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SMEs as learning organisations: a study on employee emancipation in Central India.


Emergent emergent /emer·gent/ (e-mer´jent)
1. coming out from a cavity or other part.

2. pertaining to an emergency.


1. coming out from a cavity or other part.

2. coming on suddenly.
 India, spurred by its indomitable in·dom·i·ta·ble  
Incapable of being overcome, subdued, or vanquished; unconquerable.

[Late Latin indomit
 spirit of globalisation, has accepted the global challenges as opportunities and the role of medium and small entrepreneurs in accelerating the pace of growth. The focus of the government towards SMEs was never so strong as it is in present. This has led to the creation of new ventures where the entrepreneurs are willing to undertake and enjoy the benefits of the corresponding rewards. The MESMED Act 2006 was a positive initiative to promote the growth of SMEs, which has ensured competitive, sustainable and inclusive growth. Although, the SMEs have been recognized as drivers of economic growth, Indian SMEs are facing stiff competition from their global counterparts. If liberalization lib·er·al·ize  
v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es
To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . .
 has permitted cross border alliances and new opportunities for expansion and growth, it has also ushered in an era of competition where size does not matter but what matters is the organizational environment. Large and small firms operate in co-existence as big players outsource their activities to the SMEs. Hence, vibrancy vi·brant  
a. Pulsing or throbbing with energy or activity: the vibrant streets of a big city.

 is the corner stone for success as there is an all-pervasive pressure from the environment in which they operate. SMEs in India are less capital intensive and small in size in terms of manpower requirement and are ideal to build on the strengths on traditional skills and knowledge by the infusion of technology and innovative management practices. Apart from the export oriented o·ri·ent  
1. Orient The countries of Asia, especially of eastern Asia.

a. The luster characteristic of a pearl of high quality.

b. A pearl having exceptional luster.

 SMEs, most of them cater to the outsourced requirement of the large manufacturers. Hence it is exactness at the shop floor and the daily work management that is necessary for building competitiveness.

As the environment is continuously changing, the development of new capabilities is essential for the process of self-review and renewal. Indian SMEs by virtue of their characteristics have a tremendous potential of growth and expansion. Introducing change in such environments is relatively much easier as:

(i) Indian SMEs are rural based, manufacturing traditional products.

(ii) They are flexible due to the lack of a well-defined structure.

(iii) Size is generally small which permits convenience for training & development with respect to change.

(iv) Most SMEs operate with obsolete technologies hence there is a scope for transformation through modernization modernization

Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family,
 (The Chartered Accountant, 2005).

Learning is not 'an' adaptation to change alone in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[]

As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh.
 with the environment, but also accordance to the mental models in which they operate. Hence, it is the entrepreneurial en·tre·pre·neur  
A person who organizes, operates, and assumes the risk for a business venture.

[French, from Old French, from entreprendre, to undertake; see enterprise.
 orientation that determines the performance of the firm (Lumpkins and Dess 2005). The success of SMEs largely depends upon the competitiveness. The Competitiveness of the firm can be evaluated at two levels:

(i) Firm specific characteristics like strategic orientation, level of technology, utilization of networks or information exchange and strategic decision-making (Covin COVIN, fraud. A secret contrivance between two or more persons to defraud and prejudice another of his rights. Co. Litt 357, b; Com. Dig. Covin, A; 1 Vin. Abr. 473. Vide Collusion; Fraud.  and Selvin 1997).

(ii) Individual characteristics that include both attitudinal and behavioural Adj. 1. behavioural - of or relating to behavior; "behavioral sciences"
 orientation. It refers to a set of personal and psychological traits like values, attitudes and attributes associated with motivation to induce in·duce
1. To bring about or stimulate the occurrence of something, such as labor.

2. To initiate or increase the production of an enzyme or other protein at the level of genetic transcription.

 learning (Lumpkins and Dess, 1991).

To ensure competitiveness in the SMEs there is a need for the development of an organizational culture and climate that facilitate the adoption of change. In order to ensure a smooth adoption of change, it is necessary to diagnose diagnose /di·ag·nose/ (di´ag-nos) to identify or recognize a disease.

1. To distinguish or identify a disease by diagnosis.

 the organization culture which relates to the historical context within which a situation occurs and the impact of this context on the behaviour of employees. Parameters like member identity with the organization, risk tolerance Risk Tolerance

The degree of uncertainty that an investor can handle in regards to a negative change in the value of their portfolio.

An investor's risk tolerance varies according to age, income requirements, financial goals, etc.
 with respect to initiatives, group emphasis, reward criteria for motivating performance, focus on individual decision-making, the level to which conflict can be managed and tolerated, integrations and control mechanisms adopted by the firm. Finally, the openness of the firm to the external environment is a strong determinant determinant, a polynomial expression that is inherent in the entries of a square matrix. The size n of the square matrix, as determined from the number of entries in any row or column, is called the order of the determinant.  of the climate of the firm. The climate of the organization should be such that there is a synergetic synergetic /syn·er·get·ic/ (sin?er-jet´ik) synergic.

 effect leading to the growth of the firm at a faster pace. Since the SMEs in India are small in size and the structures not clearly defined, evaluating the competitiveness of the firms on the basis of culture will be inadequate. On the contrary, this very characteristic can help us in identifying features in the climate, which is relatively a more important dimension of competitiveness. A study conducted by Peters and Waterman (1982) indicates that entrepreneurs can enhance the competitiveness of their firms by laying stress on the development of culture and climate conducive con·du·cive  
Tending to cause or bring about; contributive: working conditions not conducive to productivity. See Synonyms at favorable.
 for growth. A study has been conducted to evaluate the existing state of the internal environment in small business firms in India. The survey conducted measures the opinion of both the employer and the employee regarding the climate in the organizations. For the purpose the model shown in figure 1 was adopted consisting of Six Parameters for Entrepreneurs and Ten Parameters for Employees.


Research Methodology

There are six parameters for entrepreneurs in order to test whether all of them have similar impact or there is a significant difference among them so that the important variables may be identified. Factor analysis of variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial.

In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality
 has been used for this study. On the other hand, there are ten parameters for employees. Moreover, the employees have been categorised Adj. 1. categorised - arranged into categories

classified - arranged into classes
 in three parts. The significant similarities/ dissimilarities among the parameters and types of employees have to be tested so that the important ones may be identified. Two factor analysis of variance has been selected to be applied for two dimensions, parameters and types of employees. As far as the sampling is concerned, a simple random sampling has been followed in which every third element of infinite population of SMEs has been covered.
Research Plan

Research Design           Descriptive

Research Instrument       Structured Questionnaire

Sampling Design           Simple Random Sampling

Sample Size               Entrepreneurs: 105; Employees: 525.

Sample Element            Entrepreneurs, Employees

Sample Location           Central India

Measurement Instrument    Likert's Scale

The six parameters of the entrepreneurs and ten parameters of the employees have been indexed in Table 1 and Table 2 respectively. The category of the employees has been shown in Table 3, whereas the locations of the samples have been indexed in Table 4. The sampling distribution plans for the entrepreneurs and employees have been shown in Table 5 and Table 6 respectively.

Results and Analysis

The response from the entrepreneurs as well as employees has been tabulated in Table 7 and Table 9 respectively.

Analysis of Variance (Single Factor)

(for testing equality/ inequality inequality, in mathematics, statement that a mathematical expression is less than or greater than some other expression; an inequality is not as specific as an equation, but it does contain information about the expressions involved.  of the opinions of entrepreneurs against factors)

[H.sub.0] : The difference of opinion for factors by the entrepreneurs is insignificant

([X.sub.i] = [X.sub.j])

[H.sub.1] : The difference of opinion for factors by the entrepreneurs is significant

([X.sub.i.sup.1] [X.sub.j])

(where i/j = 1,2,3 ...)

It can be seen from the Table 8a and Table 8b that:

Critical Value of [F.sub.(0.05,5,36)] = 2.48 (for testing the equality of response)

Here calculated value = 1.71

Calculated Value < Table Value

[H.sub.0] is accepted.

Hence, The difference of opinion for factors by the entrepreneurs is insignificant ([X.sub.i] = [X.sub.j]).


Analysis of Variance

(For Testing the Equality of Parameters/ Type of Employees)

[H.sub.0] : The difference among Factors/ type of Employees/ Workers is insignificant

([Y.sub.i] = [Y.sub.j]) and/or ([Z.sub.i] = [Z.sub.j])

[H.sub.1] : The difference among Parameters/ Type of Employees/ Workers is significant

(Y.sub.i.sup.1] [Y.sub.j]) and/or ([Z.sub.i.sup.1] [Z.sub.j])

(where i/j = 1, 2, 3 ...)

It can be seen from the ANOVA anova

see analysis of variance.

ANOVA Analysis of variance, see there
 results shown in Table 10b:

(a) Critical Value of [F.sub.(0.05,9,18)] = 2.46

(For Testing the Equality of Parameters)

Here calculated value = 4001.05

Calculated Value > Table Value

[H.sub.0] is rejected.

Hence [Y.sub.i.sup.1] [Y.sub.j]

(b) Critical Value of [F.sub.(0.05,2,18)] = 3.55

(For Testing the Equality of Type of Employees)

Here calculated value = 5.87

Calculated Value > Table Value

[H.sub.0] is rejected.

Hence [Zi.sup.1] Zj

It can be analysed that there is no significant difference within the opinion of the entrepreneurs regarding parameters but there is significant difference among those in the view of employees. On the other hand, all the types of employees viz viz - A visual language for specification and programming.

["viz: A Visual Language Based on Functions", C.M. Holt, 1990 IEEE Workshop on Visual Langs, Oct 1990, pp.221-226].
. skilled, semiskilled sem·i·skilled  
1. Possessing some skills but not enough to do specialized work: semiskilled dockworkers.

2. Requiring limited skills: a semiskilled job.
 and unskilled have different opinions regarding parameters. All the parameters have equal weightage in the opinion of entrepreneurs (Refer Table 8b). On the basis of their opinion all the parameters need to be emphasised equally. On the other hand, the parameters have different weightage in the opinion of employees. Besides, different types of employees have different opinions regarding different parameters (Refer Table 10 b). The parameters have been given different weightage by the employees. Moreover, there is a difference of opinion within skilled, semi-skilled and unskilled employees.


In the light of the sample study it can be concluded that (i) Entrepreneurs are cultivating a culture in SMEs directed towards employee involvement and empowerment em·pow·er  
tr.v. em·pow·ered, em·pow·er·ing, em·pow·ers
1. To invest with power, especially legal power or official authority. See Synonyms at authorize.

; (ii) They are willing to introduce flexibility in the system to react to environmental changes; (iii) On the other hand employees working in the SMEs feel that they are not adequately empowered and there is a high degree of inflexibility in·flex·i·ble  
1. Not easily bent; stiff or rigid.

2. Incapable of being changed; unalterable.

3. Unyielding in purpose, principle, or temper; immovable.
 in the internal environment. But all categories of employees do not have their views converging con·verge  
v. con·verged, con·verg·ing, con·verg·es

a. To tend toward or approach an intersecting point: lines that converge.

 on common parameters; (iv) Thus, although in the views of entrepreneurs their firms leaning organisations, the employees do not feel so. The size and structure of such organisations can facilitate positive growth through a flexible organisational culture which can help the entrepreneurs convert into learning organisations. But employee involvement through empowerment is a pre-requisite.


The study has been conducted in only the seven locations of Central India that may not be true universally. The mental status of the respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy.  at the time of data collection has not been considered that might have influenced the accuracy of the data. The individual biases like culture, climate, language, tastes, age, status etc. might have influenced the accuracy of the data that may lead to degenerated conclusion.


Covin, J. G. and Slevin, D. P. (1997), "A conceptual model of entrepreneurship en·tre·pre·neur  
A person who organizes, operates, and assumes the risk for a business venture.

[French, from Old French, from entreprendre, to undertake; see enterprise.
 as firm behaviour", Entrepreneurship Theory and Practice, Vol. 16, pp. 7-25.

Dess, G. G. and Lumpkin, G. T. (1991), "Linking corporate entrepreneurship to strategy, structure, and process: suggested research directions", Entrepreneurship Theory and Practice, Vol. 23 (3), pp. 85-10.

Dess, G. G. and Lumpkin, G.T. (2005), "The role of entrepreneurial orientation in stimulating effective corporate entrepreneurship", Academy of Management Executive, Vol. 19 (1), pp.147-56.

Peters and Waterman (1982), 'Diagnosing Organisational Culture Change', [Available at created/organisational-culture.html].

SMEs In India: Will They Be Able To Join "Global Chains"? September 2005. The Chartered Accountant.

Sumita Dave (1) and Saket Ranjan Praveer (2)

Shri Shankaracharya Institute of Management and Technology, Jhunwani, Bhilai--490020, C.G., India

(1) E-mail:,

(2) E-mail:
Table 1: Entrepreneurs

S. No.   Parameter                                           Index

1        Customer Need Identification
2        Degree of Employee Involvement in Decision-Making
3        Principle Values Living in the Organisation
4        Frequency of Change of Objectives
5        Level of Hierarchy
6        Strength of Control of Management

Table 2: Opinion Parameters for Employees

S. No.   Parameter                                         Index

1        Disturbance due to Organisational Trouble         [Y.sub.1]

2        Encouragement by Management to Take Initiatives   [Y.sub.2]

3        Group Orientation                                 [Y.sub.3]

4        Rewards Linked with Performance                   [Y.sub.4]

5        Impact of Decision on Employees                   [Y.sub.5]

6        Encouragement of Criticism                        [Y.sub.6]

7        Importance of Outcome                             [Y.sub.7]

8        Organisation of Work by Owner                     [Y.sub.8]

9        Employee Behaviour Monitored as Rules and         [Y.sub.9]

10       Change as the Outcome of External Environment     [Y.sub.10]

Table 3: Types of Employees

S. No.   Employee/ Workers Type   Index

1        Skilled                  [Z.sub.1]

2        Semi-Skilled             [Z.sub.2]

3        Unskilled                [Z.sub.3]

Table 4: Location of Samples

S. No.   Name of Location             Index
1        Pithampur, Indore (M. P.)    [L.sub.1]
2        Mandideep, Bhopal (M. P.)    [L.sub.2]
3        Bhilai/ Durg (C. G.)         [L.sub.3]
4        Jagatpur, Cuttack (Orissa)   [L.sub.4]
5        Jamshedpur (Jharkhand)       [L.sub.5]
6        Sagar (M. P.)                [L.sub.6]
7        Raipur (C. G.)               [L.sub.7]

Table 5: Sampling Distribution Plan for Entrepreneurs

            [L.sub.1]   [L.sub.2]   [L.sub.3]   [L.sub.4]

[X.sub.i]   15          15          15          15

            [L.sub.5]   [L.sub.6]   [L.sub.7]   Total

[X.sub.i]   15          15          15          105

Table 6: Sampling Distribution Plan for Employees

            [L.sub.1]   [L.sub.2]   [L.sub.3]   [L.sub.4]

[Z.sub.1]   25          25          25          25

[Z.sub.2]   25          25          25          25

[Z.sub.3]   25          25          25          25

Total       75          75          75          75

            [L.sub.5]   [L.sub.6]   [L.sub.7]   Total

[Z.sub.1]   25          25          25          175

[Z.sub.2]   25          25          25          175

[Z.sub.3]   25          25          25          175

Total       75          75          75          525

Table7: Likert's Points of Entrepreneurs' Response

            [L.sub.1]   [L.sub.2]   [L.sub.3]   [L.sub.4]   [L.sub.5]

[X.sub.1]   45          41          42          47          49

[X.sub.2]   40          44          40          40          45

[X.sub.3]   41          48          45          40          45

[X.sub.4]   44          49          47          42          45

[X.sub.5]   49          47          43          40          47

[X.sub.6]   42          43          47          45          45

            [L.sub.6]   [L.sub.7]   Mean    SD

[X.sub.1]   42          45          44.43   2.72

[X.sub.2]   41          43          41.86   1.96

[X.sub.3]   43          43          43.57   2.5

[X.sub.4]   47          47          45.86   2.17

[X.sub.5]   48          40          44.86   3.52

[X.sub.6]   41          45          44      1.93

Table 8a: Summary

Groups   Count   Sum   Average   Variance

X1       7       311   44.43      8.62

X2       7       293   41.86      4.48

X3       7       305   43.57      7.29

X4       7       321   45.86      5.48

X5       7       314   44.86     14.48

X6       7       308   44         4.33

Table 8b: ANOVA

Source of Variation   SS        df   MS      F      P-value   F crit

Between Groups         63.62     5   12.72   1.71   0.16      2.48

Within Groups         268       36    7.44

Total                 331.619   41

Table 9: Likert's Points of Employees/ Workers

       Y1    Y2    Y3    Y4    Y5    Y6

Z1     340   360   367   341   320   300

Z2     347   370   373   347   324   310

Z3     340   375   370   344   329   307

Mean   342   368   370   344   324   306

       Y7    Y8    Y9    Y10   Mean   SD

Z1     400   380   297   280   339    37.1

Z2     389   383   307   290   344    33

Z3     391   387   305   291   344    34.1

Mean   393   383   303   287

Table 10a: ANOVA (Two-Factor without Replication)

SUMMARY   Count   Sum    Average   Variance

Z1        10      3385   338.5     1528.5

Z2        10      3440   344       1213.56

Z3        10      3439   343.9     1292.77

Y1        3       1027   342.33    16.33

Y2        3       1105   368.33    58.33

Y3        3       1110   370       9

Y4        3       1032   344       9

Y5        3       973    324.33    20.33

Y6        3       917    305.67    26.33

Y7        3       1180   393.33    34.33

Y8        3       1150   383.33    12.33

Y9        3       909    303       28

Y10       3       861    287       37

Table 10b: ANOVA

Source of Variation   SS       df   MS        F        P-value    F crit

Rows                  198.07   2    99.03     5.87     0.01093    3.55

Columns               36009    9    4001.05   236.96   8.00E-17   2.46

Error                 303.93   18   16.89

Figure 1: Research Model


* Customer Need Identification

* Degree of Employee Involvement
in Decision-making

* Principle Values Living in the

* Frequency of Change of

* Level of Hierachy

* Strength of Control of

Skilled/ Semi-Skilled/ Unskilled


* Disturbance due to Organization

* Encouragement by Management to Take Initiatives

* Group Orientation Rewards Linked with

* Impact of Decision on Employees

* Encouragement of Criticism Importance of

* Organisation of Work by Owner

* Employee Behaviour Monitored as Rules and

* Change as the Outcome of External Environment
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Author:Dave, Sumita; Praveer, Saket Ranjan
Publication:Asia-Pacific Business Review
Date:Jan 1, 2009
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