A comparison of practice‐performance models between small manufacturers and subcontractors

The adoption and effectiveness of advanced management practices by small and medium enterprises (SMEs) is becoming an emerging issue since the literature has recognised that a pure entrepreneurial attitude is no longer enough for the competitive success of these firms. This paper explores this issue by comparing the practice‐performance links for two types of SMEs ‐‐ i.e. subcontractors and small manufacturers ‐‐ through the investigation of the management practices pertaining to the following three functional areas: general management, production management and product innovation management (only for manufacturers). Despite the fact that subcontracting is generally considered less appealing and profitable than manufacturing, empirical evidence shows that subcontractors are more effective in implementing advanced practices of production management whilst most small manufacturers ‐‐ although quite advanced in developing practices of general management ‐‐ experience difficulties in exploiting the potential of good product innovation practice.