Analysis of Core Competencies and Business Development of SMEs: A Case Study
Abstract
In this paper, we identify the core competencies, which are the basis for competitive advantage, in a sample of Small and Medium-Sized Enterprises (SMEs) in Iztapalapa, Mexico City. For that purpose, we implemented a two-stage methodology. First, we evaluated the uniqueness, collectiveness, and strategic flexibility of the competencies. Second, we estimated a cross-sectional model to determine their contribution to business development. In the industrial sector, processes and purchases are core competencies; in turn, in the service sector, it is sales and marketing. We estimate that these competencies contribute to maintaining low costs, a quick adjustment, and an increase in sales and income in the industrial sector. In addition, they help to reduce negative external effects, which implies a fast response and an increase in sales and income in the service sector. These results lay the foundations for making policies that promote these enterprises by boosting their core competencies depending on their sector. Industrial enterprises should design programs to develop production processes and configure below-average cost structures. In turn, the service sector should design programs to develop sales and marketing skills that minimize the negative effects of bigger competitors.
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