LIST OF ABBREVIATIONS
CHAPTER 2: LITERATURE REVIEW
2.3 Productivity management
2.3.4 Production management practices in SMMEs
operational processes by fundamentally changing their business models in order to produce and deliver value. To secure their ability to compete and survive over the long term in a competitive business environment, organisations must re-evaluate their business models more frequently (Keiningham et al. 2020; Taran and Boer 2015).
Figure 2.2: Manufacturing business model (Chen and Chiu, 2014)
A study by Schilirò (2015) found that companies of all sizes use innovations; however, they are more common in SMMEs. Production management practices should be a top goal for most firms because it is crucial for increasing competitiveness, improving administration and extracting the value of information. There is currently no information in the existing literature on businesses that employ production management software.
According to production literature, there is a connection between creativity and economic success as well as between creativity and SMME success (Nicolaides, 2014; Sandada and Mangwandi, 2015). The literature provides additional support for the positive relationship between innovation and economic success. The importance of innovation may be seen in how it enables companies to create products that are both competitive and valuable to consumers. Production management helps SMMEs achieve their financial goals quicker than their counterparts (Martínez-Costa et al.
2018). Innovation has a positive impact on organisational culture and productivity.
The organisations that prioritise production practice integration are setting the bar for creating competitive and successful business responses. The production, however, is realised when it is provided to the market in an efficient manner (Olaniyi and Reidolf 2015; Walker et al. 2015). In a market environment that is becoming more competitive and dynamic, businesses must adapt to changes in the market in order to boost growth and profitability (Bassiti and Jhoun, 2013; Hajikarimi et al. 2013).
Globalisation and rapid technological development are putting pressure on businesses to rely on production management strategies and the ability to provide cutting-edge products to the market in order to remain competitive and appealing to customers (Martínez-Costa et al. 2018). Due to this heightened competitiveness, innovation management practice should be a key element in maintaining longevity and ongoing growth. As opposed to large firms, SMMEs are more susceptible to barriers to innovation. This is because smaller businesses have higher challenges than larger ones due to internal resource constraints and a lack of experience ( Deshati 2016;
Lesáková, 2014).
The focus of research on SMMEs’ problems and shortcomings has largely switched to SMMEs’ efficiency, achievement and finding ways to solve problems (Rahman et
al. 2016). There is a presumption that SMMEs are more innovative and flexible than large organisations since they have fewer communication channels. The positive impact of mobility makes it easier for SMMEs to create emerging technologies, manufacturing procedures, approaches to marketing and business ventures (Deshati, 2016). SMMEs often have the opportunity to adjust to a rapidly evolving marketplace because of their agility, which allows them to develop swiftly as they cater to marketplace demands (Carvalho, 2018; Didonet and Villavicencio, 2020).
There are various contradictory findings about the sorts of innovation created in the SMME environment, according to Quinn et al. (2013). Lesáková (2014) claims that innovation management activities in SMMEs are more human-centred and are primarily informal procedures. SMMEs rely on straightforward and unplanned innovation management processes as opposed to larger organisations, which employ complex innovation management methods. According to Gupta and Barua (2016), SMMEs have a comparative edge in terms of innovation potential.
Moreover, a number of factors affect such potential, including competitiveness, lower costs, increased efficiency, satisfying customer expectations, handling stricter governmental regulations and enhancing their company’s reputation. Lesáková (2014) views the inventiveness of SMMEs in terms of goods, technologies, procedures and services as a way to boost their level of achievement and efficiency. The research on innovation also highlights how crucial it is to combine goods, procedures and innovation within an organisation in order to improve an organisation’s efficient governance of risk (Pereira and Romero, 2013).
The businesses making use of a variety of innovations generally outperform those using just one type of innovation in terms of number of innovations brought to market(Longenecker et al., 2022) .The majority of innovative new products come from SMMEs, which also give priority to R&D-based inventions (Deshati, 2016; Dossou- Yovo and Keen, 2021). However, Chassagnon et al. (2014) note that R&D-driven innovations are not the exclusive source of SMMEs’ innovation. In order to boost productivity and ensure survival, managers are increasingly focusing their efforts to innovate on enhancing the quality of their goods and services. It happens because
SMMEs generally have a low level of technological production deployment, which hinders productivity (Rahman et al. 2016).
In the ever-evolving business landscape, SMMEs can potentially enhance their innovation by integrating both non-technological and technological production methods. While the need for businesses to continuously refine their products and services to remain competitive is evident, the escalating competition compels businesses to adapt their organisational structures to navigate swiftly changing markets (Keiningham et al. 2020).
Quinn et al. (2013) identified discrepancies in research regarding SMMEs' inclination towards both radical and incremental innovations. Given the inherent agility of SMMEs, which allows them to implement minor enhancements more swiftly and cost- effectively than broad-scale innovations, recent research has underscored this significant aspect of their development. Dossou-Yovo and Keen (2021) argue that successful entities prioritize implementing organizational advancements over purely technological ones, as the former can amplify the effectiveness of technological innovations (Lesáková, 2014). Bayarcelik et al. (2014) emphasize that SMMEs often emulate best management practices observed globally, viewing it as a form of innovation. Contrarily, Nani (2017) suggests that while mimicking strategies can enhance a company's intrinsic value and optimize its operations, it shouldn't be misconstrued as a purely inventive strategy.
SMMEs should use production management to improve their competitiveness and sustainability, allowing them to develop new operational processes that suit marketplace demands (Martínez-Costa et al. 2018; Martínez-Costa and Martínez- Lorente, 2008) Administering modernisation techniques improves an organisation’s performance as well as leading to greater client retention and income (Pertuz and Pérez, 2021). SMMEs should undoubtedly enhance their companies’ sustainability by consistently developing and creating new ideas and creating novel amenities (Masocha, 2019).
Martínez-Costa et al. (2018) claim that by implementing a variety of complementary types of technologies and concentrating on processes, client service and promotional
strategies, development can be attained. By using innovation management as an essential development tool, SMEs can improve their efficiency, effectiveness, the final product, compliance with environmental regulations, and employee engagement (Herbst and Barnard, 2016; Quinn et al. 2013).According to Cheng and Chen (2017) and Louw et al. (2018), SMMEs can improve their innovative operations by remaining diligent, consistent, and ambitious in order to avoid disappointing results and boost efficiency and earnings by adapting to changing conditions and performing more effectively in global markets.
According to contemporary research on innovation, competitive innovation is crucial to business practise. (Dereli, 2015) Scholars have increased their emphasis on manufacturing because it enhances organisational competitiveness. As a result, the process of initiating or commencing production over sales agents, marketing programmes, and campaigns was regarded as a crucial factor in enhancing competitiveness. This makes sense for a competitive company that innovates (Patri, 2005). Small and medium-sized enterprises are more successful against rivals when their competitiveness is enhanced through innovation (Adla et al., 2020).