Sources of Small and Medium Enterprises Excellent Business Performance in a Service Oriented Economy

By Tanabe, Koji; Watanabe, Chihiro | Journal of Services Research, April 1, 2005 | Go to article overview

Sources of Small and Medium Enterprises Excellent Business Performance in a Service Oriented Economy


Tanabe, Koji, Watanabe, Chihiro, Journal of Services Research


(ProQuest Information and Learning: ... denotes formulae omitted.)

INTRODUCTION

Under the paradigm shift from an industrial economy to a service oriented economy that emerged in the 1990s, while Japanese economy has been experiencing long lasting economic stagnation, certain manufacturing industries such as electrical machinery and automobile have been maintaining their competitiveness. Not only larger enterprises (Acs and Audretsch, 1987) but also small and medium enterprises (SMEs) have been making a significant contribution to this competitiveness.

While SMEs generally incorporate comparative disadvantage to larger enterprises in management resources such as capital, human resources, information and technology, the dramatic advancement of information technology (IT) has been shifting SMEs to more advantageous position in terms of organizational flexibility and efficiency (Xiang et al., 2001; Larsen and Lomi, 2002; Izushi, 2003. Furthermore, not a few SMEs have been demonstrating excellent business performance through efficient and effective technological innovation in a mega-competition (Acs and Audretsch, 1987). This excellent performance can be attributed to their strategies aiming at maximum utilization of external knowledge (Lester, 1998; Freel, 2003).

To date, number of studies have identified the significance of technological innovation in improving SMEs' productivity thereby overcoming their comparative disadvantage with respect to larger enterprises (Small and Medium Enterprises Agency, 2003; Freel, 2003. In addition, there are studies that have suggested the potential comparative advantage in flexibility in institutional change and exploring a niche market (Kelly and Amburgey, 1991; Marten, 2001.

However, none of these studies have identified the sources inducing effective R&D in SMEs leading to excellent business performance in a service oriented economy supported by a dramatic advancement of IT, and its contribution to improving SMEs assimilation capacity for maximizing the effective utilization of external knowledge.

This paper attempts to demonstrate these points. First, on it the basis of an empirical analysis of the electrical machinery firms in Japan, attempts to demonstrate that effective R&D is essential for SMEs as well as larger enterprises to maintain excellent business performance and that the R&D activities in outstanding SMEs are more efficient than in larger enterprises. Secondly, it identifies the sources that enable SMEs achieve better performance than larger enterprises in a global competitive market under a service oriented economy. Third, based on the case analyses of technological innovation strategies taking three Japanese SMEs that achieved excellent business performance in the late 1990s, the significance of tie-ups with external institutes for assimilating external knowledge to improve their service value is demonstrated.

The paper also reviews the SMEs dynamic performance based on their technological innovation. The paper highlights SMEs comparative advantage in a service oriented economy. The research introduces case analyses demonstrating SMEs success in improving their assimilation capacity for effective technological innovation. Finally the findings are summarized and policy implications supportive to SMEs technological innovation in a service oriented economy are suggested.

Dynamic Performance of SMEs and Technological Innovation

SMEs in the Electrical Machinery Industry in Japan

In order to analyze the current situation of SMEs in Japan, an empirical analysis focusing on the electrical machinery industry which holds the highest share of sales in the Japanese manufacturing industry is attempted. While this industry has been maintaining the strongest competitive position in the world, larger enterprises in this industry have been shifting their manufacturing operation to overseas since the late 1980s. Therefore, SMEs in Japan's electrical machinery industry have been facing structural problems and endeavoring to overcome such problems. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Sources of Small and Medium Enterprises Excellent Business Performance in a Service Oriented Economy
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.