Organizational environment and management skills in small and medium-sized enterprises

At present, managers need to acquire and master various management skills that contribute to a positive organizational environment. The aim of this study is to investigate the association between management skills and the organizational environment of small and medium-sized enterprises (SMEs) in Karachi, Pakistan. The primary objective is to determine how various management skills — negotiation, decision-making, leadership, communication, and teamwork — affect the organizational environment within SMEs. Scientific methods for research adopt a descriptive and quantitative approach, utilizing a questionnaire administered to managers of 253 SMEs. Data analysis was conducted using structural equation modeling (SEM) via the partial least squares (PLS) method, employing SmartPLS 4 software. Findings of the study reveal that the latent variables of negotiation and leadership significantly impact the organizational environment, with an R-square value of 0.854. The effect size (F-square) indicates a high impact of negotiation (F-square = 0.720) on the organizational environment, while leadership has a lower but still significant effect (F-square = 0.103). Other management skills, such as decision-making, communication, and teamwork, also show positive associations with the organizational environment, although to lower degrees. Conclusions. The study emphasizes the significance of management skills, particularly effective negotiation and leadership, in fostering a productive organizational environment in SMEs. Also, it suggests that training and development in these areas could significantly improve performance.

1. Al-Janabi A.A.A., Abduljabbar G. R. The impact of SME business environments, technology adoption, and organizational capacity on innovation and growth. AIP Conference Proceedings. 2024;3009(1):030030. URL: https://doi.org/10.1063/5.0197952

2. Audretsch D. B., Belitski M. Knowledge complexity and firm performance: evidence from the European SMEs. Journal of Knowledge Management. 2021;25(4):693–713. URL: https://doi.org/10.1108/jkm-03–2020–0178

3. Banks G.P. Exploring Small-Business Change and Strategic Adaptation in an Evolving Economic Paradigm. 2013. URL: https://www.proquest.com/openview/0d61ba6bd51e50d25b707d8cb41866a6/1?pq-origsite=gscholar&cbl=18750

4. Ji L., Huang J., Liu Z., Zhu H., Cai Z. The effects of employee training on the relationship between environmental attitude and firms’ performance in sustainable development. The International Journal of Human Resource Management. 2012 Jul 1;23(14):2995–3008. URL: https://doi.org/10.1080/09585192.2011.637072

5. Ciemleja G., Lace N. The Model of Sustainable Performance of Small and Medium-sized Enterprise. Inzinerine Ekonomika-Engineering Economics 2011;22(5):501–509. URL: https://doi.org/10.5755/j01.ee.22.5.968

6. Clohessy T., Acton T. Investigating the influence of organizational factors on blockchain adoption An innovation theory perspective. Industrial Management and Data Systems. 2019;119(7):1457–1491. URL: https://doi.org/10.1108/imds-08–2018–0365

7. Diamantidis A. D., Chatzoglou P. Factors affecting employee performance: an empirical approach. International Journal of Productivity and Performance Management. 2019;68(1):171–193. URL: https://doi.org/10.1108/ijppm-01–2018–0012

8. Dolz C., Iborra M., Safon V. Family-owned company, management teams, diversity, and ambidexterity in small and medium-sized enterprises. Rae-Revista De Administracao De Empresas. 2015;55(6):673–687. URL: https://doi.org/10.1590/s0034–759020150606

9. Dulange S. R., Pundir A. K., Ganapathy L. Prioritization of factors impacting on performance of power looms using AHP. Journal of Industrial Engineering International, 2014;10(4):217–227. URL: https://doi.org/10.1007/s40092–014–0080–8

10. Dyerson R., Spinelli R., Harindranath G. Revisiting IT readiness: an approach for small firms. Industrial Management and Data Systems. 2016;116(3):546–563. URL: https://doi.org/10.1108/imds-05–2015–0204

11. Elshaer I.A., Saad S. K. Entrepreneurial resilience and business continuity in the tourism and hospitality industry: the role of adaptive performance and institutional orientation. Tourism Review. 2022;77(5):1365–1384. URL: https://doi.org/10.1108/tr-04–2021–0171

12. Fannoun S. Towards Effective Project Management and Knowledge Transfer Enhancement: a Novel System Capturing and Modelling Knowledge Acquired in a Software Development Practice. 2021. URL: https://chesterrep.openrepository.com/handle/10034/626721

13. Fitzgerald R., Dyerson R., Mishimagi T. Strategic Transformation in Japan’s SMEs, 1990–2008: Flexible Specialization, Industrial Restructuring, and Technological Change. Enterprise and Society. 2023;24(2):319–354. URL: https://doi.org/10.1017/eso.2021.30

14. Jia J., Xu Y., Li W. A study on the strategic momentum of SMEs’ digital transformation: Evidence from China. Technological Forecasting and Social Change. 2024; Mar;200:123038. URL: http://dx.doi.org/10.1016/j.techfore.2023.123038

15. Ghallab A., Almuzaiqer A., Al-Hashedi A., et al. Factors Affecting Intention to Adopt Open Source ERP Systems by SMEs in Yemen. In 2021 International Conference on Intelligent Technology, System and Service for Internet of Everything (ITSS-IoE). 2021. p. 7. URL: https://doi.org/10.1109/itss-ioe53029.2021.9615254

16. Govuzela S. The Contributions of Organisational Agility Towards Business Performance Within Small and Medium Scale Enterprises in Gauteng Province. 2018. URL: http://digiresearch.vut.ac.za/bitstream/handle/10352/427/Govuzela%20for%20Printing%20June%202018.pdf?sequence=1

17. Heenkenda H. M., Xu F., Kulathunga K. M., Senevirathne W.A. The Role of Innovation Capability in Enhancing Sustainability in SMEs: An Emerging Economy Perspective. Sustainability. 2022;14(17):10832. URL: https://doi.org/10.3390/su141710832

18. Heffner M. C. Knowledge management for technological innovation in organizations: The fusion process for creating intellectual capital. 2006. URL: https://www.proquest.com/openview/05286050949422d987d9b9b15bce8ffa/1?pq-origsite=gscholar&cbl=18750&diss=y

19. Honig B. Human capital and structural upheaval: A study of manufacturing firms in the West Bank. Journal of Business Venturing. 2001;16(6):575–594. URL: https://doi.org/10.1016/s0883–9026(99)00060–9

20. John R. Internal Relations between Parent Headquarters — Subsidiaries of Multinational Companies. 2017. URL: https://www.proquest.com/openview/9cd77a9854aed2fa49078ffe1319588e/1?pq-origsite=gscholar&cbl=2026366&diss=y

21. Kim K., Seo E. H. Analysis of Design Management Status of Domestic SMEs: Focused on CEO Design Leadership and Design Management Capabilities. Korean Journal of Business Administration. 2021.34(6):951–975. URL: https://doi.org/10.18032/kaaba.2021.34.6.951

22. Wagan S. M. Export boost of Textile Industry of Pakistan by availing EU’s GSP Plus. Journal of Economics library. 2015;1(1):18–27. URL: https://doi.org/10.20534/ejems-15–2–11–14