Internal Electronic Information as a Competitiveness‐Enhancing Resource in German Automotive Industry Suppliers

• DOI: http://doi.org/10.1002/jsc.2047
• Author: Gary Packham,Brychan Thomas,David Pickernell,Christopher Miller,Alexander Bakos
• Date: 01 January 2016
• Published date: 01 January 2016

RESEARCH ARTICLE

Strat. Change 25: 61–80 (2016)

Published online in Wiley Online Library

(wileyonlinelibrary.com) DOI: 10.1002/jsc.2047

Copyright © 2016 John Wiley & Sons, Ltd.

Strategic Change: Briengs in Entrepreneurial Finance

Strategic Change

DOI: 10.1002/jsc.2047

Internal Electronic Information as a Competitiveness-

Enhancing Resource in German Automotive Industry

Suppliers1

Alexander Bakos

Mosaiic Gmbh, Germany

Christopher Miller

University of South Wales, UK

Gary Packham

Anglia Ruskin University, UK

David Pickernell

University of South Wales, UK

Brychan omas

University of South Wales, UK

In German automotive industry suppliers, internal electronic information (IEI)

satises the requirements of being a competitiveness-enhancing resource.

e purpose of this article is to explore and analyze the potential for internal

electronic information (IEI) to be a competitiveness-enhancing resource within

the resource-based view of the rm (RBV) (Oliveira and Martins, 2011). More

specically, it investigates whether and how IEI is able to meet the RBV criteria

of being valuable/value-creating, rare/scarce, inimitable/costly to copy/non-

substitutable, and exploited by the organization (Barney and Clark, 2007: 70;

drawn from Barney, 1991, 1997), the so-called VRIO framework (Peteraf and

Barney, 2003: 316; Cardeal and Antonio, 2012).

Issues surrounding the use of electronic information as a competitiveness-

enhancing resource have long been debated (see, for example, Lederer and Salmela,

1996; Doherty et al., 1999; Levy and Powell, 2000; Peppard and Ward, 2004;

Gable, 2010). Often, however, the debate has focused around inter-organizational

use of such information (Holland, 1995; Jarvenpaa and Staples, 2000). is article

explores and analyzes the potential for IEI to be a competitiveness-enhancing

resource within the RBV framework (Hinterhuber, 2013) by investigating small

1 JEL classication codes: L26, O33.

Whilst information itself is not

scarce, it is rarely organized in

ways that creates knowledge or

can be used for analytics for the

rm.

In terms of the role and level of

IEI for specic business functions

of relevance to building

competitive advantage, there may

be gaps in knowledge use for

certain important functions.

In order to avoid a signicant

information gap, small and

medium‐sized automotive industry

suppliers (SMAS) in South East

Germany need to build on their

current practices and level of

information sophistication.

62 Alexander Bakos, Christopher Miller, Gary Packham, David Pickernell, and Brychan Thomas

Copyright © 2016 John Wiley & Sons, Ltd. Strategic Change

DOI: 10.1002/jsc

and medium-sized automotive industry suppliers (SMAS)

in South East Germany (SEG).

Recent statistics emphasize the importance of small

and medium-sized enterprises (SMEs) in both national

and European economies. e Department for Business

Enterprise and Regulatory Reform reports that 99.8% of

businesses in the UK are SMEs (BERR, 2006). e eco-

nomic situation in Germany is similar, at 99.69% (DES-

TATIS – Portal, 2007). European statistics concur that

SMEs account for about 99% of all businesses in Europe

(EC, 2003). e contribution of small and medium busi-

nesses (SMBs) to national economies can also be seen in

terms of their impact on employment and turnover. Inthe

UK, SMEs account for 58.9% of employment and for

51.9% of turnover (BERR, 2006). e data on Germany

reveals that SMEs provide 70.7% (IfM, 2006) of overall

employment and a share of 38.3% in national turnover

(IfM, 2006).

e dierences between small and large rms are not,

however, limited to their size, but also due to certain

related characteristics. Levy and Powell (2005) argue that,

for example, although small businesses are confronted

with similar economic dynamics as larger rms, there are

major dierences in the companies’ objectives. e main

interest in shareholder value by larger enterprises is in

contrast to the intention for exibility within smaller

rms; the fundamental purpose of small companies

varying from lifestyle to growth orientations (Levy and

Powell, 2005; Burns, 2006). Gray (2002) identies,

however, that resistance to change amongst SME owner/

managers may hinder a business’s development, indicating

the strong link between the owner/manager and the busi-

ness. Penrose (1995) also proposes that the intention of

owner/managers (to grow) is the decisive factor in SMEs’

development. erefore, the owner/managers’ lack of

growth motivation is a key constraint amongst small busi-

nesses (Penrose, 1995).

Levy and Powell (2005) also identify ve key charac-

teristics important for small businesses in determining

their growth, which are market context, independence,

personal inuences, innovation, and exibility. Benecial

features associated with SMEs in the research literature

generally overlap with this and include agility and respon-

siveness (Koh and Simpson, 2005), innovation (Levy and

Powell, 2005), and exibility (Jones and Tilley, 2003).

Jones and Tilley (2003: 29) point out that the ‘major

advantage over their large rivals is their ability to respond

more rapidly to changing signals from the marketplace.’

Sharma and Bhagwat (2006) support this, emphasizing

responsiveness vis-à-vis the fullment of customer

demands. Koh and Simpson (2005) highlight these char-

acteristics as being the main aspects of competitive advan-

tage for small manufacturing enterprises. Research,

however, also reports a number of resource-related limita-

tions, which disproportionately aect SMEs. Specically,

the literature suggests the lack of capital, and particularly

nancial, skill, and sta resources.

e signicance of nancial resources in order to

prosper is reported (see, for example, Bullock et al.,

2004). e monetary constraints, however, need to be

discussed in three ways. First, the inability of small busi-

nesses to acquire a sucient amount of external capital

inhibits further growth. Consequently, the action plans

and initiatives of both German and UK governments

assign themselves to the improvement of access to

nances for SMEs (BMWI, 2006; BERR, 2008). Second,

the decit of internal capital and cash ow amongst

SMEs limits the organizational performance as it pro-

hibits the procurement of necessary equipment (Gélinas

and Bigras, 2004). e Small Business Service (SBS)

Annual Survey 2005 furthermore notes the signicance

of internal nances because this is the ‘most popular way

to fund growth’ (BERR, 2005: 62). ird, insucient

utilization of funds or underinvestment in organiza-

tional functions diminishes the development of the

business.

Spending on technology and education or skills

improvement is also seen as particularly important in

order to maintain SME growth (BERR, 2008). Scarcity

of skilled labor and knowledgeable workers is seen as a