Entrepreneurial Supply Chain Management competence performance of manufacturing Small Medium Enterprises

Impact of Entrepreneurial Supply Chain Management
Competence on Performance of manufacturing Small
Medium Enterprises in twin cities of Pakistan
Presented By;
Ejaz Ahmed
1900062
Muhammad Waqas Asif
1900095
Muhammad Hasan Manzoor
1900077
Supervised By;
Yalman Ansari

Background of the Study
 Importance of SME Sector in Economic development
 SME Sector according to SMEDA
 Competitive advantage SME’s can achieve through SCM
 Research regarding SCM significance in SME’s
 Research Methodology applied

Gap Analysis
 Lack of Entrepreneurial endeavors
 Patents infringements and registration problems
 Cheap competition from neighbors and under developed local SME
industry
 Industry Ignorance towards Competitive SCM advantages in SME’s

Problem Statement/Research Questions
 The influences of research variables as mentioned above calculate
the positive upward trends in performance in comparison to
competition while using entrepreneurial SCM in SME’s.
 The Impact of entrepreneurial SCM Competence i.e Innovative
Orientation, Risk taking characteristics, Proactiveness, Relational
Capital and Coordination Capabilities.
 The most important Variable that reflects most positive in
quantitative analysis
 Innovative Orientation

Scope of the Study
 To bring the SMEs in best competitive position.
 To support our study we have selected the SMEs of Pakistan in which supply
chain activities are extensively performed.
 Our study are restricted to only five variables of SCM entrepreneurial
Competence i.e. Innovativeness Orientation, Risk-taking characteristics, pro-
activeness, and relational capital, coordination capability, which are
important for our study and will enhance supply chain performance
respectively.
 This study will allow the managers to understand the relation of
entrepreneurial supply chain management Competence and Performance, to
work and act more efficiently that will ultimately improve their supply chain
performance.

Study Objectives
 This study attempts to contribute to the SCM and entrepreneurship literature
by exploring this gap.
 First, we examine the role of a specific entrepreneurial SCM competence,
which we define as the inimitable SCM capability for recognizing and
pursuing business opportunities that engender success and growth.
 Second, to extend the knowledge in this area, we first seek to establish
whether a parallel exists between literature in entrepreneurship and SCM.

Rationale / Significance of Study
 Manufacturing SMEs lack behind in term of financial and tangible
resources that are much crucial to competencies in the global market,
successes in the competitive global environment appear to large
fundamental and intangible resource constitute their entrepreneurial SCM
competence. Their key tangible resources include innovation orientation,
risk-taking characteristics, proactive orientation, relational capital and
coordination capability.
 In this immensely competitive global environment, the practical
contribution of this study to the corporate and business environment is; to
help SMEs in Pakistan to make supply chain management (SCM) as a core
strategic competence to gain competitive edge, to compete in highly
competitive or challenging environments in which there are a large number
of SMEs, SMEs are more prone about profit hence to help to maximize their
profit.

CHAPTER 2
REVIEW OF THE LITERATURE

General
 In this immensely competitive global environment, many firms
resort to supply chain
 management (SCM) as a core strategic competence to gain
competitive edge.
 Pakistan's industrial performance has been on a reliable decrease
throughout the previous three decades.
 SME (Small and Medium Enterprises) structure more than 99
percent of the aggregate organizations in Pakistan.
 There is an immediate relationship between the soundness of SME
area in an economy and the general quality and development of that
economy.
 Previous research shows that there is less research work in
entrepreneurial SCM in SMEs of Pakistan

Performance (Dependent Variable)
 In terms of methods to review and classify company’s performance, several
critiques show the significance of comprising a structured process to get
better performance eventually.
 We have worked upon key areas and have identified five main inclinations
causing drastic influence and modifications to supply chain plan and
performance i.e. Innovativeness Orientation, Risk-taking characteristics, pro-
activeness, and relational capital and coordination capability.
 Manufacturing SMEs normally depend on various stakeholders for the
overall performance and profitability of the organization such as suppliers,
engineers, assemblers, retailers and even the end users. Until the processes
pass on successfully through each of its stakeholder, the desired profitability
cannot be achieved. All these stakeholders are part of supply chain hence
making it even more important (La Londe and Masters, 1994).

Entrepreneurial SCM Competence (Independent Variable)
 We characterize Entrepreneurial SCM Competence as the matchless SCM
ability for perceiving and seeking after business open doors that induce
achievement and development.
 Entrepreneurial SCM capabilities give significant preferences that encourage
SCM exercises.
 Past literature shows that the most vital organizational traits can be
assembled into five classifications: advancement introduction, risk taking
attributes, proactiveness introduction, relational capital ability, and
coordination capacity.
 Thus, we characterize entrepreneurial SCM ability as the incomparable SCM
capacity for perceiving and seeking after business opportunities that incite
achievement.

 Innovation orientation
 In the survey, most of the SME managers mentioned the importance of an
aggressive innovative approach.
 Firms with a strong innovative orientation tend to possess distinctive
competences and outlooks (Quintana-Garcia and Benavides-Velasco 2005),
and are characterized by a managerial vision and innovative organizational
culture that aims at achieving the firm’s goals through a supply chain
(Gonzalez-Padron et al. 2008).
 Firms with limited tangible resources that want to pursue SCM strategies
may need a strong innovative posture to take the initiative to pursue new
opportunities in complex and risky markets.
 An innovation orientation also should give rise to processes, practices, and
decision-making activities associated with supply chain activities and thus

 Risk-taking Characteristics
 The critical role of risk-taking characteristics appears in virtually all SME
literature. Risk-taking activities engender superior organizational
performance for entrepreneurial firms.
 Firms in complex supply chains require seamless coordinated flows of
goods, services, information, and cash; or else, they face significant supply
risk (Harland et al. 2004).
 Manuj and Mentzer (2008) identify eight types of SCM risk: supply,
operational, demand, security, macro, policy, competitive, and resource.
 Risk-taking or venturing behavior also may result when firms engage in new
supply chains or provide new products and services to supply chain
members.

 Pro activeness Orientation
 Most SMEs in our survey are highly proactive with respect to their industry,
product category, and how they compete in the supply chain.
 We define a proactiveness orientation as the firms’ tendency to originate
proactive innovations that beat competitors to the punch (Miller 1983).
 Proactiveness entails a firm’s ability to integrate supply chain information and
shape its environment by introducing new products, technologies, and
administrative techniques (Miller and Friesen 1978).
 Thus, a proactiveness orientation drives entrepreneurial SCM competence.

 Relational Capital Skill
 In our survey, SME executives frequently highlighted the importance of being
socially connected to customers and suppliers, which the literature refers to as
relational capital skill (Dwyer et al. 1987).
 In this context, social networking activity is a strategy for augmenting their self-
interests through mutual relationships (Galaskiewicz 1979).
 In SCM terms, a relational capital skill symbolises an ability to connect with
supply chain members who control necessary inputs, especially those whom the
entrepreneurs know well enough to predict their behaviour (Sarkar et al. 2001).
 To accomplish this provision, manufacturing SMEs could engage in relationships
with supply chain partners that leverage the core competencies of the individual
partners and thereby better manage uncertainty in exchange processes.

 Coordination Capability
 Prior literature examined information sharing as an enabler of coordination
capability within the supply chain (Carr and Smeltzer 2002).
 This competence refers to the capability to integrate key business processes
among supply chain members to provide the correct products, services, and
information (Kim et al. 2006). A relationship also may arise between the use of
coordination capability and the richness of shared information.
 Coordination capability among supply chain members has a positive and direct
effect on both internal and external collaboration, and information sharing is a key
dimension of collaboration.
 Coordination capability simplifies manufacturing processes to increase cost
efficiency, increases employees’ productivity, reduces variation, and eliminates
waste.

Theoretical Framework
Entrepreneurial SCM Competence
Dependent Variable Independent Variable
Innovation Orientation
Relational Capital Skill
Coordination Capability
Proactiveness Orientation
Risk-taking Characteristics
Performance

Hypotheses
H1: There is a positive relationship between Innovativeness Orientation and
Performance.
H1o: There is no relationship between Innovativeness Orientation and Performance.
H2: There is a positive relationship between Risk-taking Characteristics and
Performance.
H2o: There is no relationship between Risk-taking Characteristics and Performance.
H3: There is a positive relationship between Pro-activeness and performance.
H3o: There is a no relationship between Pro-activeness and performance.
H4: There is a positive relationship between Relational Capital and performance.
H4o: There is a no relationship between Relational Capital and performance.
H5: There is a positive relationship between Coordination Capability and
performance.
H5o: There is a no relationship between Coordination Capability and performance.

CHAPTER 3
RESEARCH METHODOLOGY

Sampling Method
 Population
 There are approx. 2 million Micro Small and Medium Enterprises in
Pakistan. These include 400,000 Manufacturing units, 600,000 Service
sector units and 1 million Trade sector units (retailers).
 Population for this study is the SMEs of Pakistan in general and the
workforce of the SMEs of twin cities of Pakistan specifically.
 For the sake of the study it has been assumed beforehand that enterprises is
well known of the supply chain activates in Pakistan.

 Sample Size
 We selected different type of manufacturing and service based small
and medium enterprise in Rawalpindi and Islamabad.
 The sample size for this research study is 100 which include senior
& first line manager and supervisor from different SMEs of twin
cities of Pakistan.
Sampling Method

 Sampling Technique
 A sample is basically a subset of the population, selected by either probability or non-
probability methods.
 Randomly selected sample of 100 respondents was selected for this study from 20 SMEs of
twin cities of Pakistan which include: Paint Removers manufacturers, Drain Pipe
manufacturers, Soap & Chemical manufacturers, Furniture manufacturers, Polythene Bag
manufacturers, Jewelry manufacturers, and mobile banking services.
 This sample size includes employees of the organizations working directly or indirectly with
their respective supply chains.
Sampling Method

Data Collection Techniques
Research Instruments
 This study is meant to discover the prevailing relationship between the
independent variables and depending variable.
 Correlation and regression study has been conducted for the purpose.
 Data has been gathered through questionnaires designed for quantitative
research.
 In this questionnaire, likert scale has been used to measure the
responses on a 5 point scale regarding the dependent and independent
variables.

 Pilot Reliability Test
 A pilot test comprising a sample of 30 responses was conducted to test the internal validity of
the items; Cornbach’s coefficient alphas were calculated using the data of each independent
variable and the dependent variable.
Data Collection Techniques
Variables
Chronbach’s
Alpha
Chronbach’s Alpha based
on Standardized Items
Performance .751 .713
Innovation orientation .838 .837
Risk-taking .817 .801
Proactiveness .782 .767
Relational Capital .719 .713
Coordination Capabilities .759 .753

Sample Characteristics
S. No Demographics Frequency Percentage
1 Age Interval
25-30 yrs. 20 20
31-35 yrs. 16 16
36-40 yrs. 16 16
41-45 yrs. 11 11
46-50 yrs. 25 25
Above 50 yrs. 12 12
2 Gender
Male 89 89
Female 11 11
3 Sector Type
Manufacturing 88 88
Service 12 12
4 Work Experience
5-10 yrs. 25 25
11-15 yrs. 24 24
16-20 yrs. 13 13
21-25 yrs. 21 21
26-30 yrs. 17 17
5 Type of Organisation
Private 90 90
Public 10 10
6 Job Status
Managerial 91 91
Non- managerial 9 9

Data Analysis Techniques
Both primary data and secondary data have been used for this research study.
The primary data has been collected through already available articles on the
topic while the secondary data has been gathered from questionnaires. The data
has been analyzed on the basis of quantitative research.

Descriptive Statistics
Variables Mean SD
Innovation
Orientation
3.350 1.067
Risk-taking 4.080 .939
Proactiveness 3.400 1.015
Relational
Capital
4.250 .821
Coordination
Capabilities
3.260 1.078
Performance 4.540 .5009

Inferential Statistics
 Correlation Analysis
Sr.
no
Variables Innovation
Orientation
Risk-taking Proactiveness Relational
Capital
Coordination
Capabilities
Performance
1 Innovation
Orientation
1
2 Risk-taking .042 1
3 Proactiveness .737** -.087 1
4 Relational
Capital
.291** -.144 .145 1
5 Coordination
Capabilities
.657** -.120 .651** .097 1
6 Performance .701** .251* .604** .258** .531** 1

 Regression Analysis
Inferential Statistics
Predictors Outcomes
Beta T p
Innovation Orientation .354 3.159 .002
Risk-taking .304 4.403 .000
Proactiveness .233 2.294 .024
Relational Capital .146 2.077 .040
Coordination Capabilities .185 2.013 .047

Hypothesis 1
 There is a positive relationship between Innovation Orientation and
Performance. The statistics show that this hypothesis is supported.
Innovation Orientation has a significant impact on the Performance.
 Firms with a strong innovative orientation tend to possess distinctive
competences and outlooks, and are characterized by a managerial vision
and innovative organizational culture that aims at achieving the firm’s
goals through a supply chain (Gonzalez-Padron et al. 2008).
 Relationship between innovation orientation and performance is significant
at 0.01 level of confidence, as t-value is 3.159 which is greater than 2 and
p-value is 0.002 which is less than 0.05, showing that H1 is accepted and
null hypotheses regarding innovation orientation is rejected.

Hypothesis 2
 Hypothesis 2 is supported, i.e. there is positive and significant
relationship between Risk-taking and Performance.
 Manufacturing SMEs with risk-taking entrepreneurial
characteristics are likely to seek profit-maximizing strategies in
which they leverage SCM. Risk-taking or venturing behavior also
may result when firms engage in new supply chains or provide
new products and services to supply chain members.
 According to the results there is a significant relationship between
Risk-taking and Performance at 0.05 significant level of SMEs of
Pakistan, as p-value of Risk-taking is 0.000 which is less than .05
and t-value is 4.403 which is more than 2, which shows that H2 is
accepted and null hypotheses regarding Risk-taking is rejected.

Hypothesis 3
 The success of an organization depends heavily upon the success of
the proactiveness of the supply chain in which it participates as a
partner Cai et al., (2008) also stated that one of the issues that have
become critical for gaining competitive advantages for companies is
improving supply chain performance and its orientation.
 The Pro-activeness has a positive relationship with performance.
According to the results there is a significant relationship between
Pro-activeness and Performance at 0.05 significant level of SMEs of
Pakistan, as p-value of Pro-activeness is 0.024 which is less than
0.05 and t-value is 2.294 which is more than 2, which shows that H3
is accepted and null hypotheses regarding Pro-activeness and
Performance is rejected.

Hypothesis 4
 There is a positive relationship between Relational Capital and
Relational Capital has a significant impact on the Performance.
 To accomplish relational capital, manufacturing SMEs could participate
in relationships with supply chain partners that leverage the core
competencies of the individual partners and thereby better manage
uncertainty in exchange processes.
 Relationship between relational capital and performance is significant at
0.01 level of confidence, as t-value is 2.077 which is more than 2 and p-
value is .040 which is also less than .05 which shows that, H4 is accepted
and null hypotheses regarding relational capital is rejected.

Hypothesis 5
 There is a positive relationship between coordination capability and
 The possession of coordination capability signals to partner firms that
information sharing can drive relationship development; hence,
coordination capability is a factor that supports entrepreneurial SCM
competence.
 The results show that the coordination capability and performance have
significant relationship. Relationship between coordination capability and
performance is significant at 0.05 level of confidence, and t value is 2.013
which is greater than 2 and p value is .047 which is less than 0.05, so H5
is rejected and null hypotheses regarding coordination capability is
accepted.

Summary of Discussion
 This study has been conducted in a very rigorous manner in order to bring up the best
possible knowledge body in the field of supply chain management.
 As hypothesized through the literature review, the impact of five identified variables,
innovation orientation, risk-taking, Proactiveness, relational capital and coordination
were studied, and the results came out highly correlated. Previous researches also
supported the notion and identified a high correlation between the dependent and
independent variables.
 The results showed that SMEs in Pakistan will get benefit for this study. As SMEs have
less resource of finance so they will get competency by these variable.
 As evident, all independent variable are positively strongly correlated with the supply
chain performance. It shows that SMEs performance area is whole operational area in
the supply chain that impacts the whole process very complexly.

Conclusions
 Based on the findings of our research, organizational capabilities of manufacturing Small
and Medium Enterprises support superior performance. We conclude that SCM
entrepreneurial competence i.e. innovativeness, risk taking, proactiveness, relational
capital and coordination capacity effect Performance.
 The results provide empirical evidence manufacturing SMEs that possess a high level of
entrepreneurial Supply Chain Management competence perform better in their supply
chain. The SMEs performance is led by entrepreneurial SCM competence further proceed
by SCM strategies and Performance of manufacturing SMEs is affected by SCM
competence.
 Result shows significant relationship between entrepreneurial SCM competence and
performance. There is direct and indirect effect of entrepreneurial SCM competence on
performance. Missing links can provide significant relationship between SMEs capabilities
and performance.
 SMEs must implement SCM strategies to get full benefit entrepreneurial SCM strategies.
SMEs can enhance their performance by linking up and skillfully managing their
entrepreneurial SCM competence.

Recommendations
 Our findings suggest that to flourish in this competitive global market, manufacturing
SMEs should develop unique competence that are inimitable to maximize their utility in
the supply chain. The possession of entrepreneurial SCM competence leads to the
development of crucial organizational capability.
 Managers of manufacturing SMEs should devise an appropriate collection of
capabilities to support their entrepreneurial SCM competence.
 Organization should also investigate remaining potential dimensions, such as the
organizational learning or knowledge management in which SMEs engage after
participating in supply chain activities.
 Organization should consider performance from multiple perspectives, such as market
structure, from industrial organization literature; ownership structure, from finance
literature; or corporate governance, from organizational behavior literature.
 The antecedents of entrepreneurial SCM competence have not been be explored. So
further research should investigate both internal and external factors of SMEs that
influence entrepreneurial SCM competence.

Entrepreneurial Supply Chain Management competence performance of manufacturing Small Medium Enterprises

Entrepreneurial Supply Chain Management competence performance of manufacturing Small Medium Enterprises

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