Integrated E-Strategy Model for Increasing Competi

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Review of Social, Economic & Business Studies, Vol.9/10, 179-208

An Integrated e-Strategy Model for

Increasing Competitive Performance

of Manufacturing Small and Medium

Sized Enterprises in Kazakhstan

Tayfun TURGAY

Prof. Dr., Department of Business Administration, Faculty ofBusiness and Economics, Eastern Mediterranean University

Rassim KARBOVR. Asst., Department of Business Administration, Faculty of

Business and Economics, Eastern Mediterranean University

Abstract

In todays hyper-competitive markets, manufacturing SMEs try togain advantage by deploying surprise strategies and use oftechnology through which they secure the advantage of introducinggoods to the market prior to their competitors. Meanwhile,electronic commerce offers a rich array of opportunities to improvemanufacturing SMEs competitive performance. Choosing aparticular e-commerce application is a strategic decision that mustbe made in the context of the companies strategies. Therefore, theprimary purpose of this study is to explore the essence of genericcompetitive, growth and e-commerce strategies in enhancing thecompetitiveness of manufacturing SMEs in Kazakhstan throughintegrated E-Strategy Model. The primary data was collectedthrough a questionnaire distributed to the managers of 80manufacturing SMEs in Kazakhstan. The hypothesizedrelationships were tested by single and multiple regression analysis,

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using SPSS.13. The studys results demonstrated that business ande-commerce strategies were the most important factors affectingthe firm competitiveness.

Keywords:E-commerce, e-commerce strategies, businessstrategies, manufacturing small and medium sizedenterprises, Kazakhstan, firm competitiveness, e-strategy model.

Introduction

Small and medium sized enterprises (SMEs) are often credited asagents of industrial change and innovation and vehicles foremployment generation, wealth creation and economic growth.According to the industrial statistics of market economies, theprolific small and medium businesses economy represents about 99percent of all enterprises and accounts for approximately half ofprivate sector employment. However, SMEs operate in a highlycompetitive environment where risk and uncertainty are an integral

part of its operations.Globalization and technological innovations have changed

the way that manufacturing SMEs operate. These changes, despitethe enormous benefits they brought, have also made theenvironment more competitive, therefore increasing themanufacturing SMEs exposure to various risks of loosingcompetitiveness and profitability. The need arose to manage thesenew types of risks so that manufacturing SMEs could continue to

effectively and efficiently operate in a competitive environment, atthe same time gaining the competitive advantage and ensure theirprofitability.

In order to preserve its competitiveness and overallperformance high, manufacturing SMEs should set sound effectivegrowth and competitive strategies in the presence of dynamicenvironment. Recent advances in technology are changing the waycompanies operate, availability and falling costs of personal

computers have had a major effect on the ability of manufacturingSMEs to compete in electronic commerce world.

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Therefore, this study demonstrates an integrated E-StrategyModel which aims to measure generic competitive, growth and e-commerce strategies in enhancing manufacturing SMEs

competitiveness in Kazakhstan. It also sets out to prove crucialparts of the integrated model in order to demonstrate its reliabilityand validity.

This study is carried out in the manufacturing industry ofSME sector in Kazakhstan. The SME sector has been chosenbecause it plays a very important role in society, market andeconomy.

Socio-Economic Environment of Kazakhstan

The Republic of Kazakhstan extends from the Volga River in thewest to the Altai Mountains in the east, from the Siberian plain inthe north to the Central Asian deserts in the south. In 1991Kazakhstan declared independence from the USSR, and wasredesignated the Republic of Kazakhstan. In that year the countrywas formally recognized as a co-founder of the Commonwealth of

Independent States. Kazakhstan is the second largest country in theregion, the total area is 2,724,900 sq km, over four-fifths the size ofIndia (but with only 2% of the population). The total population at1 January, 2005 was estimated to be 15,074,200.In 2004, according to estimates by the World Bank, (2004)Kazakhstans gross national income (GNI) was US $33,780million (m). During 19952004, it was estimated, the populationdecreased at an average annual rate of 0.8%, while gross domestic

product (GDP) per head increased, in real terms, by an average of6.8% per year. Throughout 19952004, overall GDP has increased,in real terms, at an average annual rate of 6.0% and real GDPincreased by 9.4% in both 2004 and 2005.

Industry (including mining, manufacturing, construction,and power) contributed 37.1% of GDP in 2004, according toprovisional figures. The sector provided 17.2% of totalemployment in 2003. Measured by the gross value of output, the

principal branches of industry in 1997 were the fuel industry(accounting for 27.7% of the total), metal-processing (23.9%),

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food-processing (15.4%) and electrical power generation (14.1%).Industrial GDP increased, in real terms, at an average annual rateof 7.2% in 19952004. According to ADB figures, the GDP of the

sector increased by 10.1% in 2004 and by 4.6% in 2005.Manufacturing provided 10.2% of employment in 1998, and anestimated 15.6% of GDP in 2004. The GDP of the manufacturingsector increased at an average annual rate of 6.4% in 19952004.

Definition and Essence of Small and Medium Sized Enterprises

According to the World Bank Group, (2001) definition enterprises

that employ less than 10 workers and generate revenues less than100 thousands $US are very small (micro); enterprises that employ10 to 50 workers and generate revenues between 100-3000thousands $US are small sized; and the enterprises that have 50 to300 employees and generate revenues between 3000-15000thousands $US are medium sized. Although number of SMEemployees may vary from place to place. For example, SMEs inCanada are characterized with a number of employees less than

500, whereas this number would represent a large sized business.In European Union, the classification number varies from 250 inthe medium sized businesses, and with employees fewer than 50 insmall sized businesses.

SMEs represent a significant importance and play a crucialrole in the national economy (Desouza and Avazu, 2006). Theimportance of standardized mass production lost its weight alreadysome time ago (Jenner and Hubner, 1992). Flexible structure of

SMEs contributed to the progressive indicators a great deal, thusexuding a high level of employment potential and displayingadvantageous outcomes that provide stability and competitiveness,exert assistance to larger industrial enterprises, pay close attentionto customer care and their needs, faster in adapting newtechnologies and creative methods of management, and establishan indispensable insurance for the stability and growth in thecountries economies. In a natural way a small or medium

enterprise is closer to the contemporary vision of a new, flat andlean, horizontal company (Womack, Jones and Ross, 1990).

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Furthermore, for politicians and governments the SME sector isimportant first of all due to the fact that it can replace thegovernment in the difficult task of job creation, which is one of the

most main issues for the countrys economy. Another importantconsideration for the governments is the potential for additionalfiscal income creation by the SME sector. According to the dataprovided by Organization for Economic Cooperation andDevelopment (OECD), SMEs comprise about 95 percent ofenterprises in a nation, thus employing 60-70 percent of workforce.In Asia-Pacific Economic Cooperation member economies, SMEsreach up 90 percent of enterprises and employ between 32-84

percent of the workforce.

Manufacturing Small and Medium Sized Enterprises, E-

commerce and Business Strategies

The e-commerce establishes a very powerful path that gives newalternatives and opportunities for the businesses to implement theiractivities. According to Kalakota and Whinston, (1996) e-

commerce has been defined as the buying and selling ofinformation, products, and services via computer networks.

The reliability of the e-commerce and its common aim byvarious business representatives has helped many manufacturingSMEs to implement their activities despite the many changes, andbarriers that come along the way. The relative size of the firmsenables manufacturing SMEs to be more adaptable and responsiveto changing conditions than large organizations (Grieger, 20003)

and to benefit from the speed and flexibility that the electronicenvironment offers. The advantages of e-commerce participationfor manufacturing SMEs are mostly related to their ability to keeppace with a changing business landscape. New informationtechnology (IT) has a changing behavior that entails the following:facilitated access to global markets, changes in production methodsand costs, enhances in communication, reduced transaction costsand stimulated competition that resulted in new competitive

premises to SMEs from e-commerce application.

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In the case of Ireland, firms have high expectations ofgetting over physical barriers that are attributed to the geographicallocation and remote distance from Europe. This example implies

that manufacturing SMEs have come to appreciation of thevaluable features of the e-commerce and its abilities to cross overgeographical distances, thus exerting positive and successfulprogress and contribution to the growth outcomes.

Regarding e-commerce as a source of interactivity, Blattbergand Deighton, (1991) argument that interactive computer systemswill introduce a fresh approach to customer relationshipmanagement and point up the importance of competencies such as

communication.The Internet represents a crucial point that contributes to

lowering barriers for new competitors. Without any hugeinvestments they can easily enter into e-commerce. As a matter offact, the e-commerce changes the basis of competition by addingalterations to the products and the cost structure of manufacturingSMEs. In addition, the use of the e-commerce reduces thecustomers search cost by letting customer compare the prices.

Facilitation of an electronic integration of the supply chainactivities as well as facilitation of partnerships of generation ofstrategic alliances network is another characteristic representativeto the features of the e-commerce for manufacturing SMEs.

Understanding of the Internet, networking and e-commerceexhibits a considerable significance in determining the outcomesand advantages contributing to buyer and seller relationships.McGowan, (2001) gives the following examples and notes that

communication through the e-commerce helps manufacturingSMEs to acquire a myriad of information that aids in comparingthe differences in functions and variables. Consequently possessionof information leads to knowledge perseverance transforming intoevaluation, and planning activities accordingly.

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1. Business Strategies

Effective strategies have always leaded many companies to high-performance results. Researches have shown that a firms strategyis the most important determinant of companys performance(Heracleous, 2003). According to Shrader et al, (1984), Strategyis the primary means of reaching the focal objective. The focalobjective is whatever objective is in mind at the moment. Strictlyspeaking, it is literally meaningless to talk about strategy withouthaving an objective in mind. Viewed in this context strategybecomes an integral part of the ends-means hierarchy. Strategy isthe direction and scope of an organization over the long term.

In changing world some companies perform better than theirrivals in terms of global, business, corporate and functional levelproductivities due to implementation and capitalization ofstrategies. However, an organizations strategy must be appropriatefor its resources, environmental circumstances, and core objectives.The process involves matching the company's strategic advantagesto the business environment the organization faces. One objectiveof an overall corporate strategy is to put the organization into a

position to carry out its mission effectively and efficiently.

1.1.Growth Strategies (Ansoffs product/market growth

matrix)

Based on the contemporary researches, many authors havecommented on the typical limitations of strategic alternatives suchas small market share and limitations of resources and skills to thesmall firms (Carson, 1985). According to Storey and Sykes, (1996),due to these limitations, not all strategies are typically suitable forSMEs. Therefore, appropriate strategies are those that avoid directcompetition with bigger firms and contribute to the developmentsof close customer relationships and new product versions. In thespecific language of Ansoffs Matrix, it has been suggested byPerry, (1987) that for SMEs the most appropriate growth strategiesis therefore product development and market development.Furthermore, Cravens et al., (1994) addressed that organizational

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characteristics, strategic situation and entrepreneur motivationswould determine the choice of growth strategy for SMEs (p.247).

Igor Ansoff, (1965) contended that strategy is the integration

of five issued common thread: 1) product-market scope, 2)competitive advantage, 3) growth vector, 4) internally generatedsynergy, and 5) make or buy decisions.

Ansoffs product/market matrix has been amongst mostpopular tools for growth strategy identification. The Ansoff matrixhelps to identify the companys product and market growthstrategy. The company is looking to grow through marketpenetration, in other words, to expand profits by selling existing

products to the existing markets. Market development occurs whena company seeks to sell its existing products into new markets. Thenew markets could be geographically based either within the homecountry or abroad alternatively the new market could be a newmarket segment. A product development strategy entailsdeveloping new products for sale in existing markets. This strategymay require the development of new competencies and requires thebusiness to develop modified products which can appeal to existing

markets. Diversification is the name given to the growth strategywhere a business markets new products in new markets.

1.2. Competitive Strategies (Porters generic strategies)

Generic strategy is among the most popular business strategies thathave been based on assessing competitive environment and thebusiness's capabilities relative to other competitors. Researches

show that the link between organizational characteristics and thegeneric business strategies of cost and differentiation is a recentdevelopment. According to Porter, (1980) cost leadership;differentiation and focus are ways businesses deal with the fivecompetitive forces, to create sustainable competitive advantage andthereby higher returns. The formulation of competitive strategyrequires a completely different set of tools and methods of analysis(Kotorov, 2001).

While considering Porters research, competitive advantage cancome from either having the lowest cost in the industry or from

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possessing significant and desirable differences from competitors.Furthermore, another important factor of Porters competitiveadvantage is the broad and narrow scope of the product-market in

which the organization wishes to compete. The mix of these scopesin terms provides the basis for Porters competitive strategieswhich include cost leadership, differentiation and focus (cost anddifferentiation).

Fundamentally, pure cost leadership strategies focus onthose variables that will allow the firm to achieve and maintain alow cost position. The 'competitive price' set by the market place isaccepted. On the other hand, a business with a pure differentiation

strategy seeks to enhance the price element by offering customerssomething they perceive as unique and for which they are willingto pay a higher price. Differentiation usually requires incurringhigher costs but, if successful, these incremental costs will be lessthan the incremental contribution attributable to the higher price.

An integrated E-Strategy Model and Research Hypothesis

Given the fact that the number of SMEs is increasing every year inKazakhstan, they fail to keep their competitive position andperformance in the market (Tokaev, 2006). Therefore, the purposeof this study is to exhibit and test a model that explores the essenceof business and e-commerce strategies in enhancing the perceivedcompetitiveness of manufacturing SMEs in Kazakhstan. Herein, anapplication of E-Strategy Model is being made in order to showhow manufacturing SMEs can shift from traditional way of doing

business and increase their perceived competitiveness.The main research question that investigated by this study is:

How generic competitive, growth and e-commerce strategies have

an impact on perceived competitiveness of manufacturing SMEs in

Kazakhstan?The question above is mostly attributed to the components ofstrategic management and e-commerce that will serve as a guide tothe empirical investigations of an integrated E-Strategy Model,

as depicted in (Figure 1). The integrated model is based on thetheoretical framework that explicated by other studies.

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Figure 1 An integrated E-Strategy Model

In management literature, different studies have been focused onthe resource-based view of strategy and have argued thatcompetitive advantage and performance arises from distinctiveorganizational capabilities (Peteraf, 1993). This view suggests thatcompetitive advantage and performance results are a consequence

of a firm-specific resources and capabilities.Another literature suggests that one of the most effective intends ofachieving competitive performance is by using firms capabilities(Fleisher and Bensoussan, 2003).Resources such as: stocks of knowledge, physical assets, humancapital, and other tangible and intangible factors that a businessowns, enable a firm to achieve a greater efficiency and thereforelower costs, increased quality and the possibility of greater market

share and profitability (Collis, 1994). Furthermore, distinctivecapabilities provide strategy directions by enabling a firm to take

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advantage of its external opportunities and to minimize the threatsthat it faces (Dess and Lumpkin, 2003).

ORegan and Ghobadian, (2004) examined that distinctive

capabilities (delivering a broad product range, advertise theproduct and service, distribute products broadly, making rapiddesign changes, deliver products quickly and offer consistentquality) have a close relationship with generic competitive andgrowth strategies. This indicates that the firms surveyed vieworganizational capabilities as an integral part of the strategicprocess. It could be argued that SMEs use their distinctiveorganizational capabilities as the basis of their strategic direction.

Based on proceeding, the first two hypotheses can be proposed as:H1:Distinctive Organizational Capabilities are associated with the

factors used to craft Generic Competitive Strategies.H2:Distinctive Organizational Capabilities are associated with the

factors used to craft Growth Strategies.

In order to pursue sustainable e-commerce strategies, theentrepreneur should take a systemic view of the critical success

factors which have already been explained in chapter two. Each ofthem is dynamically linked with others and arises from theaccumulation and depletion processes affecting strategic assets. Forinstance, in order to attain a firm competitiveness through e-commerce strategies based on the interaction factor, entrepreneursmay foster those processes enlarging the business customer base.At a consequence, the development of an interaction is achieved tothe prejudice of control and brand image in the long run.Accordingly, to manage Internet-based growth strategies properly,it is crucial to foster decision makers learning about effectivepresentation of products and its product to price sensitivity over theInternet. Furthermore, the higher the product scope, the higher willbe web-site attractiveness while applying e-commerce strategies(KITE, 1999). It is therefore can be hypothesized that:

H3: The effective presentation of a product offered over theInternet will have a positive impact on e-commerce strategy

implementation.

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initially used this as a growth strategy by taking their existing e-commerce strategy of book in the US market and developing it forthe UK. Hereby, e-commerce has facilitated the development of

new products and services (Murphy, R and Bruce, M. 2003).According to McDonald, (2000) e-commerce helped firms to reachtheir growth strategies by developing new products/services andintroducing them to new market segments in a way of pursuing thediversification. Thus, it is hypothesized that:

H11: E-commerce strategies facilitate the implementation andachievement of growth strategies.

E-commerce offers a rich array of opportunities to improvebusiness performance. An empirical study by Straub and Klein,(2001) identified that e-commerce strategies benefited companieson cutting costs and rising productivity, accessing new customersand markets, and gaining sustainable competitive advantage byattempting to achieve a complete integration of e-commerce intothe companys overall business strategy.Another research shows that e-commerce strategies have great

impact on firms sales growth and profitability (Karagozoglu andLindell, 2004). Therefore, it can be hypothesized that:

H12:E-commerce strategies have a positive impact on perceivedfirms competitiveness.

Methodology

Mainly, the descriptive statistics used to measure the demographicvariable and reliability, correlation and regression analysis fortesting the reliability and credibility of the hypotheses.Hypothesized relationships are tested by using Statistical Packagefor Social Sciences (SPSS 13).

1. Study Setting and Sample

The study is carried out in Kazakhstan amongst the managers of

manufacturing SMEs. The main aim of this study as previouslyexplained is to exhibit and test a model that explores the essence of

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business and e-commerce strategies in increasing overallmanufacturing SMEs competitiveness in Kazakhstan. Basically, anapplication of E-Strategy Model is being made in order to show

how manufacturing SMEs can shift from traditional way of doingbusiness and increase their competitiveness.

The company managers were the samples ranging fromManaging Director, Financial Manager, IT Manager, MarketingManager and Operation Manager Positions in Kazakhstan.

2. Questionnaire and Measures

According to survey structure, each manufacturing SME manager

was requested to answer the questionnaire specific for his/hercompany. The method of obtaining information from managerswas based on asking opened-end and closed-end questions.

Two types of questionnaires were used in this study. Thesequestionnaires were administered to the target managers ofmanufacturing SMEs.

The questionnaire was containing main five parts. The firstpart had variables that explored managers age, gender, educational

level, position and how long they had been at the present positionwithin the company. The second part of the questionnaire tried toexplicate general information about the company such as: numberof employees, foundation year, ownership type, city ofheadquarters, establishments outside of country and involvement inforeign trade activity, number of PCs, length of connection toInternet and web site availability within the firm. Furthermore, thissection purposed to identify a utilization of strategic planning,

capabilities, and generic competitive and growth strategies. Theinitial positive affect of generic competitive and growth strategiesto e-commerce strategies were measured on a five point likert scaleranging from 1= Definitely Used to 5= Definitely Not Used.In the third section of the questionnaire, e-commerce strategieswere measured on a scale ranging from 1= Frequent Use to 3=Never Use. In part four, Strategic value of e-commerce onperceived firms competitiveness was measured on a scale ranging

from 1= Strongly Agree to 5= Strongly Disagree and finally,critical success factors affecting overall e-commerce performance

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was also measured on a 5 point scale ranging from 1= StronglyAgree to 5= Strongly Disagree.

6.3.

SampleTotal of 80 questionnaires were distributed to managers ofmanufacturing SMEs and 80 were collected. This shows theresponse rate of 100%. The majority of respondents (72.5%) werefemale and 27.5% were male. The age of the respondents wasranged between 18 and 29, totaled 38.8%; 30-59, totaled 53.7%;and 60 and above, totaled 7.5%. Based on data, we can observe aslight skewness towards middle aged respondents.

The majority of respondents (48.7%) were holding four yearuniversity degree, 37.5% had a masters degree, 5% had a PhDeducation and 8.8% of respondents had two year university degree.Most of the respondents (30.0%) as depicted in table 1 wereholding Managing Director positions, 28.7% IT Manager positions,16.3% Marketing Manager Positions, 15.0% Operation ManagerPositions and 10.0% Finance Manager positions.Further detailed information regarding respondent demographics

and company profiles are presented in tables 1, 2 and 3.

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Table 1 Demographic Breakdown of the Sample Study

Frequency Valid Percent (%)

GenderFemale 58 72.5

Male 22 27.5

Age

18-29 31 38.8

30-59 43 53.7

60+ 6 7.5

Education

Two year university 7 8.8

Four year university 39 48.7

Master 30 37.5

Doctorate 4 5.0

Position

Managing Director (GM) 24 30.0Finance Manager 8 10.0

IT Manager 23 28.7

Marketing Manager 13 16.3

Operation Manager 12 15.0

Years in position

Less than 10 49 61.2

More than 10 31 38.8

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Table 2 Corporate Breakdown of the Sample Study

Frequency Valid Percent (%)Number of employees

Less than 10 (Micro Enterprises) 0 0.0

10-49 (Small Enterprises) 33 41.350-300 (Medium Enterprises) 47 58.7

Type of ownership

Sole Proprietorship 7 8.8

Family 15 18.7

State Enterprise 36 45.0

Other 22 27.5

Foundation year of a firm

1-10 35 43.7

10+ 45 56.3

City of firm headquarters

Almaty 38 47.5

Astana 8 10.0Taraz 15 18.7

Karaganda 3 3.8

Shymkent 4 5.0

Abroad 5 6.3

Other 7 8.7

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Table 3 Corporate Breakdown of the Sample Study

Frequency Valid Percent (%)

Establishment outside of countryYes 31 38.8

No 49 61.2

Sales from outside of home country

Less than 10% 46 57.510-50% 29 36.2More than 50% 5 6.3

Purchases from outside of home

countryLess than 10% 51 63.810-50% 28 35.0

More than 50% 1 1.2

Number of PCs in the firmLess than 5 12 15.05-100 30 37.5100+ 38 47.5

Length of connection to InternetNot available 12 15.0

Less than 1 year 4 5.02 years 8 10.03 years 17 21.3More than 3 years 39 48.7

Web site availability

Yes 50 62.5No 30 37.5

Strategic decision

Owner 16 20.0

Manager 35 43.8Family member 13 16.2

Other 16 20.0

Based on sample observations in figure 2, it can be observed that

72.5% of manufacturing SMEs agreed that e-commerce increasestheir competitive position. It is also obvious that more than 70% of

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manufacturing SMEs accept that e-commerce improves productdifferentiation and organizational communication. However,according to the sample, e-commerce did not contribute on

increasing the profits of the companies.

Figure 2 Strategic importance of E-commerce for perceived firms

competitiveness

4. Hypothesis Testing Results

The psychometric properties used for assessing the measures werereliability coefficients, single and multiple regression analysis and

correlation coefficients. The reliability test evaluated the internalconsistency of the scale and the single and multiple regression tests

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showed the relationship between the measures and the dependentvariable. The correlation coefficients were used to show theassociation between the measures.

4.1 Reliability Tests

To check the internal consistency among the variables and with thescale, reliability tests were conducted to ensure the measurementitems were reliable, in other words, the items mostly reflected truescores rather than the error on the scales and the items. Table 4presents the reliability test for each variable in the survey

conducted on managers.

Table 4 Relaibility Coefficients of Business and E-commerce strategies on

Perceived Firms Competitiveness

Measure Chronbach's alpha

DOC1 0.79CS 0.82

GS 0.70ECS 0.89

CSF 0.71FCOM 0.76

According to Nunnally, (1978) the coefficients that equal to orabove 0.70 are acceptable indicators of reliability. From table 4, allthe Chronbachs alpha scores were within this range.

4.2 Regression Tests

In this study, three single and two multiple regression tests wereconducted to measure integrated E-Strategy Model.

Formula 1.CSpredicted= .30 + .40DOCFormula 2.GSpredicted= .70 + .52DOC

1The list of abbreviations can be found in appendix.

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Formula 3.ECSpredicted= 1.10 + .25CSF1 + .41CSF2 + .35CSF3+ .10CSF4 + .30CSF5 + -.30CSF6 + -.50CSF7

Formula 4.ECSpredicted= .92 + .33CS + .42GS

Formula 5.FCOMperceived= 1.64 + .26ECS

The results of the tests are presented through tables 5 and 6.

Table 5 ANOVA of the Regression Test of the Survey

ANOVA

Model Sum of Squares df Mean Square F Sig.

1 Regression 8.708 1 8.708 14.509 .000 Residual 46.816 78 .600

2 Regression 2.229 1 2.229 29.043 .000

Residual 5.987 78 .077

3 Regression 3.696 7 .528 8.146 .000

Residual 4.667 72 .065

4 Regression 2.734 2 1.367 18.694 .000

Residual 5.630 77 .073

5 Regression 1.236 1 1.236 5.638 .020 Residual 17.095 78 .219

One way analysis of variance (ANOVA) of the regression test asdepicted in table 5 shows that the linear combination of thedimensions is statistically significant. The F values are 14.509,29.043, 8.146, 18.694 and 5.638 with the p values of 0.000 and0.020. The regression shows the explained portion of the variance

and the residual shows the unexplained portion of the variance.By summarizing table 6, we can say that B shows the

constant and the coefficients for the regression equation that themeasures predict. The standard error is the standard deviation ofthe B values and it is a measure of stability or sampling error of theB values. Beta is the standardized regression coefficients. Thusthey are the z scores for the independent variables. T is a test toshow that a particular correlation is statistically significant. The

significance of t shows the probability that the independent

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variables will occur. As shown in table 6, most of t-values ofvariables were significant, which is (>2.00).

Table 6 Coefficients of the Regression Test of the Survey

Coefficients

Mode B Std. Error Beta t Sig.

1 (Constant) .302 .499 .606 .546

DOC 1.247 .327 .396 3.809 .000

2 (Constant) .712 .178 3.992 .000

DOC .631 .117 .521 5.389 .000

3 (Constant) 1.110 .139 7.959 .000

CSF1 .011 .050 .025 .226 .822

CSF2 .0184 .063 .417 2.914 .005

CSF3 .193 .058 .349 3.303 .001

CSF4 .034 .031 .113 1.098 .276

CSF5 .138 .043 .312 3.219 .002

CSF6 .154 .075 .310 2.057 .043

CSF7 -.016 .031 -.051 -.519 .605

4 (Constant) .924 .179 5.466 .000

CS .127 .037 .326 3.452 .001

GS .428 .095 .424 4.489 .000

5 (Constant) 1.645 .313 5.246 .000

ECS .384 .162 .260 2.375 .020

Mode 1 and 2 of single regression tests show how well distinctiveorganizational capabilities contribute to competitive and growthstrategies. From the table above, it is indicated that there is a

probability of DOC to occur, p= 0.000. Which means thathypothesized are statistically significant (


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mode 3 of regression tests show the possible effect of criticalsuccess factors on performance of e-commerce strategies. Bysummarizing table 6, it can be seen that there is no probability that

CSF1, CSF4 and CSF7 will occur. The significance of their tvalues are 0.226, 1.098 and

-0.519 respectively. There is also no probability that theoutcome dimensions would occur. The significance of their tvalues are 0.822, 0.276 and 0.605 respectively. However, there is astrong probability that CSF2, CSF3, CSF5 and CSF6 will occur.Moreover, mode 4 of regression tests show the possible effect ofcompetitive and growth strategies on performance of e-commerce

strategies. As shown in table 6, it can be seen that there is aprobability that CS and GS will occur. The significance of their tvalues is 3.452 and 4.489 respectively. The significance of their tvalues is 0.001 and 0.000 respectively. Lastly, mode 5 ofregression test shows whether e-commerce strategies significantlyaffect perceived firms competitiveness. From table 6, it can beseen that there is a probability that ECS occur. The significance oftheir t values is 2.375 and significance of its t value is 0.020.

4.3. Correlation Analysis

A correlation analysis was performed in order to find out theassociations between these measures and perceived firmscompetitiveness. The correlations are shown in table 7 as follows:

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Table 7 Correlation of variables

Variable FCOM GS CS DOC ECS CSF1 CSF2 CSF3 CSF4 CSF5CSF6GS .277*

Sig. (2-tailed) .013CS .131 .146

Sig. (2-tailed) .248 .197

DOC .124 .521* .396**Sig. (2-tailed) .273 .000 .000

ECS .260* .472* .388* .408*Sig. (2-tailed) .020 .000 .000 .000

CSF1 .063 .171 .156 .164 .292**

Sig. (2-tailed) .579 .129 .168 .146 .009CSF2 -.018 .242* .118 .142 .430* .517**

Sig. (2-tailed) .872 .031 .296 .209 .000 .000CSF3 .139 .361* .194 .266* .526* .382**.414**

Sig. (2-tailed) .219 .001 .084 .017 .000 .000 .000CSF4 .096 .081 .019 .013 .151 .406**.325**

0.85Sig. (2-tailed) .399 .475 .870 .907 .180 .000 .003 .452

CSF5 .212 .379**.125 .290**

.454* .128 .224* .356**

-.038

Sig. (2-tailed) .059 .001 .270 .009 .000 .257 .046 .001 .738

CSF6 .067 .138 .004 .116 .256* .506**.768**

.412**

.401**.201Sig. (2-tailed) .557 .222 .969 .304 .022 .000 .000 .000 .000 .074

CSF7 .019 .050 -.050 .005 .080

.227* .254* .152

.014 .242*.357** Sig. (2-tailed) .865 .661 .658 .967 .481

.043 .023 .179.904 .031 .001

N 80 80 80 80 80 80 80 80 80 80 80

** Correlation is significant at the 0.01 level (2-tailed)* Correlation is significant at the 0.05 level (2-tailed)

From the table above, it can be seen that most of the variables werepositively correlated with each other. Growth and e-commercestrategies were positively correlated with dependent variable, andthey were statistically significant. Growth and e-commercestrategies have a positive impact on perceived firmscompetitiveness.

Conclusion

In the presence of dynamic environment and competitive world,

small and medium sized enterprises in Kazakhstan face

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competitive pressure from larger companies which reducesmanufacturing SME competitiveness.

In todays hyper-competitive markets as previously

remarked, companies try to gain advantage by developing surprisestrategies through which they secure the advantage of introducinggoods and services to the market prior to their competitors.The primary purpose of this study was to explore the essence ofselected business and e-commerce strategies in enhancing theperceived competitiveness of manufacturing SMEs in Kazakhstanthrough integrated E-Strategy Model.

The findings of this study show that (H1) is accepted. Based

on the regression analysis and the correlation test, it is obvious thatdistinctive organizational capabilities that firm possess positivelyaffect the improvement and implementation of generic competitivestrategies. This means that distinctive organizational capabilitiesare the key factors in designing and applying successful genericcompetitive strategies.

The second hypothesis (H2) is also accepted. Distinctiveorganizational capabilities are positively associated with the factors

used to craft growth strategies. This means that the distinctiveorganizational capabilities that firm owns have a great impact onscheduling growth strategies by providing directions to marketpenetration, market development, product development anddiversification of firms products. There is a strong correlationbetween distinctive capabilities and growth strategies, whichsupports the fact that there is a mutual relationship between thesetwo variables.

(H3) is not accepted. The results of the tests show that theeffective presentation of a product offered by a firm over theInternet does not have a positive impact on overall e-commercestrategy implementation. This might be due to insufficient numberof internet subscribers in Kazakhstan. No researches were foundrelated to this concern.

According to correlation test results (H4) and (H5) areaccepted. This means that the quality and usability of web site andclearly defined processes of the company are positively related toe-commerce strategy implementation.

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Whats more, (H6) is not accepted. The test results show that thereis no significant correlation between relationship buildings withfirm stakeholders and e-commerce strategies. According to Cragg

and King, (1993) the reason behind that could be the following:lack of knowledge competency and skill level of business operators,lack of e-commerce readiness in some industry sectors, lack ofambitiousness for extracting benefits and understanding of e-commerce. Therefore, we can say that e-commerce strategies arenot affected by stakeholder relationship building behavior of acompany.However, (H7 and H8) are accepted. The correlation results

present that brand name of a company and its products and overallmotivation for using the internet and will to innovate have apositive impact on e-commerce strategy implementation. Moreover,(H9) is not accepted the statistical results have shown thatsensitivity of a product to price competition on the internet doesnot affect overall e-commerce strategies. There wasnt anysignificant correlation between these two variables. The reason canbe the same as in hypothesis 3.

Hypothesis (H10) is accepted. Based on the test results, itcan be said that e-commerce strategies have a positive impact onsupporting and achieving competitive generic strategies which areset by a firm. The e-commerce strategies are significantlycorrelated and have a great effect on the growth strategies. Thus,(H11) is accepted.

Lastly, there is evidence based on correlation test resultsshowing that, successful e-commerce strategies have positive

impact on overall perceived firms competitiveness. Therefore, wecan conclude that (H12) is accepted.

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Appendix

List of Abbreviations

Dimensions VariablesDistinctiveOrganizationalCapabilities(DOC)

Employee DedicationTechnologyKnow-howResources

Critical SuccessFactors (CSF)

ContentConvenienceControlInteraction

Brand ImageCommitmentPrice Sensibility

CompetitiveStrategies (CS)

Cost LeadershipDifferentiationFocus

Growth Strategies(GS)

Market PenetrationProduct DevelopmentMarket Development

DiversificationE-commerceStrategies (ECS)

E-mailBrowsing company homepagesMarket and product researchExchange of information with clientsInformation searchExchange of information with suppliersReceiving orders from clientsPlacing orders to suppliers

Intra-company communicationMedium of paymentPlacing job recruitment advertisementsVideo-conference

Perceived FirmsCompetitiveness(FCOM)

Overall competitive performance fromutilization of e-commerce strategies

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