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 of
Business and Economics, Eastern Mediterranean University

Rassim KARBOV
R. Asst., Department of Business Administration, Faculty of
Business and Economics, Eastern Mediterranean University

Abstract
In todays hyper-competitive markets, manufacturing SMEs try to
gain advantage by deploying surprise strategies and use of
technology through which they secure the advantage of introducing
goods to the market prior to their competitors. Meanwhile,
electronic commerce offers a rich array of opportunities to improve
manufacturing SMEs competitive performance. Choosing a
particular e-commerce application is a strategic decision that must
be made in the context of the companies strategies. Therefore, the
primary purpose of this study is to explore the essence of generic
competitive, growth and e-commerce strategies in enhancing the
competitiveness of manufacturing SMEs in Kazakhstan through
integrated E-Strategy Model. The primary data was collected
through a questionnaire distributed to the managers of 80
manufacturing SMEs in Kazakhstan. The hypothesized
relationships were tested by single and multiple regression analysis,

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using SPSS.13. The studys results demonstrated that business and

e-commerce strategies were the most important factors affecting
the firm competitiveness.
Keywords: E-commerce, e-commerce strategies, business
strategies, manufacturing small and medium sized
enterprises, Kazakhstan, firm competitiveness, estrategy model.
Introduction
Small and medium sized enterprises (SMEs) are often credited as
agents of industrial change and innovation and vehicles for
employment generation, wealth creation and economic growth.
According to the industrial statistics of market economies, the
prolific small and medium businesses economy represents about 99
percent of all enterprises and accounts for approximately half of
private sector employment. However, SMEs operate in a highly
competitive 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, despite
the enormous benefits they brought, have also made the
environment more competitive, therefore increasing the
manufacturing SMEs exposure to various risks of loosing
competitiveness and profitability. The need arose to manage these
new types of risks so that manufacturing SMEs could continue to
effectively and efficiently operate in a competitive environment, at
the same time gaining the competitive advantage and ensure their
profitability.
In order to preserve its competitiveness and overall
performance high, manufacturing SMEs should set sound effective
growth and competitive strategies in the presence of dynamic
environment. Recent advances in technology are changing the way
companies operate, availability and falling costs of personal
computers have had a major effect on the ability of manufacturing
SMEs to compete in electronic commerce world.

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Therefore, this study demonstrates an integrated E-Strategy

Model which aims to measure generic competitive, growth and ecommerce strategies in enhancing manufacturing SMEs
competitiveness in Kazakhstan. It also sets out to prove crucial
parts of the integrated model in order to demonstrate its reliability
and validity.
This study is carried out in the manufacturing industry of
SME sector in Kazakhstan. The SME sector has been chosen
because it plays a very important role in society, market and
economy.
Socio-Economic Environment of Kazakhstan
The Republic of Kazakhstan extends from the Volga River in the
west to the Altai Mountains in the east, from the Siberian plain in
the north to the Central Asian deserts in the south. In 1991
Kazakhstan declared independence from the USSR, and was
redesignated the Republic of Kazakhstan. In that year the country
was formally recognized as a co-founder of the Commonwealth of
Independent States. Kazakhstan is the second largest country in the
region, the total area is 2,724,900 sq km, over four-fifths the size of
India (but with only 2% of the population). The total population at
1 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 $33,780
million (m). During 19952004, it was estimated, the population
decreased at an average annual rate of 0.8%, while gross domestic
product (GDP) per head increased, in real terms, by an average of
6.8% per year. Throughout 19952004, overall GDP has increased,
in real terms, at an average annual rate of 6.0% and real GDP
increased by 9.4% in both 2004 and 2005.
Industry (including mining, manufacturing, construction,
and power) contributed 37.1% of GDP in 2004, according to
provisional figures. The sector provided 17.2% of total
employment 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 rate
of 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 an
estimated 15.6% of GDP in 2004. The GDP of the manufacturing
sector 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 than
100 thousands $US are very small (micro); enterprises that employ
10 to 50 workers and generate revenues between 100-3000
thousands $US are small sized; and the enterprises that have 50 to
300 employees and generate revenues between 3000-15000
thousands $US are medium sized. Although number of SME
employees may vary from place to place. For example, SMEs in
Canada 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 in
the medium sized businesses, and with employees fewer than 50 in
small sized businesses.
SMEs represent a significant importance and play a crucial
role in the national economy (Desouza and Avazu, 2006). The
importance of standardized mass production lost its weight already
some time ago (Jenner and Hubner, 1992). Flexible structure of
SMEs contributed to the progressive indicators a great deal, thus
exuding a high level of employment potential and displaying
advantageous outcomes that provide stability and competitiveness,
exert assistance to larger industrial enterprises, pay close attention
to customer care and their needs, faster in adapting new
technologies and creative methods of management, and establish
an indispensable insurance for the stability and growth in the
countries economies. In a natural way a small or medium
enterprise is closer to the contemporary vision of a new, flat and
lean, horizontal company (Womack, Jones and Ross, 1990).

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Furthermore, for politicians and governments the SME sector is

important first of all due to the fact that it can replace the
government in the difficult task of job creation, which is one of the
most main issues for the countrys economy. Another important
consideration for the governments is the potential for additional
fiscal income creation by the SME sector. According to the data
provided by Organization for Economic Cooperation and
Development (OECD), SMEs comprise about 95 percent of
enterprises in a nation, thus employing 60-70 percent of workforce.
In Asia-Pacific Economic Cooperation member economies, SMEs
reach up 90 percent of enterprises and employ between 32-84
percent of the workforce.
Manufacturing Small and Medium Sized Enterprises, Ecommerce and Business Strategies
The e-commerce establishes a very powerful path that gives new
alternatives and opportunities for the businesses to implement their
activities. According to Kalakota and Whinston, (1996) ecommerce has been defined as the buying and selling of
information, products, and services via computer networks.
The reliability of the e-commerce and its common aim by
various business representatives has helped many manufacturing
SMEs to implement their activities despite the many changes, and
barriers that come along the way. The relative size of the firms
enables manufacturing SMEs to be more adaptable and responsive
to changing conditions than large organizations (Grieger, 20003)
and to benefit from the speed and flexibility that the electronic
environment offers. The advantages of e-commerce participation
for manufacturing SMEs are mostly related to their ability to keep
pace with a changing business landscape. New information
technology (IT) has a changing behavior that entails the following:
facilitated access to global markets, changes in production methods
and costs, enhances in communication, reduced transaction costs
and 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 of

getting over physical barriers that are attributed to the geographical
location and remote distance from Europe. This example implies
that manufacturing SMEs have come to appreciation of the
valuable features of the e-commerce and its abilities to cross over
geographical distances, thus exerting positive and successful
progress and contribution to the growth outcomes.
Regarding e-commerce as a source of interactivity, Blattberg
and Deighton, (1991) argument that interactive computer systems
will introduce a fresh approach to customer relationship
management 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 huge
investments they can easily enter into e-commerce. As a matter of
fact, the e-commerce changes the basis of competition by adding
alterations to the products and the cost structure of manufacturing
SMEs. In addition, the use of the e-commerce reduces the
customers search cost by letting customer compare the prices.
Facilitation of an electronic integration of the supply chain
activities as well as facilitation of partnerships of generation of
strategic alliances network is another characteristic representative
to the features of the e-commerce for manufacturing SMEs.
Understanding of the Internet, networking and e-commerce
exhibits a considerable significance in determining the outcomes
and advantages contributing to buyer and seller relationships.
McGowan, (2001) gives the following examples and notes that
communication through the e-commerce helps manufacturing
SMEs to acquire a myriad of information that aids in comparing
the differences in functions and variables. Consequently possession
of information leads to knowledge perseverance transforming into
evaluation, and planning activities accordingly.

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1. Business Strategies
Effective strategies have always leaded many companies to highperformance results. Researches have shown that a firms strategy
is the most important determinant of companys performance
(Heracleous, 2003). According to Shrader et al, (1984), Strategy
is the primary means of reaching the focal objective. The focal
objective is whatever objective is in mind at the moment. Strictly
speaking, it is literally meaningless to talk about strategy without
having an objective in mind. Viewed in this context strategy
becomes an integral part of the ends-means hierarchy. Strategy is
the direction and scope of an organization over the long term.
In changing world some companies perform better than their
rivals in terms of global, business, corporate and functional level
productivities due to implementation and capitalization of
strategies. However, an organizations strategy must be appropriate
for its resources, environmental circumstances, and core objectives.
The process involves matching the company's strategic advantages
to the business environment the organization faces. One objective
of 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 have
commented on the typical limitations of strategic alternatives such
as small market share and limitations of resources and skills to the
small firms (Carson, 1985). According to Storey and Sykes, (1996),
due to these limitations, not all strategies are typically suitable for
SMEs. Therefore, appropriate strategies are those that avoid direct
competition with bigger firms and contribute to the developments
of close customer relationships and new product versions. In the
specific language of Ansoffs Matrix, it has been suggested by
Perry, (1987) that for SMEs the most appropriate growth strategies
is therefore product development and market development.
Furthermore, Cravens et al., (1994) addressed that organizational

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characteristics, strategic situation and entrepreneur motivations

would 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 generated
synergy, and 5) make or buy decisions.
Ansoffs product/market matrix has been amongst most
popular tools for growth strategy identification. The Ansoff matrix
helps to identify the companys product and market growth
strategy. The company is looking to grow through market
penetration, in other words, to expand profits by selling existing
products to the existing markets. Market development occurs when
a company seeks to sell its existing products into new markets. The
new markets could be geographically based either within the home
country or abroad alternatively the new market could be a new
market segment. A product development strategy entails
developing new products for sale in existing markets. This strategy
may require the development of new competencies and requires the
business to develop modified products which can appeal to existing
markets. Diversification is the name given to the growth strategy
where a business markets new products in new markets.
1.2. Competitive Strategies (Porters generic strategies)
Generic strategy is among the most popular business strategies that
have been based on assessing competitive environment and the
business's capabilities relative to other competitors. Researches
show that the link between organizational characteristics and the
generic business strategies of cost and differentiation is a recent
development. According to Porter, (1980) cost leadership;
differentiation and focus are ways businesses deal with the five
competitive forces, to create sustainable competitive advantage and
thereby higher returns. The formulation of competitive strategy
requires a completely different set of tools and methods of analysis
(Kotorov, 2001).
While considering Porters research, competitive advantage can
come 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 competitive
advantage is the broad and narrow scope of the product-market in
which the organization wishes to compete. The mix of these scopes
in terms provides the basis for Porters competitive strategies
which include cost leadership, differentiation and focus (cost and
differentiation).
Fundamentally, pure cost leadership strategies focus on
those variables that will allow the firm to achieve and maintain a
low cost position. The 'competitive price' set by the market place is
accepted. On the other hand, a business with a pure differentiation
strategy seeks to enhance the price element by offering customers
something they perceive as unique and for which they are willing
to pay a higher price. Differentiation usually requires incurring
higher costs but, if successful, these incremental costs will be less
than 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 in
Kazakhstan, they fail to keep their competitive position and
performance in the market (Tokaev, 2006). Therefore, the purpose
of this study is to exhibit and test a model that explores the essence
of business and e-commerce strategies in enhancing the perceived
competitiveness of manufacturing SMEs in Kazakhstan. Herein, an
application of E-Strategy Model is being made in order to show
how 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 of
strategic management and e-commerce that will serve as a guide to
the empirical investigations of an integrated E-Strategy Model,
as depicted in (Figure 1). The integrated model is based on the
theoretical 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 on

the resource-based view of strategy and have argued that
competitive advantage and performance arises from distinctive
organizational capabilities (Peteraf, 1993). This view suggests that
competitive advantage and performance results are a consequence
of a firm-specific resources and capabilities.
Another literature suggests that one of the most effective intends of
achieving competitive performance is by using firms capabilities
(Fleisher and Bensoussan, 2003).
Resources such as: stocks of knowledge, physical assets, human
capital, and other tangible and intangible factors that a business
owns, enable a firm to achieve a greater efficiency and therefore
lower costs, increased quality and the possibility of greater market
share and profitability (Collis, 1994). Furthermore, distinctive
capabilities provide strategy directions by enabling a firm to take

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advantage of its external opportunities and to minimize the threats

that it faces (Dess and Lumpkin, 2003).
ORegan and Ghobadian, (2004) examined that distinctive
capabilities (delivering a broad product range, advertise the
product and service, distribute products broadly, making rapid
design changes, deliver products quickly and offer consistent
quality) have a close relationship with generic competitive and
growth strategies. This indicates that the firms surveyed view
organizational capabilities as an integral part of the strategic
process. It could be argued that SMEs use their distinctive
organizational 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, the
entrepreneur should take a systemic view of the critical success
factors which have already been explained in chapter two. Each of
them is dynamically linked with others and arises from the
accumulation and depletion processes affecting strategic assets. For
instance, in order to attain a firm competitiveness through ecommerce strategies based on the interaction factor, entrepreneurs
may foster those processes enlarging the business customer base.
At a consequence, the development of an interaction is achieved to
the 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 effective
presentation of products and its product to price sensitivity over the
Internet. Furthermore, the higher the product scope, the higher will
be 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 the
Internet will have a positive impact on e-commerce strategy
implementation.

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H4: The quality and usability of the Web Site is positively related
to e-commerce strategy implementation.
H5: Clearly defined processes of the company exert a positive
influence on e-commerce strategy implementation.
H6: Relationship building with stakeholders is positively related to
e-commerce strategy implementation.
H7: Brand name of a company and its products will significantly
influence e-commerce strategy implementation.
H8: Overall motivation for using the internet and will to innovate
will have a positive impact on e-commerce strategy
implementation.
H9: Sensitivity of a product to price competition on the internet
will have an effect on overall e-commerce strategy
implementation.
Earlier it has been mentioned that companies can achieve
competitiveness essentially by differentiating their products and
services from those of competitors and through low costs (Lynch,
2003). Choosing a particular e-commerce application is a strategic
decision that must be made in the context of the companys
competitive strategy (Lanckriet and Heene, 1999). The nature of
the e-commerce makes it easier for buyers and sellers to search,
meet, compare prices and negotiate and thereby helps in reducing
transactional costs (Berthon et al.., 2003).
Research by Pearson, (1999) shows that e-commerce
strategies significantly support generic competitive strategies in a
way of achieving cost leadership, differentiation and focus.
Therefore, it is hypothesized that:
H10: E-commerce strategies have a positive impact on supporting
generic competitive strategies.
The Ansoff Matrix as growth strategies presents the product and
market choices available to an organization. It is argued that ecommerce strategies are used to sell more existing products into
existing products. E-commerce strategies can increase awareness
of a firm within the industry by pursuing market penetration
(Murphy, R and Bruce, M. 2003). Moreover, e-commerce
strategies facilitate market development. For instance, Amazon

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initially used this as a growth strategy by taking their existing ecommerce strategy of book in the US market and developing it for
the 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 reach
their growth strategies by developing new products/services and
introducing them to new market segments in a way of pursuing the
diversification. Thus, it is hypothesized that:
H11: E-commerce strategies facilitate the implementation and
achievement of growth strategies.
E-commerce offers a rich array of opportunities to improve
business performance. An empirical study by Straub and Klein,
(2001) identified that e-commerce strategies benefited companies
on cutting costs and rising productivity, accessing new customers
and markets, and gaining sustainable competitive advantage by
attempting to achieve a complete integration of e-commerce into
the companys overall business strategy.
Another research shows that e-commerce strategies have great
impact on firms sales growth and profitability (Karagozoglu and
Lindell, 2004). Therefore, it can be hypothesized that:
H12: E-commerce strategies have a positive impact on perceived
firms competitiveness.

Methodology
Mainly, the descriptive statistics used to measure the demographic
variable and reliability, correlation and regression analysis for
testing the reliability and credibility of the hypotheses.
Hypothesized relationships are tested by using Statistical Package
for 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 previously
explained is to exhibit and test a model that explores the essence of

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business and e-commerce strategies in increasing overall

manufacturing SMEs competitiveness in Kazakhstan. Basically, an
application of E-Strategy Model is being made in order to show
how manufacturing SMEs can shift from traditional way of doing
business and increase their competitiveness.
The company managers were the samples ranging from
Managing Director, Financial Manager, IT Manager, Marketing
Manager 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/her
company. The method of obtaining information from managers
was based on asking opened-end and closed-end questions.
Two types of questionnaires were used in this study. These
questionnaires were administered to the target managers of
manufacturing SMEs.
The questionnaire was containing main five parts. The first
part had variables that explored managers age, gender, educational
level, position and how long they had been at the present position
within the company. The second part of the questionnaire tried to
explicate general information about the company such as: number
of employees, foundation year, ownership type, city of
headquarters, establishments outside of country and involvement in
foreign trade activity, number of PCs, length of connection to
Internet and web site availability within the firm. Furthermore, this
section purposed to identify a utilization of strategic planning,
capabilities, and generic competitive and growth strategies. The
initial positive affect of generic competitive and growth strategies
to e-commerce strategies were measured on a five point likert scale
ranging from 1= Definitely Used to 5= Definitely Not Used.
In the third section of the questionnaire, e-commerce strategies
were measured on a scale ranging from 1= Frequent Use to 3=
Never Use. In part four, Strategic value of e-commerce on
perceived 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= Strongly

Agree to 5= Strongly Disagree.
6.3. Sample
Total of 80 questionnaires were distributed to managers of
manufacturing SMEs and 80 were collected. This shows the
response rate of 100%. The majority of respondents (72.5%) were
female and 27.5% were male. The age of the respondents was
ranged 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 a
slight skewness towards middle aged respondents.
The majority of respondents (48.7%) were holding four year
university degree, 37.5% had a masters degree, 5% had a PhD
education and 8.8% of respondents had two year university degree.
Most of the respondents (30.0%) as depicted in table 1 were
holding Managing Director positions, 28.7% IT Manager positions,
16.3% Marketing Manager Positions, 15.0% Operation Manager
Positions 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 (%)

Gender
Female
Male

58
22

72.5
27.5

Age
18-29
30-59

31
43

38.8
53.7

60+

7.5

Education
Two year university
Four year university
Master
Doctorate

7
39
30

8.8
48.7
37.5

5.0

Position
Managing Director (GM)
Finance Manager
IT Manager
Marketing Manager
Operation Manager

24
8
23
13
12

30.0
10.0
28.7
16.3
15.0

Years in position
Less than 10
More than 10

49
31

61.2
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)
10-49 (Small Enterprises)
50-300 (Medium Enterprises)

0
33
47

0.0
41.3
58.7

Type of ownership
Sole Proprietorship
Family
State Enterprise
Other

7
15
36
22

8.8
18.7
45.0
27.5

Foundation year of a firm

1-10
10+

35
45

43.7
56.3

City of firm headquarters

Almaty
Astana
Taraz
Karaganda
Shymkent
Abroad
Other

38
8
15
3
4
5
7

47.5
10.0
18.7
3.8
5.0
6.3
8.7

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Table 3 Corporate Breakdown of the Sample Study
Frequency

Valid Percent (%)

Establishment outside of country

Yes
No

31
49

38.8
61.2

Sales from outside of home country

Less than 10%
10-50%
More than 50%

46
29
5

57.5
36.2
6.3

Purchases from outside of

country
Less than 10%
10-50%
More than 50%

51
28
1

63.8
35.0
1.2

Number of PCs in the firm

Less than 5
5-100
100+

12
30
38

15.0
37.5
47.5

Length of connection to Internet

Not available
Less than 1 year
2 years
3 years
More than 3 years

12
4
8
17
39

15.0
5.0
10.0
21.3
48.7

Web site availability

Yes
No

50
30

62.5
37.5

home

Strategic decision
Owner

16

20.0

Manager
Family member
Other

35
13
16

43.8
16.2
20.0

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

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

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manufacturing SMEs accept that e-commerce improves product

differentiation 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 were
reliability coefficients, single and multiple regression analysis and
correlation coefficients. The reliability test evaluated the internal
consistency of the scale and the single and multiple regression tests

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showed the relationship between the measures and the dependent

variable. The correlation coefficients were used to show the
association between the measures.
4.1 Reliability Tests
To check the internal consistency among the variables and with the
scale, reliability tests were conducted to ensure the measurement
items were reliable, in other words, the items mostly reflected true
scores rather than the error on the scales and the items. Table 4
presents 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
DOC 1
CS
GS
ECS
CSF
FCOM

Chronbach's alpha
0.79
0.82
0.70
0.89
0.71
0.76

According to Nunnally, (1978) the coefficients that equal to or

above 0.70 are acceptable indicators of reliability. From table 4, all
the Chronbachs alpha scores were within this range.
4.2 Regression Tests
In this study, three single and two multiple regression tests were
conducted to measure integrated E-Strategy Model.
Formula 1. CSpredicted = .30 + .40DOC
Formula 2. GSpredicted = .70 + .52DOC
1

The 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
1
2
3
4
5

Regression
Residual
Regression
Residual
Regression
Residual
Regression
Residual
Regression
Residual

Sum of Squares df Mean Square F

Sig.

8.708
46.816
2.229
5.987
3.696
4.667
2.734
5.630
1.236
17.095

14.509

.000

29.043

.000

8.146

.000

18.694

.000

5.638

.020

1
78
1
78
7
72
2
77
1
78

8.708
.600
2.229
.077
.528
.065
1.367
.073
1.236
.219

One way analysis of variance (ANOVA) of the regression test as

depicted in table 5 shows that the linear combination of the
dimensions 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 and
0.020. 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 the
measures predict. The standard error is the standard deviation of
the B values and it is a measure of stability or sampling error of the
B values. Beta is the standardized regression coefficients. Thus
they are the z scores for the independent variables. T is a test to
show 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 of

variables were significant, which is (>2.00).
Table 6 Coefficients of the Regression Test of the Survey

Coefficients
Mode
1

B
(Constant) .302
DOC

Std. Error Beta

Sig.

.499

.606

.546

1.247 .327

(Constant) .712

.178

DOC

.117

.631

.396

3.809 .000
3.992 .000

.521

(Constant) 1.110 .139

5.389 .000
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

(Constant) .924

.179

5.466 .000

CS

.127

.037

.326

3.452 .001

GS

.428

.095

.424

4.489 .000

(Constant) 1.645 .313

ECS

.384

.162

5.246 .000
.260

2.375 .020

Mode 1 and 2 of single regression tests show how well distinctive

organizational capabilities contribute to competitive and growth
strategies. From the table above, it is indicated that there is a
probability of DOC to occur, p= 0.000. Which means that
hypothesized are statistically significant (<0.05). Furthermore,

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mode 3 of regression tests show the possible effect of critical

success factors on performance of e-commerce strategies. By
summarizing table 6, it can be seen that there is no probability that
CSF1, CSF4 and CSF7 will occur. The significance of their t
values are 0.226, 1.098 and
-0.519 respectively. There is also no probability that the
outcome dimensions would occur. The significance of their t
values are 0.822, 0.276 and 0.605 respectively. However, there is a
strong probability that CSF2, CSF3, CSF5 and CSF6 will occur.
Moreover, mode 4 of regression tests show the possible effect of
competitive and growth strategies on performance of e-commerce
strategies. As shown in table 6, it can be seen that there is a
probability that CS and GS will occur. The significance of their t
values is 3.452 and 4.489 respectively. The significance of their t
values is 0.001 and 0.000 respectively. Lastly, mode 5 of
regression test shows whether e-commerce strategies significantly
affect perceived firms competitiveness. From table 6, it can be
seen that there is a probability that ECS occur. The significance of
their 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 the
associations between these measures and perceived firms
competitiveness. The correlations are shown in table 7 as follows:

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Table 7 Correlation of variables
Variable
GS
Sig. (2-tailed)
CS
Sig. (2-tailed)

FCOM GS CS
.277*
.013
.131 .146
.248 .197

DOC
Sig. (2-tailed)
ECS
Sig. (2-tailed)
CSF1
Sig. (2-tailed)
CSF2

.124
.273
.260*
.020
.063
.579
-.018

.521*
.000
.472*
.000
.171
.129
.242*

DOC ECS CSF1 CSF2 CSF3 CSF4 CSF5CSF6

.396**
.000
.388* .408*
.000 .000
.156 .164 .292**
.168 .146 .009
.118 .142 .430* .517**

Sig. (2-tailed) .872

CSF3
.139

.031 .296
.361* .194

.209 .000 .000

.266* .526* .382**.414**

Sig. (2-tailed)
CSF4
Sig. (2-tailed)
CSF5
Sig. (2-tailed)

.219
.096
.399
.212
.059

.001 .084
.081 .019
.475 .870
.379**.125
.001 .270

.017 .000
.013 .151
.907 .180
.290**.454*
.009 .000

CSF6
.067
Sig. (2-tailed) .557

.138 .004
.222 .969

.116
.304

CSF7
Sig.
tailed)
N

.019

.050 -.050 .005

.256* .506**.768**.412**.401**.201
.022 .000 .000 .000 .000 .074
.080 .227* .254* .152 .014 .242* .357**

.865
80

.661 .658
80
80

.043
.481
80
80

(2.967
80

.000 .000
.406**.325**0.85
.000 .003 .452
.128 .224* .356**-.038
.257 .046 .001 .738

.023

.179

80

80

.904
80

.031 .001
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 were
positively correlated with each other. Growth and e-commerce
strategies were positively correlated with dependent variable, and
they were statistically significant. Growth and e-commerce
strategies have a positive impact on perceived firms
competitiveness.
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 reduces

manufacturing SME competitiveness.
In todays hyper-competitive markets as previously
remarked, companies try to gain advantage by developing surprise
strategies through which they secure the advantage of introducing
goods and services to the market prior to their competitors.
The primary purpose of this study was to explore the essence of
selected business and e-commerce strategies in enhancing the
perceived competitiveness of manufacturing SMEs in Kazakhstan
through 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 that
distinctive organizational capabilities that firm possess positively
affect the improvement and implementation of generic competitive
strategies. This means that distinctive organizational capabilities
are the key factors in designing and applying successful generic
competitive strategies.
The second hypothesis (H2) is also accepted. Distinctive
organizational capabilities are positively associated with the factors
used to craft growth strategies. This means that the distinctive
organizational capabilities that firm owns have a great impact on
scheduling growth strategies by providing directions to market
penetration, market development, product development and
diversification of firms products. There is a strong correlation
between distinctive capabilities and growth strategies, which
supports the fact that there is a mutual relationship between these
two variables.
(H3) is not accepted. The results of the tests show that the
effective presentation of a product offered by a firm over the
Internet does not have a positive impact on overall e-commerce
strategy implementation. This might be due to insufficient number
of internet subscribers in Kazakhstan. No researches were found
related to this concern.
According to correlation test results (H4) and (H5) are
accepted. This means that the quality and usability of web site and
clearly defined processes of the company are positively related to
e-commerce strategy implementation.

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Whats more, (H6) is not accepted. The test results show that there
is no significant correlation between relationship buildings with
firm 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 of
ambitiousness for extracting benefits and understanding of ecommerce. Therefore, we can say that e-commerce strategies are
not affected by stakeholder relationship building behavior of a
company.
However, (H7 and H8) are accepted. The correlation results
present that brand name of a company and its products and overall
motivation for using the internet and will to innovate have a
positive impact on e-commerce strategy implementation. Moreover,
(H9) is not accepted the statistical results have shown that
sensitivity of a product to price competition on the internet does
not affect overall e-commerce strategies. There wasnt any
significant correlation between these two variables. The reason can
be the same as in hypothesis 3.
Hypothesis (H10) is accepted. Based on the test results, it
can be said that e-commerce strategies have a positive impact on
supporting and achieving competitive generic strategies which are
set by a firm. The e-commerce strategies are significantly
correlated and have a great effect on the growth strategies. Thus,
(H11) is accepted.
Lastly, there is evidence based on correlation test results
showing that, successful e-commerce strategies have positive
impact on overall perceived firms competitiveness. Therefore, we
can conclude that (H12) is accepted.

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Appendix
List of Abbreviations
Dimensions
Distinctive
Organizational
Capabilities
(DOC)
Critical Success
Factors (CSF)

Competitive
Strategies (CS)
Growth Strategies
(GS)

E-commerce
Strategies (ECS)

Perceived Firms
Competitiveness
(FCOM)

Variables
Employee Dedication
Technology
Know-how
Resources
Content
Convenience
Control
Interaction
Brand Image
Commitment
Price Sensibility
Cost Leadership
Differentiation
Focus
Market Penetration
Product Development
Market Development
Diversification
E-mail
Browsing company homepages
Market and product research
Exchange of information with clients
Information search
Exchange of information with suppliers
Receiving orders from clients
Placing orders to suppliers
Intra-company communication
Medium of payment
Placing job recruitment advertisements
Video-conference
Overall competitive performance from
utilization of e-commerce strategies

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