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INTRODUCTION
Technological advances, industrial development, globalization, and the evolution of work, have caused significant changes in the styles and dynamics of companies, generating new challenges for developing competitive advantage as business dynamics. Therefore, developing new strategies and tools is necessary to adapt to this reality, where the manager's role is paramount (Minh, 2020).
Different sectors in Colombia have been affected by new economic realities caused by internationalization, globalization, innovation, emerging markets, technology, and others, which in turn create changes in the structure, strategic development, and decision-making. From this perspective, it can be inferred that aspects such as management skills and the study of organizational performance can identify factors of competitive sales and SMEs to achieve better adaptability and competitiveness.
In this sense, for the context of the research paper, SMEs are defined as the type of company of greater participation in emerging and highly competitive markets where, for Jennings and Beaver (1997), one of the main problems that this type of companies have is due to little planning since their management is focused on the solution of problems as they arise, generating in this way short-term solutions. In addition, the development and handling of management tools and techniques could be more efficient since it is centered on planning developed more at the internal operative level rather than as a strategic vision of the organization (Cagliano et al., 2001).
Some of the main limitations SMEs face is based on access to new technologies (Fajardo et al., 2017), which prevent the efficient structuring of internal processes and optimization of the value chain. Similarly, there is a direct relationship between the performance of organizations and the role of the manager in SMEs since they are responsible for various operational and strategic functions (Fuller-Love, 2006). For example, it is seen in the companies' minor expansion because there is no specialized personnel for each type of task, and the manager oversees most of them (Gray, 2002).
Sometimes, the owner sees the company as a source that covers his basic needs (Frangieh & Rusu, 2021). Therefore, SMEs' success and business management are due to the individual skills of the manager (usually the owner) rather than the design and application of specific management processes or practices (Hudson & Smith, 2007; Hoffman & Tadelis, 2021).
It is acknowledged that managers of SMEs play a central role in the success or failure of SMEs (Lepak & Snell, 1999; Audretsch & Belitski, 2021) as they are the main actors of performance units, economic gains, and the creation of competitive advantage (Woodruffe, 1993; Fatonah & Haryanto, 2022). Because of these factors, that competitive advantage is seen as a reflection of the manager's skills supported by the capability and commitment of the workforce (Liu & McMurray, 2004).
Different conceptual and empirical articles present arguments that show that high levels of skills provide advantages in organizations (Adner & Helfat, 2003; Tiron et al., 2020). Although different studies have been conducted to identify the development of managerial skills of most significant importance to managers (Mintzberg, 1973; Mumford et al., 2002, Mumford et al., 2007), there is still no agreement, especially on those skills that enable better organizational performance and in turn a better competitive advantage (Yukl et al., 2002).
For this reason, the research proposal is established here, which aims to identify the managerial skills the manager has in an organization and how these skills are related to competitive sales and the economic development of SMEs by establishing a new paradigm of the contemporary version of organizational management. Thus, the objective of this research proposal is based on the preliminary analysis of managerial skills and their influence on the competitive advantage and business performance of SMEs in the department of Caquetá, Colombia.
RESEARCH QUESTION
How do managerial skills affect the competitive advantage and organizational performance of SMEs in the department of Caquetá, Colombia?
SMEs
Micro, small and medium-sized enterprises (SMEs) in the country are increasingly integrated into different industrial sectors; they currently account for many employment opportunities for Colombian citizens. According to figures from the Ministry of Commerce, Industry and Tourism (2019), SMEs represent 90% of the companies in Colombia and produce 80% of the national employability, contributing around 50% of the Gross Domestic Product (GDP). Therefore, it is considered that the effectiveness of organizations is measured through their management levels. This indicator transcends all areas of a company (Table 1).
Table 1 Classification of SMEs in Colombia
| Economic sector | Micro enterprises | Small businesses | Medium-sized enterprises |
|---|---|---|---|
| Manufacturing sector | Those whose income from the ordinary annual activities is les than or equal to twentythree thousand five hundred and sixty-three Tax Value Units (23,563 UVT). | Those whose income from ordinary annual activities is higher than twenty-three thousand five hundred and sixty-three Tax Value Units (23,563 UVT) and less than or equal to two hundred and four thousand nine hundred and ninety-five Tax Value Units (204,995 UVT). | Those whose income from ordinary annual activity is higher than two hundred and four thousand nine hundred and ninety-five Tax Value Units (204,995 UVT) and less tan or equal to one million seven hundred and thirty-six thousand five hundred and sixty-five Tax Value Units (1'736,565 UVT). |
| Service sector | Those whose income from ordinary anual activities is less than or equal to thirty-two thousand nine hundred and eighty-eight Tax Value Units (32,988 UVT). | Those whose income from ordinary annual activities is higher than thirty-two thousand nine hundred and eighty-eight Tax Value Units (32,988 UVT) and less than or equal to one hundred and thirty-one thousand nine hundred and fifty-one Tax Value Units (131,951 UVT). | Those whose income from ordinary annual activities is higher than one hundred and thirty-one thousand nine hundred and fifty-one Tax Value Units (131,951 UTV) and less than or equal to four hundred and eighty-three thousand thirtyfour Tax Value Units (483,034 UVT). |
| Commerce sector | Those whose income from ordinary anual activities is less than or equal to forty-four thousand seven hundred sixty-nine Tax Value Units (44,769 UVT). | Those whose income from annual activities is higher tan forty-four thousand seven hundred and sixty-nine Tax Value Units (44,769 UVT) and less than or equal to four hundred and thirty-one thousand one hundred and ninety-six Tax Value Units (431,196 UVT). | Those whose income from ordinary annual activities is higher than four hundred and thirty-one thousand one hundred and ninety-six Tax Value Units (431,196 UVT) and less than or equal to two million one hundred and sixty thousand six hundred and ninety-two Tax Value Units (2'160,692 UVT). |
Source: Ministry of Commerce. Decree 957 of June 5, 2019.
In Colombia, according to Decree number 957 of June 5, 2019, for a company to be considered Micro, Small or Medium, it must consider the criterion of gross sales assimilated according to income from ordinary annual activities, “according to the provisions of Article 2 of the Law of 2000, as amended by Article 43 of Law 1450 of 2011”.
The income level according to the development of ordinary activities that determines the business size varies depending on the economic sector where the company develops. In this regard, according to what is dictated by Decree 957 of 2019, the classification is shown in the previous table.
Another aspect of analyzing SMEs has based on their presence in the department of Caquetá. The Graphic 1 presents the number of companies in the department by size for 2018. Small companies represent 99,6%, with 11,024, 38 are medium-sized, and only two are registered as large companies (Ministry of Commerce, 2019).
Source: Report of Socioeconomic Indicators from the department of Caquetá 2018 -2019 (Ministry of Commerce (2019).
Grpah 1 Number of companies by size
The counties with the highest number of companies in 2018 were Florencia with 6,431, San Vicente del Caguán with 1,405, and Cartagena del Chaira with 603 companies. Conversely, the number of companies decreased between 2017 and 2018. The counties with the most significant decrease were Solano with 26%, Albania with 20%, and Alone with 16%.
According to the Competitiveness Department Index (CDI), determined by the Private Competitiveness Council (PCC) and the University of Rosario (2015), the department of Caquetá is in stage 1 of competitive development, ranking 22nd in the overall ranking. This position which has been kept for three consecutive years. The measurement comprises 90 variables grouped into ten dimensions or pillars of competitiveness. (Gil, 2019).
In the regional context, there is a high presence of micro, small and medium-sized family- owned businesses. According to the Caquetá Regional Economic Situation Report (DANE, 2014), 174 companies were constituted in the Chamber of Commerce of Florencia for Caquetá with a capital of $8,262 million, which achieved a growth of 64% compared to the previous year; the activity with the highest participation was services with 39.3%, followed by transport with 22.2%.
MANAGEMENT SKILLS IN SMES
Concerning the discussion of management skills in small and medium enterprises as a fundamental part of strategic direction, Laguna et al. (2012) identified the value of general competencies that allow the success of SMEs to the extent that the development of specific managerial skills is achieved. Management skills are due to personality traits and managerial traits, managing to establish processes and goals that directly influence the success of organizations (Rauch & Frese, 2007a, 2007b).
Regarding the theoretical discussion on the influence of managerial skills in SMEs, Rauch and Frese (2007a) identified that managerial competencies (organizational ability and ability to recognize opportunities) directly affect strategic performance, while skills focus on technical and industry aspects that influence business growth.
One of the aspects that measure the relationship of managerial skills in SMEs is based on personality factors in the development of the entrepreneurial activity, but not as factors of entrepreneurial actions but rather as an ability for the development of models that allow better performance in SMEs with the possibility of change (Markman, 2007).
That is why general competencies become a predictor of success in SMEs, focusing on specific skills for developing business management activities in changing environments (Laguna et al., 2012). Another aspect that defines performance in SMEs is the ability of the manager to influence their employees and thus increase the possibility of success of the company (Vazirani, 2010).
However, these skills depend on the manager's training, experience, and capabilities (Hezlett, 2004). Therefore, a high level of general skills (leadership, teamwork, communication, cooperation) increases the ability to develop management skills (market knowledge, organizational performance, logistics) which are crucial to success in SMEs (Laguna et al., 2012).
Organizational performance in SMEs
Small and medium enterprises are an essential part of the economic growth of nations. However, there is a great challenge to keep their performance in the long term. For this reason, adopting management systems focused on administrative practices is key to achieving better business performance focusing on competitiveness (Cagliano et al., 2001).
Nonetheless, it is complex to define a single style of management system that allows better performance in companies; that is why it is clear the need to achieve better development of management skills in SMEs according to the characteristics of each company (Fuller-Love, 2006). Moreover, attempting to define or integrate the various perspectives or inputs that allow better performance in SMEs is complex due to the variety of structures of these companies. For this reason, the performance management process is based on individual and collective work between all areas (Ates et al., 2013).
Consequently, the process of performance in the organization focuses on the development of strategies. For this, it is necessary to have a clear idea of the vision, mission, values, and objective, at the corporate and individual levels (Bititci et al., 1997; Otley, 1999; Armstrong, 2017; Hagos & Pal, 2010).
Other aspects that measure SME performance are the requirement and management of financial and human resources as well as training and development at individual and corporate levels (Lansbury, 1988). With the implementation of strategies as objectives, it is necessary to design performance indicators (Otley, 1999; Busi & Bititci, 2006) where the objectives must be related to individual work to identify responsibilities and define appropriate behavior to achieve a better performance, especially talking about small companies (Otley, 1999; Agunis & Kraiger, 2009).
From this perspective, one of the most influential variables to measure performance in SMEs is the verification of planned and executed objectives; when managers know this information so they can confirm or change current action plans, improve strategic objectives if necessary, and define more accurate activities to the reality of the organization (Bititci et al., 1997; Otley, 1999).
Furthermore, measuring the performance of companies, especially SMEs, allows decision- making based on the feedback of what is being done and the successes or failures that have been obtained to meet changing environments and understand current behaviors of the organization, such as the market (Bititci et al., 1997; Otley, 1999; Barnes & Radnos, 2008; Moynihan, 2008).
In an organization, this means challenging and revising the current strategy to adapt to the changing business environment according to emerging needs (Otley, 1999; Busi & Bititci, 2006; Stiffler, 2006; Parthiban & Goh, 2011). Finally, another aspect that enables better performance in companies is based on communication, which is the process and the use of appropriate and effective means of communication (i.e., what to communicate and how) as a mechanism to create more significant commitment and interest in the development of different activities (Otley, 1999; Verweire et al., 2004; Barnes & Radnor, 2008).
According to the literature, there are different approaches to measuring performance in organizations, but the adoption of this practice in SMEs is low, so it fails to define a straightforward approach to assess the specific needs of these companies in the pursuit of performance (Bititci et al., 1997; Hudson & Smith, 2007).
In addition, the definitions of performance and its activities do not consider the size of the company, so performance management in the context of SMEs requires a deeper understanding of the specific characteristics of SMEs (Ates et al., 2013). Similarly, Cangliano et al. (2001) accepted that the development of better performance in SMEs requires the adoption of advanced methods and better management practices in management systems, which is affected by the lack of management for decision-making and control in these companies since the individual who oversees this work in SMEs focuses more on operational work, the development of multi-functions and short-term planning. For this reason, SMEs that look for a high level of sustainable performance must develop capabilities for the practice of performance management with knowledge of all areas involved (Piwowar‐ Sulej, 2021; Malik et al., 2021).
Competitive advantage in SMEs
Micro and small companies usually do not have a highly structured hierarchy that allows them to adapt better to change, so organizational flexibility is considered a fundamental tool to achieve better performance and competitive success (Heredia et al., 2009). In this scenery, this type of company must adjust its human talent according to the variations in demand and budget variables to anticipate environmental changes (Pacheco, 2005).
Developing strategies focused on better organizational performance requires the creation of competitive advantages in micro and small enterprises (Valenzo et al., 2021; Pardo et al., 2022), for which it is required to determine different historical data that allows knowing and analyzing the behavior of these companies in terms of their competitive strength (García, 2021). The competitive advantage of company is focused on its ability to learn from measuring the variables of productivity and efficiency (Ballina, 2015).
For Grant (2005), the competitive advantage in companies depends on the combination of resources and strategies, thus achieving organizational capabilities, which is a critical factor for business development. Therefore, managerial skills as an organizational capacity represent a factor of primary importance in SMEs (Audretsch & Belitski, 2021).
However, in this type of company, managers usually have the little strategic capacity in a predominantly function-oriented culture, which prevents the delegation and development of management initiatives, limiting continuous learning (Camisón, 1997). In addition, the limited use of technologies (Zevallos, 2006) and the short professional positions prevent the development of organized processes focused on a competitive advantage.
The ability to generate products and compete concerning costs is complex for SMEs, unlike large industries (Marino & Pariso, 2021). However, their proximity to customers allows them to differentiate themselves in more specific products and better adapt to their needs (Pelham, 1997).
In this scenery, the competitive advantage of SMEs is based on the development of products according to the knowledge of customer needs, thus managing to define a target market and reducing production costs (Fernández & Martos, 2014). Similarly, if SMEs want to reach global markets, they must adopt information and communication technologies (Tarutea & Gatautis, 2014). These tools allow better business management and a better competitive advantage (Levi & Powell, 2005).
In other words, SMEs must be beyond the traditional management system, representing the correct way to carry out organizational activities However, more is needed because it is necessary to identify sustainable factors over time with a differential mark in the competitive market (Ferrer & Clemenza, 2006).
METHODOLOGY
The following section contains the methodological design implemented in this research work that describes how the empirical work was developed:
The data analysisis quantitative, descriptive, correlational, and explanatory. It works as an explanation of two variables and the degree of influence of these. Identifies the management skills assumed by the manager in an organization and their relationship with the competitive advantages and economic development of SMEs
From another perspective, the current deductive research attempts to achieve some conclusions starting from diverse theoretical premises, which are evaluated from an empirical work of cross-sectional character that yields data of quantitative type from the implementation of the instruments of investigation.
The process to collect relevant information according to the study's objective will be carried out according to the research topics. For the study of managerial skills, the proposal of Katz (1955) will be applied according to the instrument made and applied in the research of Khan and Ghouri (2011), eliminating variables into factors and sub-factors, which measure technical skills, human skills, and conceptual skills. The study of variables related to business performance will be measured according to the rational model presented by Quinn and Rohrbaugh (1983); this model evaluates measurement sub-variables such as Human Relations, Open Systems, Internal Processes, and Rational Goals
A survey of two blocks identified as Management Skills and Organizational Performance was implemented.
The sample is stratified random with a sample of 273 units (SMEs in the department of Caquetá, Colombia).
Development of measures
As for the instrument implemented in this research of SMEs in the department of Caquetá, Colombia, it was designed with two blocks identified as Managerial Skills, implementing the instrument made by Northouse (2010); and Organizational Performance, implementing the instrument made by Quinn and Rohrbaugh (1983). The blocks were measured with a 1-5 Likert scale with the following values: 1 (Strongly disagree), 2 (Disagree), 3 (Neither agree nor disagree), 4 (Agree), and 5 (Strongly agree).
RESULTS: MANAGEMENT SKILLS
The reliability and validity of the questionnaire (18 items) prepared for this analysis were evaluated considering all the questions, and as Table 2 indicates, Cronbach's Alpha coefficient was 0.953. Therefore, considering it is a value higher than 0.7, it is a reliable data collection instrument with strong internal consistency.
Table 2 Reliability statistics
| Cronbach’s alpha | Number of questions (items) |
|---|---|
| 0,953 | 18 |
Source: Own elaboration.
Table 3 shows the descriptive statistics comprising the managerial skills questions of the 273 companies surveyed. The question with the highest relevance is “I would like to develop strategies for the growth of my company,” with an average of 4.45. It is followed by “I am good at completing the things assigned to me,” with a mean of 4.38, and the third most relevant question is “I like to go into detail on how things work,” with a mean of 4.37.
Table 3 Item statistics
| Median | Deviation | |
|---|---|---|
| I like to go into detail about how things work | 4,37 | ,931 |
| Generally, I find it relatively easy to adapt ideas to people’s needs. | 4,29 | ,887 |
| I like to work with abstract ideas (indeterminate, indefinite, imprecise). | 3,42 | 1,381 |
| I'm fascinated by technical things | 3,93 | 1,034 |
| Being able to understand others is the most critical part of my job. | 4,29 | ,866 |
| Seeing the “big picture” is easy for me | 4,08 | ,883 |
| One of my skills is being good at making things work. | 4,34 | ,860 |
| My main concern is to have a supportive communication climate. | 4,25 | ,868 |
| I am intrigued by complex organizational problems | 3,98 | ,923 |
| I find it easy to follow instructions and fill out forms | 4,16 | ,916 |
| For me, it is crucial to understand the social fabric of the company | 4,29 | ,891 |
| I would like to develop strategies for the growth of my company | 4,45 | ,882 |
| I am good at completing the things that have been assigned to me | 4,38 | ,846 |
| Getting all the parts to work together is a challenge I enjoy | 4,28 | ,897 |
| Creating a mission statement is rewarding work. | 4,25 | ,824 |
| I understand how to do the basic things that are expected of me | 4,34 | ,842 |
| I am concerned about how my decisions affect the lives of others. | 4,16 | ,964 |
| I am attracted to thinking about the values and philosophy of the organization. | 4,24 | ,895 |
Source: Own elaboration.
Organizational Performance
The reliability and validity of the questionnaire were evaluated by taking all the questions as indicated in Table 4. The reliability and validity of the questionnaire were assessed by taking all the questions as indicated in Table 4, where the Cronbach's Alpha coefficient is 0.944 with a value higher than 0.7 which shows that it is a reliable data collection instrument with strong internal consistency.
Table 4 Reliability statistics
| Cronbach’s alpha | Number of questions (items) |
|---|---|
| 0.944 | 12 |
Source: Own elaboration.
Regarding organizational performance, Table 5 shows the descriptive statistics of the organizational performance questions. The question with the highest relevance is "quality of the product and/or service" with an average of 4.45. The "customer satisfaction" question has an average of 4.43, and the "image of the company and its products/services" has an average of 4.37.
Table 5 Item statistics
| Media | Deviation | |
|---|---|---|
| Quality of the product and/or service | 4,45 | ,804 |
| The efficiency of internal operational processes | 4,30 | ,803 |
| The efficiency of staff tasks | 4,32 | ,798 |
| Customer satisfaction | 4,43 | ,774 |
| Quick adaptation to market needs | 4,29 | ,783 |
| Image of the company and its products/services | 4,37 | ,751 |
| Increased market share | 4,03 | ,884 |
| Increased profitability | 4,04 | ,922 |
| Increased productivity | 4,14 | ,903 |
| Employee motivation/satisfaction | 4,25 | ,839 |
| Reduced staff turnover | 3,85 | 1,094 |
| Reduced absenteeism | 3,89 | 1,099 |
Source: Own elaboration.
Table 6 Input / eliminated variables
| Model | Input variables | Eliminated variables | Method |
|---|---|---|---|
| 1 | HGTOTALb | . | Enter |
a. dependent variable: TOTAL PERFORMANCE
b. All requested variables entered.
Source: Own elaboration.
Table 7 Summary of the model
| Model | R | Adjusted R-Squared | Standard error of estimate |
|---|---|---|---|
| 1 | .246a | .057 | ,67198 |
| Predictors (Constant) TOTALHG |
Source: Own elaboration.
By obtaining 0.00 significant (Table 8), managerial skills do affect the organizational performance of SMEs in the department of Caquetá, Colombia (Table 9).
Table 8 ANOVA
| Model Sum of | gl | Root mean square | F | Sig. | ||
|---|---|---|---|---|---|---|
| Squares | ||||||
| 1 | Regression | 7,873 | 1 | 7,873 | 17,435 | ,000b |
| Residual value | 122,371 | 271 | ,452 | |||
| Total | 130,244 | 272 | ||||
a. Dependent variable: TOTAL PERFORMANCE
b. Predictors: (Constant), TOTALHG
Source: Own elaboration.
Tabla 9 Coefficients
| Model | Non-standardized coefficients | Standardized coefficients | t | Sig- | ||
|---|---|---|---|---|---|---|
| B | Dev. Error | Beta | ||||
| 1 | (Constant) | 3.166 | ,250 | 12,650 | ,000 | |
| TOTALHG | ,246 | ,059 | ,246 | 4,175 | ,000 |
a. Dependent variable: Total Performance
Source: Own elaboration
By obtaining 0.00 significant (Table 8), managerial skills do affect the organizational performance of SMEs in the department of Caquetá, Colombia (Table 9).
CONCLUSION
Management skills and organizational performance are terms that allude to the experience and knowledge of staff, leading to developing competitive advantages, which generate value for organizations. In this case, the objective of this research was to analyze how managerial skills affect organizational performance and contribute to SMEs' competitive advantage in the Caquetá, Colombia department.
As the most important conclusions of the current research, it can be mentioned that through the statistical analysis carried out (variables, correlation, and simple linear regression), it was possible to establish that there is a relationship between the constructs taking into account the observed data, which is a positive thing for both constructs, considering a five-point Likert-type response scale.
The relevance of managerial skills and organizational performance in SMEs' competitive advantages in Caquetá Colombia's department is acknowledged. However, it is suggested to implement future studies within this area of investigation since the results obtained are based on a preliminary sample.
