Operational Excellence and Resilience as Drivers for Business Growth in Micro-enterprises?

Abstract

Entrepreneurship is dealing with risky situations in which goals must be achieved under dynamic conditions of uncertainty, change and resource scarcity. Enterprises need to be prepared for also unexpectedly challenging business scenarios and market changes. During the COVID19 pandemic, the concept of entrepreneurial resilience has gained both academic and public attention. Resilience, tolerance of uncertainty, and the ability to learn from disadvantaged situations and failures are major factors for entrepreneurial success. Entrepreneurs must adapt their managerial actions to address changes so their businesses will survive and even grow.

On company-level, the preparedness for changes and ability to overcome sudden hardships can be conceptualized as operational excellence which means focusing on maximising customer value delivered by business operations. Any company striving for business growth particularly in geographically remote regions must pursue for operational excellence to achieve a competitive advantage, although the contextual factors make it harder to achieve some traditional competitive advantages defined by Porter (1998). More than 90% of the companies in the Nordic countries are microenterprises. In sparsely populated and Arctic regions, microenterprises are facing business challenges related to long distance from customers, low population density, and climate conditions that lead to higher operation costs in comparison to other regions. However, companies with operational excellence can overcome regional disadvantages through creation of networks with other companies, utilizing network assets as company resources, and advanced digitalization. When business operations are at the excellent level, the challenges can be tackled successfully, and business growth and renewal is possible.

Definitions of operational excellence state the development of enablers to generate competitive benefits in a dynamic environment. Building resilience at entrepreneur as well as company-level could make one type of competitive benefit compared to less resilient competitors.  From the above-mentioned perspective, it is reasonable to assume that the concepts of entrepreneurial resilience and operational excellence are related and their impacts on business outcomes are partly entangled.

In this paper, we aim to further discuss and develop the hypothesis on the entangled concepts of operational excellence and resilience, and their roles on business growth among microenterprises. We plan to construct a literature-based overview to get a state-of-art description of how these concepts are defined and considered in the context of microentrepreneurship, and whether the previous studies have discussed the interconnections between these concepts. One hypothesis is that operational excellence with optimal business operations helps to build resilience to bounce back and quickly renew in changes. On the other hand, the potential interplay could be that having entrepreneurial resilience boosts creating operational excellence in microenterprises. This analysis will result in more in-depth understanding on the processes and mechanisms through which microenterprises also in sparsely populated areas can achieve competitive advantage and resilience on both entrepreneurial and company level.