The higher result at the same cost, the faster it grows in the calculation per unit of socially necessary labor cost, or the less the cost per unit of useful effect, the higher is the production efficiency. The generalized criterion of economic efficiency of social production is the level of labor productivity.
References
Bhat, J.S.A., Kumar, V. (2004). A structured approach to knowledge management in SMEs: towards a successful manufacturing strategy. International Journal of Business Performance Management, 6 (3-4), 233-244.
Jeppesen, S. (2005). Enhancing competitiveness and securing equitable development: Can small, micro, and medium-sized enterprises (SMEs) do the trick? Development in Practice, 15(3-4), 463-474.
Jones, O., & Tilley, F. (2003). Competitive Advantage in SMEs: Organising for Innovation and Change. Wiley.
Man, T., Lau, T., & Chan, K.F. (2002). The competitiveness of small and medium enterprises. A conceptualization with focus on entrepreneurial competencies. Journal of Business Venturing 17, 123–142.
Peters, M., Hisrich, R., & Shepherd, D. (2006). Entrepreneurship (7th ed.). McGraw-Hill/Irwin.
Phusavat, K. (2007). Roles of performance measurement in SMEs’ management processes. International Journal of Management and Enterprise Development, 4(4), 441-458.
Pinchot, G., & Pellman, R. (2000). Intrapreneuring in Action: A Handbook for Business Innovation. Berrett-Koehler Publishers.
Rowley, J., & Mitchelmore, S. (2010). Entrepreneurial competencies: a literature review and development agenda. International Journal of Entrepreneurial Behaviour and Research, 16 (2), 92-111.
Steenkamp, N., & Kashyap, V. (2010). Importance and contribution of intangible assets: SME managers’ perceptions. Journal of Intellectual Capital, 11(3), 368-390.
Teece, D.J. (2009). Dynamic Capabilities and Strategic Management: Organizing for Innovation and Growth. Oxford University Press, USA.