Value Constellation in SMEs: The New Frontier of Entrepreneurship

Abstract

The dye is cast. They are small wonders. They give big push to industrial boom. The SMEs contribution to boom is fairly large. While taking pride in SMEs, one has to be conscious of numerous anxieties faced by promoters. Availability of low cost funds and competition are some of the major growth constraints. In India it takes 30-35 days to export goods to US while Chinese manufacturers are able to ensure that their goods reach within 14-15 days. Thus, Indians are at disadvantage leading to extra cost. The productivity and labor regulation is also a matter of concern. The output per machine is 15 garments in India while it is 25 garments per machine in Bangladesh. SMEs, small size enable competitive flexibility to beat the ever changing environment; most SMEs are in the need of partners, who could provide them with platforms to augment their competitiveness. The competition is just not local but it is global and they need to take help to compete better. The financial services are improving; the help on technology up gradation, acquisition, and critical infrastructure is available. There are added functions like business and management profile, geographical reach, length of client relationship, trade references where assistance is available and above all, representations for budget provisions are also made to make this sector competitive. This paper presents the model of 'value constellation' to maintain the competitive entrepreneurship. Value constellation-customer oriented inter organizational strategy is one of the solutions to remain competitive through knowledge integration i.e. mix of knowledge management activities, in respective areas. The paper deals with formation of supply chain networks, business networks, research networks and satellite networks. Thus there can be purposeful cooperation with other separate judicial identities. It is virtual joint ventures. This new type of competition forces traditionally operating SMEs to team up with each other in a customer-oriented network However, these networking strategies are likely to emerge only when SMEs get willingness to break away from the past traditional patterns of interaction and mental attitude. As they get unlocked from their traditional competencies and their financial and strategic resources they develop interactive strategies covering the entire value system and build atmosphere of trust. The paper identifies difficulties of formation of customer oriented network i.e. two types of value constellations-self generic truce and others based on FDI-foreign direct investment. Above all, this can give substantial capital advantage (lower cost), quick changes in manufacturing processes, higher asset utilization and skill specialization. It takes clear vision, a steady hand and discipline to avoid quick fix solutions. Indian SMEs that nurture and expand their historically built critical manufacturing competencies have to face the challenge of 1) Mission 2) Competition3) Performance 4) Change to build a competitive and sustainable model. This is possible through knowledge management. Business associations and local institutions may play a crucial role in changing and shaping the emerging network among the SMEs.