Supplier Selection in Family Small and Medium Enterprises: Modelling the Priority Attributes With an Integrated Entropy-MARCOS (E-MARCOS) Method

Supplier Selection in Family Small and Medium Enterprises: Modelling the Priority Attributes With an Integrated Entropy-MARCOS (E-MARCOS) Method

Tracy Mantos, Honey Lou Layon, Nikkithea Beduya, Iris Gulbe, Hannibal Layon, Ledesma Romagos Layon, Lanndon Ocampo
DOI: 10.4018/IJSSMET.317085
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Current literature on family businesses and small and medium enterprises (SMEs) offers some disintegrated insights in view of managing supply chains, particularly the supplier selection agenda. The presence of distinct characteristics inherent to both enterprises calls for a new line of inquiry regarding supplier selection for family SMEs. This work advances the literature by (1) identifying a set of supplier selection attributes best encapsulating the interests of family SMEs, and (2) evaluating these attributes to guide relevant decision-making. With a case study in the food industry and previous lists of supplier selection attributes, ten attributes were considered relevant to family SMEs. Applying the hybrid entropy-MARCOS method yields the priority attributes in decreasing order: on-time delivery, total service quality, product quality, productivity, attitude, response to customer requests, problem-solving capacity, payment terms, price, and flexibility. An analysis with other comparable methods suggests high consistency of these findings. Theoretical insights were discussed.
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In the least-developed economies, small and medium enterprises (SMEs) are considered major drivers of employment growth and poverty alleviation (Maksimov et al., 2017; El Hakioui & Louitri, 2017). In a recent report by Tambunan (2019), SMEs, including micro-enterprises, dominate almost all existing firms in Indonesia, contributing to at least 58% of the country’s gross domestic product (GDP). Recent analysis positively relates SMEs with the overall wealth of society and demand for more diversified products (Frąckiewicz, 2018). They also induce market competition and are linked to absorbing shocks following a recession (Frąckiewicz, 2018). Empirical insights of Maksimov et al. (2017) in some underdeveloped economies in Africa, Asia, and the Middle East yield that those SMEs securing government contracts, exporting goods to foreign markets, or are female owned, have greater socio-economic contributions, especially in attaining business efficiency and providing higher compensation to their employees. Despite their role in the economy, however, SMEs are exposed to external pressing factors in the global environment including intensified market competition, global financial crises, the advent of information and communication technologies (ICTs), the rise of multi-national companies and transnational corporations, changes in consumer behaviors, trade dumping, terrorism, religious conflicts, and trade wars (Naradda Gamage et al., 2020).

Compared to their counterparts in large firms, SMEs have greater constraints in achieving economies of scale and lower bargaining power and competition (Tong et al., 2022), making them more susceptible to higher transaction costs (Kull et al., 2018). Most reports show SMEs to have limited access to capital, raw materials, information technologies, and marketing of products and services. They also have limited access to guidance from the government while having high interest rates imposed upon them (Eravia & Handayani, 2015). Larger businesses have greater access to information and technological resources. Those determinants of firm size, export orientation, government support, and labor productivity are crucial to profitability (Pilar et al., 2018), aside from motivation in entrepreneurship, education, technologies, and human resource, which have been identified as influencing factors of success (Kurniawati & Yuliando, 2015; Eravia & Handayani, 2015). Frąckiewicz (2018) offered a comprehensive characterization of SMEs, while Yamagishi et al. (2021) outlined their characteristics.

Due to their nontrivial contributions to economic development, SMEs have drawn sustained interest from scholars over the last few decades. The current trends of SME research are identified in five directions; however, the vastness of the field warrants a separate overarching review and bibliometric analysis. First, the capacity of SMEs for innovation is critical to gaining competitive advantage during turbulent times, and initial insights suggest public funding and external support are important contributors (De Martino & Magnotti, 2018; Adam & Alarifi, 2021).

Second, an emerging stream of research focuses on the social responsibility of SMEs (De Zoysa & Takaoka, 2020; Guillén et al., 2022), and a consensus suggests that the performance of SMEs is low but growing.

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