Factors Creating Competitive Advantage for Family-Owned Business

Factors Creating Competitive Advantage for Family-Owned Business

Neeta Baporikar (Namibia University of Science and Technology, India & University of Pune, India)
DOI: 10.4018/978-1-5225-8939-6.ch003

Abstract

Management concepts have evolved as a separate discipline after the industrial revolution. In connection with this development, this discipline has combined so many different theories from different disciplines and approaches from different researchers and applications from different managers and other professionals. This amazing development of management has reached its peak in today's global business environment. Strategy concepts like vision, mission, SWOT, and competition on war footing for markets were influence of military science. Different contemporary management techniques, approaches, and implications are applicable in this unstable, dynamic, and knowledge-intensive environment. Among the various approaches, competitiveness, competitive strategies, and competitive advantage are at the core of organizational growth, development, and sustainability. Adopting a grounded theory approach with in-depth literature review, this study aims to discuss and deliberate on factors creating competitive advantage for organizations, especially family-owned SMEs, irrespective of their stage of development.
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Introduction

An organization is a structure, which consists of two or more people who have a deliberate objective and intention to accomplish it. Therefore, about this definition, it is easily understandable that the organization concept has roots not only in our time but also in ancient times. Management concept is also derivable from an equation in which both people and their organization exist as vital variables. Both management and organization practices stem from ancient times and survive in today’s global era. Business management concept has evolved as a separate discipline during and after the industrial revolution. In connection with this development, this discipline has combined many different theories born from diverse disciplines and approaches from researchers and applications from managers and other professionals. This amazing development of management has reached its peak in today’s global business environment. Today’s dynamic, chaotic and complex environment makes it a must for managers to adapt contemporary approaches for maximizing both individual and organizational effectiveness. Different contemporary management techniques, approaches, and implications apply to this unstable, dynamic and knowledge-intensive environment. Among the various approaches to competitiveness, competitive strategies and competitive advantage are at the core of organizational growth, development, and sustainability.

Porter (1990) gave a first conceptual framework of competitiveness in the book The Competitive Advantage of Nations. Stajano (2010) argues that the prosperity of an economy stems from its ability to compete in the global market. The ability of businesses to survive and compete in increasingly global and sophisticated markets depends on a wide range of aspects such as the efficiency of public institutions, the excellence of infrastructure, health and quality of education as well as political and economic stability. Innovation has a massive defense as the key element for the creation of wealth from the countries (Gibson & Naquin, 2011). Innovation is the defining challenge for global competitiveness (Baporikar, 2014b). The increasing globalization of markets and the resulting increase in a competition associated with increased technological complexity, make innovation a key aspect of the competitiveness of companies, economies, and regions hosting them (Baporikar, 2018). Thus, there is a growing interest by governments to maintain the competitiveness of their economies with policies to stimulate advances in science and technology (Clark & Guy, 2010).

In industrialized countries, the promotion of networking among small manufacturers has resulted in enhancing the competitiveness of firms and economies, fostering new standards of business sophistication (Baporikar, 2015a). Porter, Schwab, and Sachs (2004) distinguished two broad categories: macro and microeconomic dimensions about drivers of competitiveness. Microeconomic foundations, identified as traditionally neglected by policymakers assume the foundations of macroeconomic reforms to achieve sustainable prosperity of economies. The drivers of competitiveness are many and complex. Adopting a grounded theory approach with in-depth literature review this study aims to discuss and deliberate on factors creating a competitive advantage for organizations especially SMEs irrespective of their stage of development.

Key Terms in this Chapter

Customer Service: An organization’s ability to satisfy its customers’ needs.

Small and Medium Enterprises (SMEs): Is a term for segmenting businesses and other organizations that are somewhere between the “small office-home office” size and the larger enterprise. Country to country this term may vary, but the basis usually is on the criteria of investment, number of employees, and turnover, etc.

Government: The organization, machinery, or agency through which a political unit exercises authority and performs functions and which is usually classified according to the distribution of power within it and usually refers to a political system.

Decision-Making: A rational and logical process of choosing the best alternative or course of action among the available options.

Competitive advantage: An advantage that firms have over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition. There can be many types of competitive advantages including the knowledge, skills, structure, product offerings, distribution network, and support.

Enterprises: The act or process of organizing; a structure through which individuals cooperate systematically to conduct business and/or the administrative personnel of such a structure.

Innovation: Something new or different introduced, it is the act of innovating, which includes the introduction of new things or methods. Innovation is also the introduction of a new idea into the marketplace in the form of a new product or service, or an improvement in organization or process. The process of translating an idea or invention into a good or service to create value for which customers will pay.

Environment: It is i mportant or essential about a plan of action; highly important to an intended objective.

Globalization: Globalization is the tendency of businesses, technologies, or philosophies to spread throughout the world, or the process of making this happen.

Policy: Refers to guidelines as issued by the governance.

Business: Pertains broadly to commercial, financial, and industrial activities.

Competitiveness: Act of competing for some honor, or advantage. A rivalry between two or more persons or groups for an object desired in common, usually resulting in a victor and a loser but not necessarily involving the destruction of the latter. The need for global competitiveness is much important for any industry to sustain in this competitive world.

Development: Means “steady progress” and stresses effective assisting in hastening a process or bringing about the desired end, a significant consequence or event, the act or process of growing, progressing, or developing.

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