Academic journal article Journal of Competitiveness Studies

THE RELATIONSHIP BETWEEN PRODUCTION PROCESS AND COMPETITIVENESS LEVEL IN MEXICAN SMEs: AN EMPIRICAL STUDY

Academic journal article Journal of Competitiveness Studies

THE RELATIONSHIP BETWEEN PRODUCTION PROCESS AND COMPETITIVENESS LEVEL IN MEXICAN SMEs: AN EMPIRICAL STUDY

Article excerpt

INTRODUCTION

The new millennium comes with important changes in organizations (mainly concerning factors such as technology, production systems and business strategies) which require, especially from small and medium-size enterprises (SMEs), important changes in their structures and strategies in order to meet the challenges stipulated by the globalized markets in a constantly changing environment (Lipovatz et al, 2000). Similarly, SMEs need to improve their levels of competitiveness in order to survive in more demanding and changing markets (Eccles, 1991; Plos, 1991; Geanurakos, 1993).

Having said this, it is essential for these kinds of companies that materials are adequately coordinated, from the production process up to the shipment of final products to clients. In order to achieve this, it is sometimes necessary to integrate a supporting element, such as outsourcing (Daniels & Bryson, 2002), especially in those logistical activities that improve firms' competitiveness levels (Bryson, 1997; Bryson & Daniels, 2007a) because the fragility of the production process can weaken the competitiveness of organizations in general (Beyers, 2006; Cho et al. , 2008; Bryson et al., 2008).

On the one hand, large companies generally have higher technological levels of production processes. This happens because they only intend to compete in a more restricted market with scarce resources (Sustar, 2004). Part of the problem within the SMEs lies in their low level of competitiveness, which can be strengthened with improvement in the implementation of technology in the production processes (Sustar, 2004). Therefore, the economic changes that are generated in developed countries, which is the case of the Mexican manufacturing industry, promote the development and implementation of technology in the production processes (Bell, 1973; Castells, 1989; Castells & Aoyama, 1994; Webster, 2002), mainly in small businesses (Castells, 1996; Illeris, 1996; Bryson et al., 2004b; Bryson & Daniels, 2007b), which entails that organizations improve their level of competitiveness.

On the other hand, the competitiveness of manufacturing firms commonly depends on the service they provide, the kind of products they create, as well as their quality. All this will reflect the level of competitiveness of organizations in the use of factors related to their business activities such as technology, production processes and business strategies (Kaplan &Norton, 1992; Oaklan, 1993; Doyle, 1994; EFQM, 1996; Browne et al., 1997; Cho et al., 2008).

Similarly, business strategies are equally pertinent to both big, high technology companies and SMEs, which means that added value, an intensive workforce and high tech products allow companies to substantially improve their levels of competitiveness (Cho et al, 2008). Thus, companies, by means of their business strategies, give special importance to specialization in specific areas of information technologies and the application of such technologies in the production processes (Rusten & Bryson, 2007; Rusten et al, 2007).

Finally, according to the market standards in operation and the competitive placement of the firms, it is important to be prepared for any contingency; that is why there needs to be flexibility in the production processes in the companies (Sustar, 2004). The lack of flexibility in the production processes of SMEs jeopardizes the development of the organizations and directly affects competitiveness (Tyson et al, 1994).

This research paper presents the results of an analysis on the effects of production processes on SMEs competitiveness in Aguascalientes (Mexico) using a sample of 125 companies. The paper has been organized in sections. The second section reviews the theoretical framework, the previous empirical investigations and establishes the research hypotheses. The third section explains the methodology. The fourth section shows the analysis of results and the last section presents the main conclusions and implications of this research. …

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