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“FACT ORS INFLUENCING THE PERFORMANCE OF SMALL SCALE AND MEDIUM SCALE FIRMS IN AND AROUND MUMBAI”  Name of Student :  Nehete Rupendra Sharad Name of Guide :  Dr. B. E. Nark hede  Name of Co-Guide: Dr. S.K. Mahajan  Friday, November 18, 2011 1 R S Nehete VJTI

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    FACTORS INFLUENCING THE PERFORMANCEOF SMALL SCALE AND MEDIUM SCALE FIRMS

    IN AND AROUND MUMBAI

    Name of Student : Nehete Rupendra SharadName of Guide : Dr. B. E. Narkhede Name of Co-Guide: Dr. S.K. Mahajan

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    CONTENTS

    Part 1: INTRODUCTION

    Chapter One: Introduction i) Background to the Researchii) Research Problem iii) Justification For The Research iv) Scope of the Study

    02

    Part 2: Literature ReviewChapter Two: Operation Level Factors Chapter Three: Entrepreneurial Skills

    04 05 14

    Part 3: Research Framework and MethodChapter Four: Theory Development i) Development of Independent Constructs ii) Development of Dependent Constructs iii) Organizational Level Factors and Performance iv) Summery

    Chapter Five: Research Methodology Chapter Six: Research Methods

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    19

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    Part 4: Analysis and Results 38

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    INTRODUCTION

    This study examines the relationship between the operational level factorsand the operational performance for small and medium scale enterprises.The entrepreneurial skill needed to operate the SMEs is also important as

    these industries are entrepreneur specific so this issue is also taken in thisresearch for study.The exploratory study is carried out to formulate the theoretical basis foroperational level factors important for SMEs and their operationalperformance (priorities).There after the model is formulated based on the research objectives and

    the hypothesis coming out of literature review.The model is tested by structural equation method using AMOS 7 software

    to find out the relationship between observed and unobserved (latent)variables.The second research problem of entrepreneurial skills is also studied

    through exploratory study as well as statistical analysis.

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    RESEARCH PROBLEM

    What are the key operation level factorsimportant for business performance of SMEs?

    What are the skills important for businessperformance of SMEs?

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    OBJECTIVES

    To determine the operational level factors thatinfluences the business performance of SMEs.

    To find out the key operational level factorsinfluencing the business performance of SMEs.

    To determine the skills that influences thebusiness performance of SMEs.

    To determine the key skills that influences thebusiness performance of SMEs

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    LITERATURE REVIEW

    Type of Enterprise Investment in plant and machinery/equipment (excluding landand building)

    Manufacturing Enterprises Service Enterprises

    Micro Up to Rs. 25 lakh Up to Rs. 10 lakh

    Small More than Rs. 25 lakh and up

    to Rs. 5 crore

    More than Rs. 10 lakh and up

    to Rs. 2 croreMedium More than Rs. 5 crore and up

    to Rs. 10 croreMore than Rs. 2 crore and up

    to Rs. 5 crore

    Definition of MSM Enterprises

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    OPERATION LEVEL FACTORS

    Skinner conceived a model for manufacturing strategy in which thecompetitive environment suggest a basic business strategy which in turnsuggest the manufacturing mission or strategy. This mission can beencapsulated in to choices made with respect to four competitive priorities:cost, quality, delivery and flexibility. The design of the manufacturing systemcan be made to fit the strategy by making appropriate tradeoff or decisions

    in key areas.Further, Skinner suggested five areas where tradeoff decisions had to be

    made to assure a fit between business strategy and manufacturing: 1) plantand equipment 2) production planning and control 3) labor and staffing 4)product design/engineering; and 5) organization and managementBryan D. Prescott (1995) has presented ten essentials for business

    success such as customer centered organization, customer centeredleadership, customer centered strategy, management of people, training and developing people, management of resources, process control andimprovement, customer satisfaction, employee satisfaction and; communitysatisfaction.

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    OPERATION LEVEL FACTORS

    Hayes and Wheelwright (1984) have proposed that congruencyamong operations managers should exist at two levels. They shouldagree on (1) where the organization is trying to go (competitive goalsor priorities) and (2) the day-to-day decisions that involve trade-offsamong priorities and that, over time, create a pattern of manufacturing strategy.Various manufacturing practices such as TQM, JIT etc. are followed inindustries to excel in organizational performance. The objective of

    the practices, as management commitment and training to workers,is to produce improvement in operative and business performance(Powell, 1995).

    Literature review is carried out to find out the operation level factorsand are examined for six factors such as PC =Process control andimprovement, MR=Management of resources, MP=Management of people, TD=Training and developing people, TW= Team work,PS=Partnership with suppliers

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    CONCEPTUAL FRAMEWORK FOR THE THESIS

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    1. Process control & improvement

    2. Management of resources

    3. Management of people

    4. Training & developing people

    5. Team Work

    6. Partnership with Suppliers

    Operational performance

    Cost, Quality, Flexibility, Delivery Growth in Productivity

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    The first construct process control and improvement refers to the productivity andflexibility are as good as, or better than, the best of competition; processes are undercontrol and innovation and continuous improvement are encouraged (Bryan D.Prescott, 1995, Skinner W.,1974, Haynes R.H., Wheelwright S.C., 1984, T. J. Hill,1992, Eve D. Rosenzweig, and George S. Easton, 2010).The second construct management of resources refers to utilization of resources ison a par with the best of the competition and technology is effectively used toimprove productivity and flexibility (Bryan D. Prescott, 1995, Haynes R.H.,Wheelwright S.C., 1984, Eve D. Rosenzweig, and George S. Easton, 2010).The third construct management of people refers to the employing flexibleleadership style, insist on personal responsibility for quality and provide the tools,information, empowerment, and support required for people to participate in a questfor excellence in all aspect of the business (Bryan D. Prescott, 1995, SkinnerW.,1974, Haynes R.H., Wheelwright S.C., 1984, T. J. Hill ,1992, Buffa,1984, Fine &Hax, 1985, Peter T. Ward et.al.1990, Eve D. Rosenzweig, and George S. Easton,2010)

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    The forth construct training & developing people refers to the supply of qualified, competent and flexible people which are sufficient to meetoperational demands and contingencies and training is cost effective andbased on company standards (Bryan D. Prescott, 1995, Fine & Hax, 1985,Ricardo M. Pino 2007, Eve D. Rosenzweig, and George S. Easton, 2010).The fifth construct team Work refers to the cumulative actions of the team(group of people) during which each member of the team subordinates hisindividual interest and opinions to fulfill the objectives or goals of the group(Besterfield Dale H. et.al., 2003, Flynn Barbara B; Sakakibara Sadao;Schroeder Roger G., 1995, Eve D. Rosenzweig, and George S. Easton, 2010)The sixth construct supplier partnership refers to long term commitment toachieve quality, increased efficiency, lower cost, innovation and continuous

    improvement of products and services between two or more organizations(Ricardo M. Pino, 2007, Eve D. Rosenzweig, and George S. Easton, 2010)

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    OPERATION LEVEL FACTORS STUDIES Authors PC MR MP TD TW PS

    Powell, T.C. (1995) X X X X X

    Ahire, S.L., Golhar, D.Y., Waller,M.A (1996)

    X X X X X X

    John Miltenburg (2008) X X X X X X

    Samson, D., & Terziovski, M.(1999)

    X X X X X

    Huarng, F., & Cheng, Y. (2002) X X X X X X

    Li, J.H., Anderson, A.R., & Harrison, R.T. (2003)

    X X X X X

    Lagrosen S. (2002) X X X

    Agus, A. (2005) X X X X X X

    Li, J.H., Anderson, A.R., & Harrison, R.T. (2003)

    X X X X X

    Sadao Sakakibara, Barbara B.Flynn, Roger G. Schroeder(1993)

    X X X X X X

    J. Ukko, J. Tenhunen, H.Rantanen(2007)

    X

    Honggeng Zhou et.al.(2008) X

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    R S Nehete VJTITable 4: operation level factors studies

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    OPERATION PERFORMANCE OR PRIORITIES

    Skinner (1974) described common competitive performance criteria formanufacturing strategy such as short delivery cycles, superior quality andreliability, dependable deliveries, fast new product developments, flexibilityin volume changes and low cost.Hayes and Wheelwright (1984) have defined this term as price (cost),quality, delivery dependability, and flexibility.Ferdows and De Meyer (1990) identified four dimensions: cost, quality,dependability, and flexibility.Corbett and van Wassenhove (1993) point out that competitive capabilityrepresents, to a great extent, product, place, and price dimensions. Productrefers to the physical dimension, such as quality. Place includes deliveryissues and the availability of products. Price refers to the amount a

    customer pays for the product or service. Additionally, they state that thesemeasures of capabilities have their counterpart in terms of competencies in the sense that capabilities are outward looking while competencies areinward looking. As an example, the counterpart of price is cost.

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    OPERATION PERFORMANCE OR PRIORITIES

    Wood et al. (1990) examined the dimensions of manufacturing capabilities that focus on the following capabilities: low price, high product performance,high durability, high product reliability, short delivery time, delivery on duedate, product customization, number of features, product cost, conformance

    to design specifications, improved manufacturing quality, cost, on-timedelivery, product cost, quality consistency, quality perceived by customer,

    and product priceVickery et al. (1993) suggest a list of production competence characteristicsincluding product flexibility, volume flexibility, process flexibility, low productcost, delivery speed, delivery dependability, production lead time, productreliability, product durability, quality, competitive pricing, and low price.Driven by its business strategies, a firm sets competitive priorities and

    develops action plans. As action plans are implemented, manufacturing competencies are developed and these competencies allow a firm to buildmanufacturing capabilities that enable them to compete in the market(Koufteros et al., 2002).

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    OPERATION PRIORITY STUDIES

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    LITERATURE REVIEW ON ENTREPRENEURIALSKILLS

    Business success is related to the achievement of goals andobjectives. The different stakeholders may have different goals andaspirations for the enterprise, and they may change over timeJennings and Beaver (1997, 67 - 68) suggest that it would beappropriate to regard an entrepreneur as the primary stakeholder

    and to consider how she or he might define success or failureSome researchers have argued that success is driven by theentrepreneurial orientation (Covin & Slevin 1991; Lumpkin & Dess1996; Wiklund & Shepherd 2004)According to Lumpkin and Dess (2001), the concept of entrepreneurial orientation consists of five dimensions: autonomy,innovativeness, risk taking, proactiveness, and competitiveaggressiveness.According to de Koning and Brown (2001), the entrepreneurialorientation is positively associated with opportunity alertness.

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    Shane (2000) has discovered that people recognize the opportunitiesrelated to the information and knowledge, they already possess.Small business success has often been classified into three categories of antecedents: the individual characteristics of the owner-manager, firmcharacteristics and environmental characteristics (Cragg & King 1988;Rutherford & Oswald 2000).Beal (2000) provides a similar model. He emphasizes that both external andinternal alignment influence a firms performance. The external alignmentmeans the alignment between the competitive strategy and the industry lifecycle stages, and its effect on the performance. The internal alignmentmeans the competitive strategy and the small business managersfunctional experience and its effect on the performance.

    According to Jennings and Beaver (1997), a popular belief is that superiorperformance and competitive advantage in the smaller firm is invariablyequated with successful business development culminating in exceptionalreturn on the investment, sales growth, volume, profit and employment.

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    MODELS OF FIRMS SUCCESS

    Van Vuuren and Niemen(1999) developed a threedimensional model in whichentrepreneurialperformance is a function of motivation timesentrepreneurial andbusiness skills, as shown

    belowE/P = aM x bE/S x cB/S

    E/P is defined as increase in entrepreneurialperformance which is based on the starting of a business, utilizing an opportunity and growthof the business idea.M = Motivation ,this includes inner control,persistence, leadership, decisiveness,determination and sheer guts, achievementimagery, ability to inspire, ability to overcomeobstacles or blocks, ability to get help, reaction to success or failure.E/S = Entrepreneurial skills cover the ability

    turn their business idea into feasible businessopportunities, to start and to grow a businessenterprise. It includes creativity, innovation,risk taking, and the ability to take successfulentrepreneurial role models and identificationof market opportunities.B/S = Business skills covers ability to formulatebusiness plans, financial, marketing,operational, human resources, legalcommunication and management skills.a,b,c are constant coefficient.

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    MODELS OF FIRMS SUCCESS

    Wickham (2001) stated the entrepreneurialperformance results from a combination of industry knowledge, general managementskills, people skills, and personal motivation. Itcan be represented as;

    Performance = W (industry, management,

    interpersonal, motivation)

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    MODELS OF FIRMS SUCCESS

    Ucbasaran et al (2004) identified three distinct capabilities that the entrepreneur requires to succeed:The entrepreneurial role, which assist with businessdevelopment.

    The managerial role, which assists functional, needs whichinclude human resources management, marketing,operations, administration, finance and planning.The technical role, which needed for functioning andproducing products.

    Ucbasaran et al model can be represented in mathematicalform as;Success = U (E/S, B/S, Technical)

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    MODELS OF FIRMS SUCCESS

    Darroch and Clover(2005) model describesSME success as a function of preference forself employment, motivation, entrepreneurialskills(energizing behaviours) and businessskills, moderated by background and firm levelfactors. Their model can be represented in

    mathematical form as;Success = D (motivation, E/S, B/S)

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    MODELS OF FIRMS SUCCESS

    Perks and Struwig (2005) list personal, technical, business operations andmanagement skills as the four categories of skills that are needed to ensureentrepreneurial success. Their model can berepresented in mathematical form as;

    Success = P (personal, management, B/S,Technical)

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    INTEGRATATED MODEL

    Considering all the above model an integrated model can beformulated which explains entrepreneurial performance is dependenton the availability of product differentiation competencies andenterprising competencies and functional competencies. Product and

    service differentiation is the ability to ensure that the product orservice is produced at an acceptable quality. This solely depends ontechnical skill . Entrepreneurial competencies depend onentrepreneurial and personal skills . Functional competencies assist

    the entrepreneur to function the business and find the balancebetween opportunity, resources, and the entrepreneurial team.Functional competencies depend on business skills.

    E/P = (a.P/S x b.E/S) x c.(B/S) x d.(T/S)Where: E/P is increase in entrepreneurial performance, P/S ispersonal skills, E/S is entrepreneurial skills, B/S is business skills,and T/S is technical skills

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    MODELS OF FIRMS PERFORMANCE BASED ON

    ENTREPRENEURIAL SKILLSModel by Model summery

    Glancey et al(1998) Increase in performance = G (traits, motivation, management) xh(market)

    Van Vuuren and Niemen(1999)

    E/P = aM x bE/S x cB/S

    Wickham(2001) Performance = W (industry, management, interpersonal, motivation)

    Erikson (2002) Performance = E (opportunity) x M x (B/S + opportunity-id x resource)

    Man et al model Performance = G (firm competitive scope) x M (O/C,E/C)

    Ucbasaran et al(2004) Success = U (E/S, B/S, Technical)

    Darroch and Clover(2005) Success = D (motivation, E/S, B/S)

    Perks and Struwig (2005) Success = P (personal, management, B/S, Technical)

    Combined model E/P = (a.P/S x b.E/S) x c.(B/S) x d.(T/S)

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    SKILL NEEDED TO IMPROVEENTREPRENEURIAL PERFORMANCE

    Personal skills

    Business management skills

    Entrepreneurial skills

    Technical skills.

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    SKILL NEEDED FOR IMPROVING ENTREPRENEURIALPERFORMANCE

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    Personal skills(P/S) Business management skills(B/S)

    Entrepreneurial skills(E/S) Technical skills (T/S)

    Key skills Key skills Key skills Key skills Motivation (need forachievement)

    Marketing mgt. Opportunity recognition Ability to use tools, procedure& techniques

    Financial mgt. Ability to gather & control

    resources

    knowledge of industry its

    standard & practices Human resource mgt.

    Supportive skills Supportive skills Supportive skills Adaptability to change General management Creativity Communication ICT skills Innovation Decision making Legal Role model interpretation

    Negotiating skill Networking Calculated risk taking Learning ability Operational

    Numeracy Planning Problem solving Research & development

    Time management Business system Value chain management

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    RESEARCH PROPOSITIONS (HYPOTHESIS)

    H1: Process control and implementation is positively related to operationalpriorities of SMEs.H2: Management of resources is positively related to operational prioritiesof SMEs.H3: Management of people is positively related to operational priorities of SMEs.H4: Training and developing people (continuous improvement) is positivelyrelated to operational priorities of SMEs.H5: Partnership with supplier is positively related to operational priorities of SMEs.H6: Teamwork is positively related to operational priorities of SMEs.

    H7: Operational priorities have a strong impact on growth in productivity.H8: An operational priority mediates the operational level factors andoperational performance.

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    Based on entrepreneurial skills required to run the SMEsand in accordance with second research problem of thisstudy following hypothesis can be proposed;H9: The following skills are not likely to be considered as keyskills:

    o Proposition 9.1 Marketing o Proposition 9.2 Tehnicalo Proposition 9.3 Motivationo Proposition 9.4 Human resourceo Proposition 9.5 Opportunity identificationo Proposition 9.6 Financeo Proposition 9.7 Gathering of resources

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    H10: The following supportive skills are not likely to be considered as importantsupportive skills:

    o Proposition 10.1 Numeracy and literacyo Proposition 10.2 business systemo Proposition 10.3 computer literacyo Proposition 10.4 operations managemento Proposition 10.5 strategy and business planning o Proposition 10.6 Risk taking o Proposition 10.7 Life skillso Proposition 10.8 Communicationo Proposition 10.9 Business linkageso Proposition 10.10 Legalo Proposition 10.11 Research and developmento Proposition 10.12 Supplier managemento Proposition 10.13 Role models

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    RESEARCH METHODOLOGY

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    QUESTIONNAIRE: CONTENT, DESIGN, ANDSTRUCTURE

    The final questionnaire has total 20 question some of which are subdivided in to sub questions.Question number 16 assesses operational level factorsnecessary for business performance which consist of

    total 75 sub questions rated on a six point Likert scale.Also there is one question number 17 which consist of five sub questions to assess the operationalperformance.Question number 18 consists of 20 sub questions toassess important skills required for businessperformance, which is assessed based on whether notvery, moderately, very, and extremely important basis.

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    SETTING AND DATA COLLECTION

    The initial sampling that is list of SMEs inMumbai and nearby areas such as Thane andNaviMumbai is obtained from the DIC,

    confederation of Indian industries and theMaharashtra chamber of commerce. Thecriterion of selection is the turnover of industryas per the definition of SMEs in Indian context.

    This left a final list of 2100 sampling unitswhich includes metal processing andmachinery manufacturers.

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    PROCEDURE

    Anticipating 15-18 percent response ratepostal questionnaires were sent to 1560owners. The questionnaire was addressed

    personally to the CEO or owner of each firm. In the first six weeks, 231 SMEs responded, arate of 14.80 percent.

    y, ,

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    DATA ENTRY

    Each business owner was required to makeresponses on the questionnaire, which werecoded and manually entered into SPSS version

    15.0. Accuracy of the data file was ensured bycareful proofreading of the original data against

    the computerized data file, as well as

    examination of descriptive statistics andgraphic representations of the variables

    y, ,

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    DEVELOPING AND SPECIFYING MEASURES y, ,

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    CONSTRUCTS MEASURED BY THE SURVEY

    INSTRUMENT

    y

    38

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    ANALYSIS AND RESULTS

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    RELIABILITY AND VALIDITY ANALYSES

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    CORRELATIONS AND CRONBACH ALPHA

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    RESULTS FOR STRUCTURAL MODELING

    The structural equationmodeling approach isemployed to test thehypothesis and to gaininterpretational clarityof the relationships

    among the constructs.The figure shows thepath analysis model for

    the constructs. Theoverall fit for the modelwas very good chisquare=27.776; df=24;CFI=0.921;RMSEA=0.048;GFI=0.936 andAGFI=0.824).

    e1e2e3e4e5e6

    .00

    pc

    .00

    mr

    .00

    mp

    .00

    Td

    .00

    tw

    .00

    ps

    .09

    flex

    .22

    quality

    .09

    cost

    .10

    delivery

    .29

    Productivity

    e8

    e9 e10 e11

    e12

    Chi square=27.776df=24

    p=.270

    AGFI=.824CFI=.921GFI=.936RMSEA=.048

    .30.12-.06 .16.18-.10-.06

    .45.22-.06.29

    -.25.01.23 .22.11-.18 .00-.14.02 -.09.10 -.02.03.22 .04 -.16 -.08

    .32

    .25

    -.27

    43

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    PATH COEFFICIENTS OF THE MODEL

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    Impact of Path coefficientProcess control and implementation on CostQuality Flexibility Delivery

    -.10289642 .29965303 .16153149.18115451

    Management of resources on CostQuality Flexibility Delivery

    .05661217 -.24941077 .01111151 .22799770

    Management of people on CostQuality Flexibility Delivery

    -.17514994 .21973219 .11225527 .11980642

    Training and developing people on CostQuality Flexibility Delivery

    -.05878985 -.00364437 -.13722079 -.08715154

    Partnership with supplier on CostQuality Flexibility Delivery

    .21592144 -.07625419 -.15656011 .03600243

    Teamwork on CostQuality Flexibility Delivery

    .03135462 -.02490837 .09528353 .01571512

    Cost on Growth in productivity .28846117

    Quality on Growth in productivity .44590453

    Flexibility on Growth in productivity .21791484

    Delivery on Growth in productivity -.05576850

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    HYPOTHESIS

    H1: Process control and implementation is positively related to operational prioritiesof SMEs. For this hypothesis to be supported, at least one significant path from the processcontrol and implementation to the operation priority should exist. The result from

    table shows that all the path except cost are positive and supporting the hypothesis.

    H2: Management of resources is positively related to operational priorities of SMEs. Management of resources not significantly affects the cost, quality and flexibility butaffects significantly delivery of operation priority. So this hypothesis is supported .

    H3: Management of people is positively related to operational priorities of SMEs. Quality, delivery and flexibility is significantly affecting the operation priority whilecost is not affecting significantly, so this hypothesis is supported .

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    H4: Training and developing people is positively related to operationalpriorities of SMEs. This hypothesis is not supported as no path significantly affects theoperation priority.H5: Partnership with supplier is positively related to operational priorities ofSMEs. This hypothesis is supported as cost is affecting operation prioritysignificantly while others not so significantly.H6: Teamwork is positively related to operational priorities of SMEs. This hypothesis is not supported as none of the component of operationpriority is significantly affected by teamwork.H7: Operational priorities have a strong impact on growth in productivity. Cost, quality, flexibility are significantly affecting growth in productivity whiledelivery not affecting significantly, so this hypothesis is supported .

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    .08

    operations priority

    e1e2e3e4

    e5e6

    .09

    pc

    .45

    mr

    .11

    mp

    .05

    Td

    .00

    tw

    .18

    ps

    .00

    flex

    .00

    quality

    .01

    cost

    2.10

    delivery

    .01

    Productivity

    .02

    e8e9 e10 e11

    e7

    e12

    .00

    operation level factors

    .43 .05 .23 .34

    .67

    Operational performance

    .08e13

    -.12 1.45

    .30

    -.04

    .28 -1.00

    Chi square=33.354df=37p=.641

    AGFI=.857CFI=1.000GFI=.920RMSEA=.000

    -.31

    .25

    -.33 .45

    .16-.25

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    .05

    operations priority

    e1e2e3e4e5e6.10

    pc

    .45mr

    .11

    mp

    .05Td

    .00tw

    .19

    ps

    .00

    flex

    .00

    quality

    .01

    cost

    3.08

    delivery

    .00

    Productivity

    .05

    e8e9 e10 e11

    e7

    e12

    .00

    operation level factors

    .43 .05 .22 .33

    .67

    Operational performance

    .00e13

    -.08 1.76

    .32

    -.04

    .23

    Chi square=32.250df=36

    p=.648

    AGFI=.858CFI=1.000GFI=.923RMSEA=.000

    1.00

    .15

    -.33.44

    .25

    -.33

    .18-.26

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    .22

    operations priority

    e1e2e3e4

    e5e6

    .10

    pc

    .45

    mr

    .12

    mp

    .06

    Td

    .00

    tw

    .17

    ps

    .01

    flex

    .00

    quality

    .04

    cost

    .73

    delivery

    .04

    Productivity

    -.01

    e8e9 e10 e11

    e7

    e12

    .00

    operation level factors

    .42 .06 .25 .34

    .67

    Operational performance

    .21e13

    -.20 .85

    .32

    -.09

    .47 -1.08

    Chi square=32.682df=36

    p=.627

    AGFI=.854CFI=1.000GFI=.920RMSEA=.000

    -.33

    .23

    -.35 .46

    .19-.21

    .79

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    PERFORMANCE OF THREE MODELS

    1) There is a significant differencebetween the performances of models Aand C. The 2 (MA MC) is .672, which issignificant in 2 (DF=1, P

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    H9: The following skills are not likely to beconsidered as key skills: Proposition 9.1 Marketing Proposition 9.2 TechnicalProposition 9.3 MotivationProposition 9.4 Human resourceProposition 9.5 Opportunity identification

    Proposition 9.6 FinanceProposition 9.7 Gathering of resources

    H10: The following supportive skills are notlikely to be considered as important: Proposition 10.1 Numeracy and literacyProposition 10.2 business systemProposition 10.3 computer literacyProposition 10.4 operations managementProposition 10.5 strategy and business

    planning Proposition 10.6 Risk taking Proposition 10.7 Life skillsProposition 10.8 CommunicationProposition 10.9 Business linkagesProposition 10.10 LegalProposition 10.11 Research and development

    Proposition 10.12 Supplier managementProposition 10.13 Role models

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    KMO AND BARTLETT'S TEST

    52

    Kaiser-Meyer-Olkin Measure of Sampling Adequacy.

    .576

    Bartlett's Test of Sphericity Approx. Chi-Square 1296.428

    df 190

    Sig. .000

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    ROTATED COMPONENT MATRIX

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    CRONBACH ALPHAS

    Cronbach alphas for factor 1, 2and 3 are acceptable. On theother hand for factor 4 and 5was not acceptable as it isnegative. Low Cronbach alphasand eigenvalue

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    THE CHI-SQUARE TEST

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    Skill variables Successful group Less successful group Chi- square P valueNotat all

    Moderately

    Very Extremely

    Not atall

    Moderately

    Very Extremely

    Business linkage 5.63 21.12 71.83 1.40 20.20 22.12 42.10 15.48 46.127

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    H9: The following skills are not likely to beconsidered as key skills: Proposition 9.1 Marketing - rejectedProposition 9.2 Technical - rejectedProposition 9.3 Motivation- rejectedProposition 9.4 Human resource - rejectedProposition 9.5 Opportunity identification-

    rejectedProposition 9.6 Finance- rejectedProposition 9.7 Gathering of resources-rejected

    H10: The following supportive skills are notlikely to be considered as important: Proposition 10.1 Numeracy and literacy -

    rejectedProposition 10.2 business system- rejectedProposition 10.3 computer literacy- rejectedProposition 10.4 operations management-rejectedProposition 10.5 strategy and businessplanning- rejectedProposition 10.6 Risk taking- rejectedProposition 10.7 Life skills- rejectedProposition 10.8 Communication- rejectedProposition 10.9 Business linkages- rejectedProposition 10.10 Legal- rejectedProposition 1011 Research and development-rejectedProposition 10.12 Supplier management-rejectedProposition 10.13 Role models- rejected

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    The extremely important factor for SMEs isseems to be the operations (40.84%). Themajority of SMEs considered 17 of the 20 skills

    categories to be very important (43.66%-71.83%). Computer literacy (52.11%), creativity(42.25%) and communication (40.84%) are

    moderately important to the SMEs, whilecomputer literacy (23.94%) is not veryimportant to the SMEs.

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    GENDER DISTRIBUTION OF SUCCESSFUL SMES

    58

    81%

    19%

    Male

    Female

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    GENDER DISTRIBUTION OF LESS SUCCESSFULSMES

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    84%

    16%

    Male

    Female

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    AGE OF RESPONDENT

    RespondentGroup

    Frequency Mean Median Std.deviation

    Minimum Maximum

    Successful 164 43.40 42 10.33 22 70

    Less

    successful

    67 40.54 40 12.67 19 80

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    EDUCATION BACKGROUND

    The majority of the successfulgroups were on average moreeducated than the less successfulgroup whose large majority haveonly matric and below. More than58 percent of the successful SME

    respondents were of B.E.background with M.B.A. or M.E.qualification.It can be stated that successfulSMEs are led by managers witheducation level above matricmostly graduates, while lesssuccessful SMEs have educationlevel at matric or had otherqualification.

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    11

    36

    1

    16

    22

    38

    17

    3127

    4

    117

    3

    0

    5

    10

    15

    20

    25

    30

    35

    40

    Less successful

    Sucessful

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    WORK EXPERIENCE OF THE RESPONDENTS

    More of the successful groups(51%) had on average workedmore than 6 years prior tostarting their own business ascompared to the less successfulgroup whose majority (43%)indicated they had two or lessyears of experienceIt can be stated that successfulSMEs are led by mainlymanagers with more than 4years of work experience whileless successful SMEs have less

    than 4 years experience.

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    43

    12

    9

    36

    1719

    13

    51

    0

    10

    20

    30

    40

    50

    60

    0 to 2 yrs 2 to 4 yrs 4 to 6 yrs > 6 yrs

    Less successful

    Sucessful

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    NUMBER OF YEARS IN BUSINESS

    The number of years inbusiness was three yearsor more for the successfulSME sample. Figure 6.5shows all the successfulSMEs were 3 or moreyears old. Figure 6.6shows 35% lesssuccessful SMEs were of less than 3 years old,while 65% of SMEs were3 or more than 3 yearsold.

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    successful

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    NUMBER OF EMPLOYEES

    Number of employees

    Frequency Mean Median Std.deviation

    Minimum Maximum

    Successful 164 41.40 23 62.24 6 290 Less

    successful

    67 4.54 2 7.65 3 110

    Average number of peoples employed by successfulSMEs was 41 while those employed by lesssuccessful employees was 4.

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    ANNUAL INCOME

    The majority of therespondents in thesuccessful samplesindicated that their

    annual turnover was more than 1 crore rupees. Incontrast most of the lesssuccessful SMEs wereunder 1 crore rupees with

    the majority earning less than 50 lakhs rupees.

    65

    53

    42

    4

    1

    43

    39

    18

    0

    10

    20

    30

    40

    50

    60

    < 50Lakhs

    50 to 100Lakhs

    1 to 5Crore

    5 to 10Crore

    > 10Crore

    Less successful

    Sucessful

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    FORM OF BUSINESS

    The majority of respondent in thesuccessful SME samplehad all formallyregistered and eitherprivate limited or limitedcompanies, whilemajority of the firms are

    from other category thatis not registeredcategory.

    66

    12

    2 2

    32

    2

    52

    5 4

    36

    55

    0

    10

    20

    30

    40

    50

    60

    Less successful

    Sucessful

    MEANS OF SMALL AND MEDIUM SCALEFriday, November 18, 2011R S Nehete VJTI

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    INDUSTRIES.

    Construct Mean

    Std. Deviation Small scaleindustries

    Medium scaleindustries

    Manufacturing functions: Process control and implementation (Pc) 5.03 1.374 4.79 5.21

    Management of resources (Mr) 4.44 1.468 4.23 4.59 Management of people(Mp) 4.66 .935 5.00 4.40

    Training and developing people ( Td ) 4.69 1.113 4.35 4.95

    Partnership with supplier (Ps) 5.00 1.239 4.60 5.30

    Teamwork (Tw) 5.27 1.346 5.09 5.40

    Operation priorities: Cost 3.80 1.257 3.92 3.70

    Quality 3.49 .992 3.10 3.79

    Flexibility 3.94 1.293 3.71 4.11

    Delivery 3.70 1.407 3.05 4.19

    Growth in productivity 3.71 1.335 3.35 3.98

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    COMPARISON OF MEANS OF OPERATIONSPRIORITIES.

    68

    0

    0.5

    1

    1.5

    2

    2.5

    3

    3.5

    4

    4.5

    Cost Quality Flexibility Delivery Growth inproductivity

    Small scale industries

    Medium scale industries

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    COMPARISON OF MEANS OF MANUFACTURINGFUNCTIONS

    69

    0

    1

    2

    3

    4

    5

    6

    Process controland

    implementation(Pc)

    Managementof resources

    (Mr)

    Managementof people(Mp)

    Training anddeveloping

    people ( Td )

    Partnershipwith supplier

    (Ps)

    Teamwork (Tw)

    Small scale industries

    Medium scale industries

    PUBLICATIONSFriday, November 18, 2011R S Nehete VJTI

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    PUBLICATIONS

    National ConferencePresented a paper on related literature review entitled Technology, Innovation and Entrepreneurship Development: ACritical Review in PRODOLOGYa National level paper presentation competition conducted by ProductionEngineering Department V.J.T.I. Mumbai on 28 th -29 th March 2009.Presented a paper on related literature review entitled Industrial Sickness: Concept, Causes, Consequences andRemedial Measures, at CEOs conference by IIIE, at Manali on 23 rd -24 th May 2009. The same paper is published inindustrial engineering Journal of IIIE in July 2009 special issue (ISSN 0970-2555) Presented a paper on related literature review entitled HRD strategies for effective implementation of benchmarking in SMEs, at national conference on recent trends in engineering and technology at Agnel polytechnic, Vashi , on 30-31 Oct.2009.Presented a paper on related literature review entitled Productivity Enhancement through Industrial Safety as a Toolfor Motivation of Employees at 51st NATIONAL CONVENTION OF INDUSTRIAL ENGINEERS & National Seminar on'INDUSTRIAL PRODUCTIVITY,SAFETY ANDDISASTER MANAGEMENT' Organized by the Indian Institution of IndustrialEngineering, Nagpur Chapter on 4-5 December 2009.Presented a paper on Total Productive Maintenance: a critical review at the national conference held atRamdeobaba Kamla Nehru college of engineering, Nagpur held on September 24-25, 2010.A paper presented at the National Conference to be held at Tiwari college of Engineering on Improving the Process Capability of a Edm Operation by the Application of Statistical Techniques, on 11 March2011.

    A paper presented on Key Skills for Business Performance of SMEs at the National conference to be held atsinhagad institute of administration and Computer management, Lonawala held on 25-26 February 2011.Theproceedings are published under ISBN:978-93-5024-792-1.

    70

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    PUBLICATIONS

    International Conference Presented a paper on related literature review entitled Factors Influencing Performance of Small and Medium ScaleTechnological Industries, in GLOWGIFT 09 conference at NITIE,Powai on 12-14 Nov. 2009Presented a paper on related literature review entitled Factors influencing the survival and growth of small andmedium industries in Mumbai and suburban region,in 13 th SOM conference at IIT,Chennai on 20-21 December2009

    Paper Publication (National/ International) A paper entitled Industrial Sickness: Concept, Causes, Consequences and Remedial Measures, is published in

    industrial engineering Journal of IIIE in July 2009 special issue (ISSN 0970-2555) A paper published in Expression a CSR journal on titled CSR and SMEs: perceptions and Initiatives, published inissue 2 April-October 2011 ISSN 2229-4384 An international paper accepted and to be published in International Journal of Engineering Science and Technologyon Investigation of Entrepreneurial Skills for Better Performance of Manufacturing SMEs in July 2011 issue ISSN0975-5462 .An international paper under review in International Journal of Production Economics on Manufacturing functionsand plant performance: an empirical study in manufacturing SMEs in Mumbai ISSN 0925-5273 .An international paper under review in International Journal of Manufacturing Technology and Management on

    Manufacturing functions and plant performance: an empirical study in manufacturing SMEs in Mumbai ISSN 1741-5195, ISSN 1368-2148 .

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    THANK YOU

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