A financial performance-based assessment of SMEs’ competitiveness – an analysis of Hungarian and US small businesses

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The study aims to identify the financial performance measures used as a proxy of the firm-level competitiveness dimensions of small and medium-sized enterprises and their competitiveness. By investigating the factors that affect competitiveness in general, those areas will be introduced, related to an identified competitiveness dimension. Financial and non-financial performance indicators will assess these areas. The paper considers competitiveness as an outcome variable, suggests a relationship between financial performance and the identified areas, and searches for the financial performance measures drivers.
A panel data model was tested on Hungarian small and medium-sized enterprises (SMEs) and US SMEs. The collected data cover the period between 2013 and 2017. As a result of the applied panel regression, those variables were successfully identified that drive and could predict financial performance measures related to competitiveness. The research found a significant difference between the two-sample dataset results, which differences can be connected to country, industry, and, in general, to economic development characteristics.
The results provide decision-making support and hint about the managerial tools and techniques aiming to control the firm characteristics, performance, and, eventually, firm-level competitiveness. Based on the results, further research can be dedicated to the development characteristics of firm-level competitiveness and the analysis of the relationship between the competitiveness dimensions and competitiveness itself.

Acknowledgment
The research was financed by the Higher Education Institutional Excellence Programme of the Ministry for Innovation and Technology in Hungary, within the framework of the 4th thematic programme „Enhancing the Role of Domestic Companies in the Reindustrialization of Hungary” of the University of Pécs.

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    • Figure 1. Competitiveness dimensions and the way to assess them
    • Figure 2. Relation of dependent and independent variables in the two datasets-based research
    • Table 1. Expected impact of financial areas on competitiveness
    • Table 2. Variable definitions and calculation methodology
    • Table 3. Chi-square statistics in the Hungarian and US sample
    • Table 4. Correlation matrix
    • Table 5. Descriptive statistics for the Hungarian data (a) and the US sample (b)
    • Table 6. Results of the fixed effect panel regression, 1st model, dependent variable: TAT
    • Table 7. Results of the fixed effect panel regression, 2nd model, dependent variable: LABOR
    • Table 8. Results of the fixed effect panel regression, 3rd model, dependent variable: R&D
    • Table 9. Specific impact of the financial areas on competitiveness in the Hungarian and US samples
    • Conceptualization
      Vivien Csapi
    • Formal Analysis
      Vivien Csapi
    • Methodology
      Vivien Csapi, Virgínia Balogh
    • Supervision
      Vivien Csapi
    • Validation
      Vivien Csapi
    • Writing – original draft
      Vivien Csapi, Virgínia Balogh
    • Writing – review & editing
      Vivien Csapi, Virgínia Balogh
    • Data curation
      Virgínia Balogh
    • Investigation
      Virgínia Balogh
    • Project administration
      Virgínia Balogh
    • Visualization
      Virgínia Balogh