Policies for sustainable growth of the SMEs: a study in Indian automotive component manufacturing industry

Chandra Mouli V.V. Kotturu and Biswajit Mahanty

International Journal of Business Continuity and Risk Management, 2019, vol. 9, issue 3, 199-225

Abstract: In automotive manufacturing industry, a majority of the component manufacturers are small and medium sized enterprises (SMEs), who supply parts and assemblies to the original equipment manufacturers (OEM) on contractual agreements. In recent years, with rapid technological advancements in manufacturing and the entry of transnational corporations (TNCs) in the automotive manufacturing industry, component manufacturers are not able to meet the expectations of the OEMs and are struggling to stay in the value chain. As a result, growth of these enterprises is slowing down. In this research work, a questionnaire survey was administered among automotive component manufacturing SMEs, who supply components to a TNC in India. Using a resource-based view strategy, a dynamic simulation model has been developed to study the performance behaviour of the SMEs and formulate policies for their sustainability. The results show that in the existing scenario, the SMEs would fail to supply the desired products and would not be able to sustain their growth without building technological competence and retraining of the staff. There should also be adequate level of support between the TNC and the SMEs for building technological competence of the SMEs.

Keywords: Small and medium enterprises; subcontracting; Indian automotive industry; system dynamics; policy study. (search for similar items in EconPapers)
Date: 2019
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