Espirales. Revista multidisciplinaria de investigación científica, Vol. 6, No. 40

January - March 2022. e-ISSN 2550-6862. pp. 1-9.

DOIhttps://doi.org/10.31876/er.v6i40.806

Business competitiveness and its impact on organizational

performance in MSMEs

Competitividad empresarial y su incidencia en el desempeño organizacional en

MiPymes

Cristhian Andrés Solorzano Tomalá*

Juan Carlos Olives*

Received: July 03, 2021

Approved: September 12, 2021

* B.A. in Public Administration, Peninsula de

Santa Elena State University, Santa Elena,

Ecuador, cast_cristhian@hotmail.com,

https://orcid.org/0000-0002-3981-0575

Master in Finance and Projects;

Universidad Estatal Península de Santa

Elena; Santa Elena, Ecuador,

jolives@upse.edu.ec,

https://orcid.org/0000-0001-8710-1995

Abstract

The objective of the research is to analyze business competitiveness

and its impact on the organizational performance of small and

medium-sized enterprises in the province of Santa Elena; to meet the

research objective, a survey was applied to 316 companies. The

results show that 58% of MSMEs do not employ sustainable

competitiveness strategies; therefore, the MCEM - 2021 metamodel

was designed, which aims to strengthen business sustainability

through the implementation of strategic actions that contribute to

two dimensions: administrative management and organizational

performance.

Keyword:

Business competitiveness, organizational performance,

administrative management, business sustainability, MSMEs.

Cite this:

Solorzano, C., Olives, J. (2022).

Business competitiveness and its

impact on organizational

performance in MiPymes.

Espirales. Revista Multidisciplinaria

de investigación científica, 6(40),

1-9

Business competitiveness and its impact on organizational performance in MiPymes.

Espirales. Revista multidisciplinaria de investigación científica, Vol. 6, No. 40

January - March 2022. e-ISSN 2550-6862. pp 1-9.

Introduction

According to Ron & Sacoto, (2017) MSMEs are considered an important part of the

economic context and the vision of new societies. Micro, small and medium-sized

enterprises, throughout history, have become a fundamental factor in the development

of countries; they are a fundamental component of the business fabric in Latin America.

MSMEs are vital to boost the world's economy; their contributions range from

employment generation, to the dynamization of the supply of goods and services

through the promotion of new strategies; a fundamental aspect of Latin American SMEs

is their heterogeneity. In the first place, there are microenterprises whose gestation

usually responds to individual self-employment needs, and which are often located in a

situation of informality (low levels of human capital, difficulty in accessing external

financial resources, scarce internationalization, carrying out activities with low technical

requirements...). (Economic Commission for Latin America and the Caribbean , 2018).

In some cases, the status (micro, small or medium-sized) is determined according to the

number of employees, the number of assets and even the amount of capital or sales.

All turn out to be fundamental aspects when it comes to accessing, for example,

financing or state incentives, which in some economies turn out to be scarce. (logistics

zone, 2019)

In Ecuador, in recent years, there has been an increase in this type of organizations and

the peninsula of Santa Elena, with its tourism, commercial and service potential,

provides the appropriate conditions for their formation, usually without any prior study,

consequently there is no suitable information system, which shows the shortcomings in

the management of micro, small and medium-sized enterprises, and the urgent need to

implement sources of information, especially accounting, to facilitate the effective

operation of the various levels of the organization. (Rosales, Lindao, Lindao, & Toro,

2017).

Resumen

El objetivo de la investigación es analizar la competividad empresarial

y su incidencia en el desempeño organizacional de las pequeñas y

medianas empresas de la provincia de Santa Elena; para cumplir con

el objetivo de investigación se aplicó una encuesta a 316 empresas.

Los resultados arrojan que existe un 58% de las Mipymes no emplean

estrategias de competitividad sostenibles; por lo tanto, se diseñó el

metamodelo MCEM – 2021, que tiene como finalidad fortalecer la

perdurabilidad empresarial, mediante la implementación de acciones

estratégicas que contribuyan a dos dimensiones: gestión

administrativa, y desempeño organizacional.

Palabra clave:

Competitividad empresarial, desempeño

organizacional, gestión administrativa, perdurabilidad empresarial,

Mipymes.

Cristhian Andrés Solorzano Tomalá, Juan Carlos Olives

Espirales. Revista multidisciplinaria de investigación científica, Vol. 6, No. 40

January - March 2022. e-ISSN 2550-6862. pp 1-9

According to Instituto Nacional de Estadisticas y Censos INEC, (2020) MSMEs in

Ecuador represent 99.55%, and the segment with the highest participation are

microenterprises with 90.78%, followed by small with 7.22% and medium with 1.55%;

the group is concentrated in the areas of service and commerce.

Micro, small and medium enterprises in the Ecuadorian business environment have a

significant contribution; according to the last National Economic Census, according to

size, of the 843,745 companies registered in 2016, 90.5% are microenterprises, i.e. with

annual sales of less than 100 thousand dollars and between one and nine employees;

followed by small businesses with 7.5% and annual sales between 100,001 to 1'000,000

between 10 and 49 employees. (Delgado & Chávez, 2018)

MSMEs have weaknesses due to lack of business knowledge, lack of capital or liquidity,

insufficient machinery and technology for their production, accounting and

administrative processes, difficulty in competing with large multinational companies,

lack of advice and specific programs to control their businesses.

The development of this sector of the economy in the country has been characterized

by a great diversity of initiatives carried out by a variety of actors; however, as

microenterprise expands in importance in the economy, the demand for support

services for this sector by the state and public and private institutions, international

cooperation and trade associations involved in the development of the sector also

grows.

According to Borbor, Lindao, Lindao, Alava, (2017) in the province of Santa Elena has

experienced these last 10 years a considerable business growth but not lasting in time

due to the limited knowledge in an empirical way of the managers of MSMEs, as well

as the lack of professional technical advice and training.

Despite the importance of entrepreneurial activity, the generation of a significant impact

on the economy implies guaranteeing the sustainability over time of the ventures and

therefore the generation of value, but what is evident in reality is that a high percentage

of these companies disappear in the short term. (Sepúlveda, 2016)

According to Gutiérrez, (2010) Business competitiveness on a global scale symbolizes

one of the most relevant features in the business sector and marks a differentiation

between organizations since this variable is considered a contributing factor in the

management of sales that leads to the positioning and demand of products for a target

market.

Competitiveness is understood as a company's ability to produce a product or service

in a better way than its competitors. This ability is essential in a world of globalized

markets, where the customer can usually choose what he or she needs from a variety of

options. Thus, more and more organizations, whether a manufacturer, a hotel, a school,

Business competitiveness and its impact on organizational performance in MiPymes.

Espirales. Revista multidisciplinaria de investigación científica, Vol. 6, No. 40

January - March 2022. e-ISSN 2550-6862. pp 1-9.

a bank, competitiveness and quality improvement, a local government or a political

party, are competing for customers, for students, for support resources, and so on.

The differences are observed in a perception of higher growth rates, market share,

return on investment, development of new products and markets, R&D&I activities and

people development. (Calderón, Alvarez, & Naranjo, 2010).

This forces companies to generate greater commitment and interrelation between all

the areas involved and the imperative need to identify the critical factors of customer

satisfaction in relation to business competitiveness, such as:

• Product quality: The measurement of product quality involves attributes,

technology, functionality, durability, prestige and reliability.

• Service quality: Service quality satisfaction considers delivery time, flexibility in

capacity, availability, attitudes and behaviors, responses to failure and technical

assistance.

• Price: Consideration is given to direct price, sales discounts, payment terms,

average value, after-sales service cost, operating margin and total costs.

Quality is given by the characteristics, attributes and technology of the product itself;

while the price is what the final consumer pays for the good, and the quality of service

is determined by the way in which the customer is served by the company. (Gutiérrez,

2010, p. 17).

According to Cabrera & López, (2011) organizational performance represents a

manageable process made up of several components such as human talent,

organizational structure, business environment and organizational results. This formula

of components allows identifying and differentiating the impact and importance of each

one. Organizational results are considered the cornerstone of the other components

involved in organizational performance.

The performance of an organization is possible to be measured through indicators of

qualitative and quantitative nature due to the fact that these shape the evolution of

various business variables. At the quantitative level, performance has been measured in

the literature in various ways: through financial measures such as return on investment,

ROI (Sánchez and Aragón, 2003), return on assets, ROA (Guillén & Aduna,

2008)profitability del Casasola, (2015) profit and market measures such as sales growth,

among others. Huerta, (2017) among others. Organizational performance, considering

the perception of effectiveness, is different according to the type of strategy; companies

with more structured strategies, in the sense of being differentiators in quality, reflect a

higher perception of effectiveness in their performance, while companies focused on

control and cost strategies tend to show lower effectiveness results.

Cristhian Andrés Solorzano Tomalá, Juan Carlos Olives

Espirales. Revista multidisciplinaria de investigación científica, Vol. 6, No. 40

January - March 2022. e-ISSN 2550-6862. pp 1-9

Materials and methods

According to Sandoval et al., (2020) the present study used descriptive research of the

descriptive type, which first allowed a characterization that reflects the current situation

of MSMEs in the province of Santa Elena, and also establishes the factors that are part

of it, seeking in some way to generate an effective response to the problem posed; and

quantitative research in order to know the impact of business competitiveness on

organizational performance.

The analytical method was used because it allows analyzing each of the parts, elements

or organizational structure of the areas of MSMEs in the province of Santa Elena, in

addition to verifying the needs of MSMEs in relation to their level of professional training

and job performance to generate a training plan and professional technical assistance,

so this interaction establishes a general synthesis of the problem that is based on the

importance of raising knowledge about the management and administration of MSMEs

and have a consulting option for the administrative, accounting, tax, financial, marketing

and sales areas. The following research methods were used: the inductive method

allowed analyzing each of the parts, elements or organizational structure of the areas of

MSMEs in the province of Santa Elena, r, and thus build a model of business

competitiveness of MSMEs, in addition the analytical method was used through the use

of surveys that facilitated the analysis of the relationship of variables, to meet the needs

in relation to business competitiveness and its impact on organizational performance.

The techniques used to obtain primary source information were: interviews with experts

in business competitiveness and organizational performance; and surveys of SME

managers, which consisted of 26 research questions that became indicators for

measuring the level of administrative effectiveness. By means of statistical analysis, the

collected data were processed and coded by 8 dimensions: administrative process,

feasibility study, market study, quality, price, technology, training, and distribution

channels; each one had questions determined as indicators that allowed determining

job satisfaction; the Sppss software was used to process the collected data.In the

description of the sample in this study, a total of 1798 SMEs were considered; to define

the sample size, a 95% confidence level was considered, a margin of error of 5% was

used, and a variance of 0.5, thus obtaining a sample of 316 SMEs in the province of

Santa Elena.

Results

MSMEs should employ strategic actions that contribute to achieve sustainable

competitiveness, because it contributes to economic growth, strengthen the

competitive culture, and improve organizational results, thus achieving managerial

effectiveness.

The surveys carried out revealed that 59% of the SMEs do not implement sustainable

competitiveness strategies because their strategic planning process is carried out

empirically; it is important that they determine actions to improve productivity and

generate long-term results, for which it is important that managers strengthen their

Business competitiveness and its impact on organizational performance in MiPymes.

Espirales. Revista multidisciplinaria de investigación científica, Vol. 6, No. 40

January - March 2022. e-ISSN 2550-6862. pp 1-9.

knowledge in administration, labor organization, production organization, marketing,

technology and business management.

Business development is related to several factors, such as: growing on the basis of an

economic unit, growing by generating other units; improving economy, efficiency,

effectiveness, productivity and competitiveness. Also with obtaining better levels of

liquidity, management, solvency and profitability.

The development of MSMEs is a priority for the economic and social growth of any

country. If they want to remain and grow in this environment, they must propose

dynamic strategies that allow them to achieve their business development goals; hence,

the importance of implementing a strategic planning process according to business

needs and environmental conditions.

One of the main factors that prevent MSMEs from improving their organizational

development is the lack of vision of their owners, as well as other factors, whether

external or specific to their operating environment. Undoubtedly, if a company wants

to strengthen itself and achieve better results in the performance of all its activities and

processes, it is necessary to employ strategic actions focused on the critical factors

identified, including human capital.

However, the phases of the administrative process should be strengthened through an

appropriate internal and external analysis, which will allow maximizing the use of

resources to achieve administrative efficiency and, therefore, improve organizational

results.

Within the business success it is important to highlight the human factor, because

people are responsible for the management of all areas of the company to achieve the

objectives through competitiveness and productivity in different areas. Many MSMEs

do not have accounting records and in the current globalized environment of the world

system they cannot make decisions in the face of accelerated economic and

technological changes. Currently, accounting information systems play an important

role in organizations.

The accounting information system is the basic support for management, measurement

and management and organizations use it to monitor, follow up and evaluate the

achievement of the proposed goals. Therefore, the management of SMEs must know

about accounting processes in order to be able to make business decisions based on

economic information that allows determining sustainable strategies in time and

resources for their execution. It was determined that 43% of the MSMEs in the province

of Santa Elena do not implement accounting processes adequately, due to lack of

knowledge, thus negatively affecting decision making, because their strategies are

determined empirically, based on previous experiences; therefore, it is necessary to

strengthen this key factor of business management.

Cristhian Andrés Solorzano Tomalá, Juan Carlos Olives

Espirales. Revista multidisciplinaria de investigación científica, Vol. 6, No. 40

January - March 2022. e-ISSN 2550-6862. pp 1-9

Corporate culture is a fundamental element for MSMEs to represent their ideologies to

their external public; because they are those values, assumptions, expectations and

definitions that characterize the organization and its members. By clearly defining the

culture in the organization, in addition to consolidating the recognized social system, it

also provides all members with a sense of identity and unwritten or unmentioned

guidelines for action. Through the surveys conducted, it was determined that most

SMEs do not have an established corporate culture that allows them to adequately

guide their strategic actions, and this negatively affects organizational performance;

therefore, it is necessary to work on this aspect in order to improve business results.

The proposed model MCEM - 2021, is a metamodel that has the name by its acronym

identified as: Business Competitiveness Model developed in 2021, aims to strengthen

the business sustainability of MSMEs in the province of Santa Elena, through the

implementation of key components to improve organizational performance and

administrative management. Factors that are affected by the application of empirical

actions implemented by the managers of MSMEs and therefore affect productivity and

business competitiveness; being necessary to perform an analysis of the strategic

actions to be implemented in companies.

The model determined is designed in relation to the criteria determined in the research,

thus making it possible to improve critical factors that affect business durability.

Conclusions

MSMEs are the starting point for the evolution of large companies; however, not all of

them manage to reach this stage, because they do not achieve business durability; that

is why sustainable strategic actions must be implemented to keep them in business for

long periods of time. It is important to keep in mind that there are many tools and

techniques to improve administrative, economic-financial, tax and legal management.

The purpose of this work is to provide a significant contribution to MSMEs through the

creation of a professional technical advisory center for MSMEs in the province of Santa

Elena to promote sustainability in the market. The importance of MSMEs is not only

associated with their redistributive potential and capacity to generate employment, but

also in their competitive capacity because they contribute to the integral development

of the localities where they operate.

..........................................................................................................

References

Cabrera, A., & López, P. (2011). Business

competitiveness: a conceptual framework for

its study. Research papers. Business

Administration.

Calderón, G., Alvarez, C., & Naranjo, J. (2010).

Competitive strategy and organizational

performance in Colombian industrial firms.

Business competitiveness and its impact on organizational performance in MiPymes.

Espirales. Revista multidisciplinaria de investigación científica, Vol. 6, No. 40

January - March 2022. e-ISSN 2550-6862. pp 1-9.

INNOVAR. Journal of Administrative and

Social Sciences, 13-26.

Economic Commission for Latin America and the

Caribbean . (2018). Mipymes en América

Latina: un fragil desempeño y nuevos

desafios para las politicas de fomento.

Santiago: ECLAC, United Nations.

Delgado, D. D. D., & Chávez, G. P. (2018). SMEs in

Ecuador and their sources of financing.

Revista Observatorio de la Economía

Latinoamericana, 1. Retrieved from

https://www.eumed.net/rev/oel/2018/04/py

mes-ecuador-financiamiento.html

del Casasola, A. R. (2015). Financialization debate:

decoupling between profits and investment in

the Spanish case. Investigacion Economica,

74(291), 53-77.

https://doi.org/10.1016/j.inveco.2015.07.002.

Guillén mondragón, I. j., & Aduna Mondragón, A. P.

(2008). The influence of culture and

management style on organizational climate. A

case study of a medium-sized company in the

iztapalapa delegation. Estudios Gerenciales,

24(106), 47-64. https://doi.org/10.1016/s0123-

5923(08)70031-7.

Gutiérrez, H. (2010). Total Quality and Productivity.

Mexico: Mcgraw-Hill/Interamericana

Editores.

Huerta González, A. (2017). Impact of U.S.

protectionist policy on the Mexican economy.

Economía UNAM, 14(42), 118-135.

https://doi.org/10.1016/j.eunam.2017.09.005

National Institute of Statistics and Census INEC.

(2020). El Universo Newspaper. Retrieved

from

https://www.eluniverso.com/noticias/2019/0

6/27/nota/7396308/mipymes-representan-

99-negocios-pais

Ron , R. E., & Sacoto, V. A. (2017). Ecuadorian SMEs:

their impact on employment as a

contribution of GDP SMEs to total GDP.

Espacios, 15.

Rosales B. , F. J., Lindao, M. F., Lindao, C. A., & Toro,

W. J. (2017). Accounting system in the

administrative management of MSMEs in the

Cristhian Andrés Solorzano Tomalá, Juan Carlos Olives

Espirales. Revista multidisciplinaria de investigación científica, Vol. 6, No. 40

January - March 2022. e-ISSN 2550-6862. pp 1-9

Province of St. Helena Province. Revista de

Negocios & PyMes, 33-43.

Sandoval, M. del C., Surdez, E. G., & Pérez, A. G.

(2020). Level of entrepreneurship skills in

engineering and architecture students of a

public university in southeastern Mexico.

RIDE Revista Iberoamericana Para La

Investigación y El Desarrollo Educativo,

11(21).

https://doi.org/https://doi.org/10.23913/rid

e.v11i21.757.

Sepúlveda, C. I., & Reina Gutierrez, W. (2016).

Entrepreneurship sustainability. An analysis

of determinants1. Revista Venezolana de

Gerencia, vol. 21, no. 73, 2016.

Logistics zone. (2019). Weight of SMEs in the global

economy. Zona Logistica. Retrieved from

https://zonalogistica.com/peso-de-las-

pymes-en-la-economia-mundial/