Performance assessment of manufacturing SMEs: a frontier approach

Abstract

Purpose – The purpose of this paper is to measure and evaluate the performance efficiency of manufacturing small and medium enterprises (SMEs) in Turkey. The industry-based efficiency evaluation provides management with information regarding the relatively best practice sectors in the observation sets and locates the relatively inefficient sectors by comparing with the best practiced ones. Design/methodology/approach – In this study, an evaluation model is constructed to come up with efficiency analysis for manufacturing SMEs and output-oriented CCR data envelopment analysis approach is utilized to figure out best practiced SMEs. The proposed efficiency measurement model is utilized for 744 SMEs from ten different sectors. Based on the efficiency results, efficiency score of the studied sectors are compared and improvements needed for becoming an efficient unit are reported. Findings – The results showed that 94 companies efficiently performed in general perspective. The analysis also revealed that “Wearing Apparel, Dressing and Dyeing of Fur” and “Chemicals and Chemical Products” manufacturing sectors were found to be the inefficient of the overall usage of strategic competitive priorities. Originality/value – Based on the previous literature, this study brings more recent perspectives such as service activities and financial power to the four main competitive priorities of cost, quality, flexibility and delivery. The variables used in this study are as follows: Proximity to Market, Ability to Control Costs, Potential Labor Force, Product Quality, Prompt Advantage, Certification, Product Assortment, Distribution Channel, Pricing Policy, Service, Capital, Machinery-Equipment Track, Profit Margin and Market Share.