Entrepreneurial competencies and smes business success: The contingent role of external integration

Abstract

This is a conceptual paper to study the effects of entrepreneurial competencies on success of businesses in the context of Malaysian SMEs. This paper argues that the external integration moderates the influence of entrepreneurial competencies on success of SMEs businesses. Hence, the entrepreneurs should be competent enough to manage their relationships with their customers and suppliers to get competitive advantage. Only sustainable competitive advantage will ensure business survival and success. This paper adopts the resource based view of competencies (RBV) which claims that entrepreneurial competencies are valuable and intangible resources that lead towards the success of business. Entrepreneurial competencies alone are not enough to ensure the survival and success of businesses. Since, SMEs have scarce resources of finance, skills, technology and knowledge; therefore SMEs sustainable business success highly depends on many other factors such as supplier’s capabilities as well as customer’s integration. Moreover, the strong relationships of SMEs with their customers and suppliers enable them to access the information regarding latest customer choices and tastes, technologies and new methods of innovations. Therefore, this paper incorporates two theories namely, the resource dependence theory (RDT)and the resource based view (RBV) to explain the conceptual model, where RDT suggests that firms have to depend on external parties (suppliers and customers) to get critical resources for their survival. Particularly, there is a dearth of studies that have examined the influence of external integration on the relationship of entrepreneurial competencies and success of Malaysian SMEs businesses. Therefore, the current study strives to investigate the moderating impact of customer and supplier relationships on the relationship between entrepreneurial competencies and success of businesses of Malaysian SMEs in the manufacturing sector. Ultimately, this study will contribute the existing body of knowledge in entrepreneurial competencies, external integration and success of Malaysian SMEs businesses in the manufacturing industry.