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Operational Perspective Of Smes Performance And Competitive Priorities Practices: Path Analytic Approach

Author

Listed:
  • HALEEM Fazal

    (Abdul Wali Khan University Mardan, Pakistan)

  • JEHANGIR Muhammad

    (Abdul Wali Khan University Mardan, Pakistan)

  • UL HAQ Zahoor

    (Abdul Wali Khan University Mardan, Pakistan)

Abstract

Literature review suggests a close link between operations strategies and organizational performance. Nevertheless, there is dearth of research investigating the association between operations strategies and SMEs performance in a developing country, Pakistan, context. Thus, the paper attempts to fill this gap by finding out the influence of operations strategy on firms’ financial and non-financial performance. In addition, it digs out what predicts the financial and non-financial performance of the firms. Sample data is drawn from 244 manufacturing SMEs and is analyzed by Path Analytical Model of Structural Equation Modeling (SEM). The results reveal an overall positive and significant influence of competitive priorities on firm performance. However, there is no direct effect of Delivery priority on Financial, and Cost and Flexibility priority on Non-Financial Performance of the firms respectively. Moreover, the financial performance is predicted by focus on Cost, Flexibility, and Quality priorities respectively. By the same token, the predictors of Non-Financial performance are Delivery and Quality strategies in order of importance. The paper is not without limitations and acknowledges the constraints of access to data, time, finance, non-inclusion of important mediating/moderating variables. Practically, it offers implications to managers and policy makers to employ a set of competitive priorities that drives enhanced firm performance in this business setting, and to devise policies in accordance with market demands that lead to improved overall productivity respectively. Theoretically, the paper contributes to a richer and finer understanding on the connection between operations strategy and SMEs performance in a developing country context.

Suggested Citation

  • HALEEM Fazal & JEHANGIR Muhammad & UL HAQ Zahoor, 2020. "Operational Perspective Of Smes Performance And Competitive Priorities Practices: Path Analytic Approach," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 15(1), pages 55-67, April.
    • Handle: RePEc:blg:journl:v:15:y:2020:i:1:p:55-67
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    References listed on IDEAS

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    1. Bill Wooldridge & Steven W. Floyd, 1990. "The strategy process, middle management involvement, and organizational performance," Strategic Management Journal, Wiley Blackwell, vol. 11(3), pages 231-241, March.
    2. Paul M. Swamidass & William T. Newell, 1987. "Manufacturing Strategy, Environmental Uncertainty and Performance: A Path Analytic Model," Management Science, INFORMS, vol. 33(4), pages 509-524, April.
    3. Aleda V. Roth & William E. Jackson, III, 1995. "Strategic Determinants of Service Quality and Performance: Evidence from the Banking Industry," Management Science, INFORMS, vol. 41(11), pages 1720-1733, November.
    4. Badri, Masood A. & Davis, Donald & Davis, Donna, 2000. "Operations strategy, environmental uncertainty and performance: a path analytic model of industries in developing countries," Omega, Elsevier, vol. 28(2), pages 155-173, April.
    5. Gregory G. Dess & Richard B. Robinson, 1984. "Measuring organizational performance in the absence of objective measures: The case of the privately‐held firm and conglomerate business unit," Strategic Management Journal, Wiley Blackwell, vol. 5(3), pages 265-273, July.
    6. Nancy Bouranta & Evangelos Psomas, 2017. "A comparative analysis of competitive priorities and business performance between manufacturing and service firms," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 66(7), pages 914-931, September.
    7. Morgan, Robert E. & Strong, Carolyn A., 2003. "Business performance and dimensions of strategic orientation," Journal of Business Research, Elsevier, vol. 56(3), pages 163-176, March.
    8. Sadikoglu, Esin & Zehir, Cemal, 2010. "Investigating the effects of innovation and employee performance on the relationship between total quality management practices and firm performance: An empirical study of Turkish firms," International Journal of Production Economics, Elsevier, vol. 127(1), pages 13-26, September.
    9. Ting Chi & Peter P.D. Kilduff & Vidyaranya B. Gargeya, 2009. "Alignment between business environment characteristics, competitive priorities, supply chain structures, and firm business performance," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 58(7), pages 645-669, September.
    10. George Halkos & Dimitrios Bousinakis, 2010. "The effect of stress and satisfaction on productivity," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 59(5), pages 415-431, June.
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