Effect of competition on managerial practices: evidence from SMEs in the MENA region

Purpose - The aim of this paper is to document the impact of competition on managerial practices adopted by small and medium enterprises (SMEs). Design/methodology/approach - The paper uses the data provided by the World Bank’s Enterprise Surveys to test the arguments presented in this paper. The data were collected during the period between 2013 and 2014 and the sample consists of firms from Egypt, Jordan, Lebanon, Tunisia and Yemen. Findings - The authors show that SMEs with higher exposure to competition are more likely to adopt better managerial practices than SMEs with lower exposure to competition. The authors argue that competition disciplines the managers by exposing firms to the possibility of bankruptcy and/or the loss of market share to competitors. Therefore, these firms are compelled to adopt good managerial practices to protect themselves against negative impact of competition. The results show that positive impact of competition on managerial practices is confined only to the competition that comes from foreign competitors. Local competitors or competitors from informal sector have no significant impact on the adoption of good managerial practices. Originality/value - An important contribution of this paper is that it documents how various types of competition affect SME’s decision to adopt better managerial practices. Another important contribution is highlighting of the role played by the competition in shaping the management practices among SMEs in the MENA (Middle East and North Africa) region.