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SME Performance and Its Relationship to Innovation
Linköping University, Department of Management and Engineering. Linköping University, The Institute of Technology.
2011 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Current SME performance models suffer from a number of disadvantages. The models use intensively a business ratio approach, they look at SMEs as a homogenous group, they consider firms to be closed systems, they do not directly incorporate the impact of an enterprise’s innovation activities, and finally they are complex and rely on sophisticated statistical refining methods making them unpractical to use by SME managers. There are four major challenges when one tries to build SME performance models that lack these deficiencies. The first challenge is that the desired performance evaluation model must optimally incorporate both quantitative and qualitative input. The second challenge is that the model must incorporate non-financial input parameters, such as firm size and age (among others), in the performance evaluation models. The third is that the model must consider the variety of SMEs as concerns their business sectors, nationalities, sizes, and ages. The final challenge is that the model must be able to utilize existing limited information available from the SMEs bookkeeping practices in an optimal way.

The thesis addresses three questions related to constructing a better SMEperformance model, namely (1) What are the advantages and disadvantages of the existing models used in evaluating SME performance? (2) What characterizes a comprehensive model for measuring SME performance with acknowledgement of the firm’s innovation activities? (3) How can a firm’s innovation activities be enhanced in relation to the firm’s external environment?

To construct a model that copes with these challenges, I used a literature-based selection of parameters as well as a theory-based selection. I used both a conceptual approach and an empirical approach to discuss and propose a model, the Survival Index Value (or SIV) model, as an alternative to the existing performance models for SMEs.

The major contributions of this thesis to the field of SME performance can be summarized in three outcomes: the SIV model as a new model of SME performance evaluation, the ASPEM as a new tool for strategic utilization of SME performance models, and a new approach to account for innovation in relation to the external environment of the firm using the IBAM tool.

The work adds to the theory of the firm, as it presents a new way of evaluating firm performance. It also contributes to bridging the theory of the firm to organizational theory, by elevating the significance of networking and its impact on SME efficiency.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press , 2011. , 127 p.
Series
Linköping Studies in Science and Technology. Dissertations, ISSN 0345-7524 ; 1364
Keyword [en]
SME performance, performance evaluation, firm efficiency, SIV model, innovation capital, system capital, open capital, business models
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:liu:diva-71349ISBN: 978-91-7393-219-6 (print)OAI: oai:DiVA.org:liu-71349DiVA: diva2:447516
Public defence
2011-11-28, ACAS, Hus A, Campus Valla, Linköpings universitet, Linköping, 13:15 (English)
Supervisors
Available from: 2011-10-12 Created: 2011-10-12 Last updated: 2016-05-04Bibliographically approved
List of papers
1. Typology Analysis of Performance Models of Small and Medium-Size Enterprises (SMEs)
Open this publication in new window or tab >>Typology Analysis of Performance Models of Small and Medium-Size Enterprises (SMEs)
2004 (English)In: International Journal of Entrepreneurship, ISSN 1099-9264, E-ISSN 1939-4675, Vol. 2, no 1-2, 155-177 p.Article in journal (Refereed) Published
Abstract [en]

A number of firm performance models are available. Reviewing these models and pointing out their individual strengths and weaknesses, would help both academic researchers and professional users to understand and appreciate how and when to use these various models. The theoretical models for Small and Medium-size Enterprise (SME) performance can be divided into two categories: firm dynamics theories and performance prediction models. In the first part of this paper we review, in a condensed manner, the most relevant firm dynamic theories, i.e. SME's performance models. These include: Stochastic Theories, Learning Model Theories and Hazard Modeling Theories. In the second part of this paper, we examine the performance prediction models of SMEs, which include Z-Scores, ZETA-Scores, Neural Networks (NN) and the SIV® models, among others. The strengths and weaknesses of each of these models are exposed and discussed.

Place, publisher, year, edition, pages
SpringerLink, 2004
Keyword
small and medium-size enterprises - survival index value - SIV® model - Z-scores - neural networks
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-71336 (URN)10.1023/B:JIEN.0000026911.03396.2d (DOI)
Available from: 2011-10-12 Created: 2011-10-12 Last updated: 2017-12-08Bibliographically approved
2. ASPEM as the New Topographic Analysis Tool for Small and Medium-Sized Enterprises (SMEs) Performance Models Utilization
Open this publication in new window or tab >>ASPEM as the New Topographic Analysis Tool for Small and Medium-Sized Enterprises (SMEs) Performance Models Utilization
2005 (English)In: International Journal of Entrepreneurship, ISSN 1099-9264, E-ISSN 1939-4675, Vol. 3, no 1, 53-70 p.Article in journal (Refereed) Published
Abstract [en]

Quantifying and measuring small firm performance is vital in our understanding of how internationalization influences firm performance. That is also important when attempting to grasp the mechanisms of the internationalization processes. There are few methods used for the evaluation of performance of Small and Medium-sized Enterprise (SMEs). These methods can be either macro or micro economic in nature. Hazard Modeling, Stochastic Models, and Learning Models are examples of macro economic models while Z-Scores, ZETA-Scores, Neural Networks, and the SIV® model are examples of micro models. Choosing the most suitable performance model is an essential step in order to maximize our knowledge in relation to firm performance. Utilizing SMEs performance measures without thinking about the category of model, will bias the outcome of the majority of SMEs studies. However, using firm performance diverse models in an efficient manner requires strategic thinking. In this paper, we are re-introducing a tool that can accommodate that aspect. Abouzeedan (2002) designated the new tool: the Arena of SMEs Performance Models or an ASPEM diagram. The horizontal axis in the diagram indicates the Information Intensity Requirements of the model. The vertical axis indicates the Coverage Intensity of the model varying from an individual firm up to a whole group of firms. By allocating each of the SMEs performance models, at the suitable region of the ASPEM Diagram, researchers can better build a sound strategy for the application of these methods.

Place, publisher, year, edition, pages
SpringerLink, 2005
Keyword
Arena of SMEs performance models, ASPEM - SIV® model, Zeta-scores, ZETA-scores, neural networks, stochastic theories, hazard modeling
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-71337 (URN)10.1007/s10843-005-0305-4 (DOI)
Available from: 2011-10-12 Created: 2011-10-12 Last updated: 2017-12-08Bibliographically approved
3. Analysis of Swedish Fishery Company Using SIV® Model: A Case Study
Open this publication in new window or tab >>Analysis of Swedish Fishery Company Using SIV® Model: A Case Study
2004 (English)In: Journal of Enterprising Culture, ISSN 0218-4958, Vol. 12, no 4, 277-301 p.Article in journal (Refereed) Published
Abstract [en]

In his original work of the Survival Index Value (SIV®) model, Dr. Adli Abouzeedan proposed a new parameter, which he named as the Survival Index (SI) (see Abouzeedan, 2001; Abouzeedan and Busler, 2002a). The new parameter is used to evaluate the performance of Small and Medium-size Enterprises (SMEs) utilizing firm survivability as an indicator. The SI is calculated using an equation known as Survival Index (SI) Value Equation or SIE. In this paper, we applied the SIV® model to run an analysis on a very young Swedish firm and up to our knowledge, for the first time. The firm is a small one, working within a business sector defined as "fish preparation industry". This particular enterprise had a bad performance through its short life. The purpose of this study is to truly determine if the SIV® model has the capacity to indicate the performance of the firm. The case study presented in this work showed the valuable analytical power of the new model since it succeeded in giving a clear indication of the worsening situation of the enterprise. During the SIV® analysis of this Swedish firm new concepts have been introduced which do increase the practicality and analytical capacity of the model.

Place, publisher, year, edition, pages
World Scientific Publishing Co., 2004
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-71340 (URN)10.1142/S0218495804000154 (DOI)
Available from: 2011-10-12 Created: 2011-10-12 Last updated: 2017-12-08Bibliographically approved
4. Innovation Balance Matrix: an application in the Arab countries
Open this publication in new window or tab >>Innovation Balance Matrix: an application in the Arab countries
2006 (English)In: World Review of Entrepreneurship, Management and Sustainable Development, ISSN 1746-0573, E-ISSN 1746-0581, Vol. 2, no 3, 270-280 p.Article in journal (Refereed) Published
Abstract [en]

Economies have different levels of entrepreneurial activities depending on the availability of tangible as well as intangible resources. In their working paper, Abouzeedan and Busler (2004) established a new type of capital, adding up the components of the most important types of capital. These are the human capital, financial capital and the system capital. In that paper, the two researchers defined each of the components and explained what they meant with those terminologies. They called this new type of capital, innovation capital. The two researchers have argued that innovation capital can be used as an indicator for the degree of richness of the entrepreneurial environment in a region and thus the general character of the economy. They also introduced the Innovation Balance Matrix or IBAM as an analytical tool to classify economies based on their entrepreneurial conditions. In this extended work, they have used this analysis and tried to apply it to Arab countries using a general knowledge and deductive approach to the issue. They conclude the paper with some recommendations as how to enrich the innovation capital in that region.

Place, publisher, year, edition, pages
Inderscience Enterprises Limited, 2006
Keyword
Human capital; financial capital; system capital; innovation capital; innovation balance matrix; IBAM; Arab countries; Middle East; entrepreneurship.
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-71341 (URN)10.1504/WREMSD.2006.009893 (DOI)
Available from: 2011-10-12 Created: 2011-10-12 Last updated: 2017-12-08Bibliographically approved
5. Entrepreneurial policies and the innovation balance matrix: the case of the Arab countries
Open this publication in new window or tab >>Entrepreneurial policies and the innovation balance matrix: the case of the Arab countries
2007 (English)In: Science,Technology and Sustainability in the Middle East and North Africa: Section III: Science Technology and Innovation / [ed] Allam Ahmed, Inderscience Enterprises Limited , 2007, 158-175 p.Chapter in book (Refereed)
Abstract [en]

The issue of the connection between economic progress and the entrepreneurial environment has been investigated by researchers using diverse approaches. One way to investigate the question is to use deductive analysis regarding the forms of capital contributing to the entrepreneurial environment of society. Adli Abouzeedan and Michael Busler were the first to introduce the concept of 'Innovation Capital'. The two researchers argued that Innovation Capital can be used as an indicator for the degree of richness of the entrepreneurial environment. In the same paper, the researchers also introduced the Innovation Balance Matrix (IBAM) as an analytical tool to classify economies based on their entrepreneurial conditions, applying it across the globe. In a later work, the two researchers tried to run a similar IBAM analysis focusing on the Arab world. The two writers found that the best solution to the lack of individual entrepreneurial economies in that region is through what they called the 'additive solution'. In this work, we take their argument deeper and look at the kind of policies that would achieve that solution.

Place, publisher, year, edition, pages
Inderscience Enterprises Limited, 2007
Series
Globalisation, Technology and Sustainable Development Book Series
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-71342 (URN)0-907776-30-2 (ISBN)0-907776-32-9 (ISBN)
Available from: 2011-10-12 Created: 2011-10-12 Last updated: 2011-11-21Bibliographically approved
6. Managing Innovation in a Globalised Economy: Defining the Open Capital
Open this publication in new window or tab >>Managing Innovation in a Globalised Economy: Defining the Open Capital
2009 (English)In: World Sustainable Development Outlook 2009. The Impact of the Global Financial Crisis on the Environment, Energy and Sustainable Development / [ed] Allam Ahmed, World Association for Sustainable Development , 2009, 287-294 p.Chapter in book (Refereed)
Abstract [en]

Economies develop different levels of entrepreneurial capacity depending on the degree of availability of tangible as well as intangible resources. In an earlier work by Abouzeedan and Busler (2006), a new type of capital, that is, innovation capital, has been suggested to serve as an indicator for the degree of richness of the entrepreneurial environment in an economy. Innovation capital incorporates the concepts of human capital, financial capital and system capital. However, the issue of accessibility and openness in the innovation process also need to be reflected in the innovation capital concept. Innovation activities in the modern economies are growing to become more interconnected and open in their nature. In this paper, we defined and incorporated a new component within the innovation capital, namely open capital. We also reflected on how the four components of the innovation capital concept, including the open capital, are interconnected.

Place, publisher, year, edition, pages
World Association for Sustainable Development, 2009
Keyword
Open Capital, Human Capital, Financial Capital, System Capital, Innovation Capital, Open Innovation, Open Innovation Management
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-71344 (URN)978-1-907106-05-7 (ISBN)
Available from: 2011-10-12 Created: 2011-10-12 Last updated: 2011-11-21Bibliographically approved
7. Analysis of a Swedish High Technology SME Using the Survival Index Value (SIV) Model
Open this publication in new window or tab >>Analysis of a Swedish High Technology SME Using the Survival Index Value (SIV) Model
2011 (English)In: Paper Sessions, Workshops and Special Meetings: The 56th ICSB World Conference, Stockholm, Sweden, 15th and 18th of June, ICSB , 2011, 170-179 p.Conference paper, Published paper (Refereed)
Abstract [en]

One of the major deficiencies in the existing Small and Medium-sized Enterprises’ (SMEs) performance evaluation models is the fact that they lack a clear coupling to the issue of innovation and its impact on performance. A possible candidate model which could achieve this is the Survival Index Value (SIV) model. The model has a parameter incorporated in its structure, the technology-intake. This parameter can be used as an indicator of the degree of innovativeness of the firm. Previous works using the model looked at general performance without specific focus on innovation activities of the firm and without relating that to aspects of survival and growth. In this paper the aim was to demonstrate the ability of the SIV model to indicate a positive overall performance due to the intensive investment of a selected firm in innovation activities.

The enterprise analyzed, Autoadapt AB, is a Swedish high technology firm working in adapting cars and automobiles to handicapped people. Due to the nature of their activities the firm has a high level of innovation input to be able to solve the complex problems related to usage of cars by disabled people. Both the product development process and managing the activities around it requires a high level of innovativeness and ingenuity. As thus the firm presented a very interesting object to study. The study has a clear significance as there is a need to differentiate the performance of innovation-intensive enterprises from firms who are using less investment in innovation in their activities. This can be done by considering the investment in new technologies both as product development and/or as investing in absorption of external management, product or process innovation. Applying the SIV model to run this analysis can help to demonstrate the need to incorporate the technology intake as an essential component of SME’s performance model.

The results indicated that the SIVmodel is able to predict correctly the performance of the object firm. By having mostly positive survival factor values, which are single data-points, during years of operation, and also having mostly positive survivability coefficient values, which are agglomerate data-points, the SIVmodel proved its abilities. Clearly, the model has a good potential to be developed and fine-tuned even more. The SIV model can be tested further to look at deviations in performance of firms among different sectors and relates that to the innovativeness of whole sectors.

Place, publisher, year, edition, pages
ICSB, 2011
Keyword
small and medium-sized enterprises, SMEs, performance evaluation models, SIV model
National Category
Economics and Business
Identifiers
urn:nbn:se:liu:diva-71345 (URN)978-0-9819028-3-8 (ISBN)0-9819028-3-9 (ISBN)
Conference
ICSB 2011 World Conference Date: June 15-18, 2011, Stockholm Waterfront Congress Center, Stockholm, Sweden
Available from: 2011-10-12 Created: 2011-10-12 Last updated: 2016-05-04Bibliographically approved

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