Benchmarking in small and medium enterprises

Citation

Gunasekaran, A. (2003), "Benchmarking in small and medium enterprises", Benchmarking: An International Journal, Vol. 10 No. 3. https://doi.org/10.1108/bij.2003.13110caa.001

Benchmarking in small and medium enterprises

Small and medium enterprises (SMEs) play a major role in national economies, providing job opportunities and supporting large-scale companies in their pursuit of improving competitiveness through suitable strategic alliances and networking of firms. However, SMEs lag behind large-scale industries in terms of developing and implementing new strategies, and developing new skills and technologies. On the other hand, SMEs are flexible and innovative by virtue of their size and decision making processes. Over the years, researchers and practitioners have developed strategies, techniques and technologies for improving productivity and quality and, in turn, the overall competitiveness of SMEs. Throughout this process, SMEs have attempted to identify suitable performance measures, metrics and best practices to manage their operations effectively.

Benchmarking in SMEs has not received sufficient attention. However, the process of benchmarking opens up numerous opportunities for SMEs in terms of evaluating their own performance against the best in class SMEs. Furthermore, this will enable SMEs to identify gaps in their performance and then suitable best practices. In today’s global economy, SMEs are under constant pressure to improve their performance. This highlights the importance of adopting a benchmarking approach to identify best practices for achieving competitive advantage in the global market. Also, e-commerce provides further opportunities for SMEs to sell their goods and services in global markets. Previously, SMEs used to compete based on price or quality, but now they have to compete across all competitive performance objectives including flexibility and responsiveness in new economies. SMEs can benchmark their performance both with their competitors and leading firms in related and non-related industries. Benchmarking both metrics and processes represents key components of world-class performance measurement. Many SMEs, however, are lagging behind in developing a suitable performance measurement system.

In a study reported by Monkhouse (1995), about 59 per cent of SMEs claimed to be benchmarking. Most of them (45 per cent) benchmark their financial performance and only 25 per cent have undertaken both financial and non-financial or process benchmarking. About 30 per cent of the companies do not benchmark their performance with others. This indicates the importance of non-financial and intangible performance benchmarking in SMEs. The following are critical success factors for improving competitiveness of SMEs that need to be measured and benchmarked against the best-in-class performing companies (McAdam and Kelly, 2002):

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  leadership;

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  strategy and planning;

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  people management;

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  resources;

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  quality systems and processes;

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  customer satisfaction;

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  employee satisfaction;

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  overall SME company results; and

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  impact on society.

The main aim of this editorial is to bring to the fore the importance of benchmarking practices in SMEs with the objective of improving their organizational competitiveness and prosperity in the new economy. There is a need for benchmarking studies that are based on deep, rich grounded, inductive studies. These grounded benchmarking studies must look at the cultural and knowledge based measures such as leadership, people management and casual process measures (McAdam and Kelly, 2002). Generic benchmarking would be suitable for SMEs. However, internal, external and competitive benchmarking can also be used. SMEs consortium can assist in developing benchmarking practices in SMEs (Zairi and Whymark, 2000a, b)

The Editors of BIJ welcome articles that deal with benchmarking practices in small and medium enterprises as well as viewpoints from practitioners. Also, special issue proposals are welcome in the area of benchmarking in SMEs.

A. Gunasekaran