Impact of Partial Lean Thinking on the Financial Performance of Small and Medium-Sized Enterprises: An Exploratory Study in a Developing Economy

Abstract

Although evidence indicates impressive benefits of lean thinking for large enterprises, a lot of skepticism still remains about the adoption of lean in Small and Medium-sized Enterprises (SMEs). The current study intended to develop an understanding of the core concept of lean thinking in SMEs and to empirically investigate the relationship among lean adoption, operational measures, and financial performance. Particularly, the study highlights the mediating role of operational measures in deriving the financial performance associated with the adoption of lean in SMEs. The study comprises a survey; data is collected from 382 SMEs, and the hypothesized relationships are then analyzed using Structural Equation Modeling (SEM). The findings suggest that even in the case of partial implementation, lean approaches are capable of improving the operational measures and financial performance of SMEs. The impact of lean adoption on financial performance is found to be mediated by operational measures.

Keywords:

• Lean Thinking
• Small and Medium Enterprises (SMEs)
• financial performance
• operational Measures

EMJ Focus Areas:

• Continuous Improvement
• Operations Management

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Vinod Yadav

Vinod Yadav is an Assistant Professor at Manipal University Jaipur. Obtained his Ph.D. degree in Industrial Engineering from Malaviya National Institute of Technology Jaipur. His areas of research interests include Industry 4.0, Circular Economy, multi-criteria decision-making, SMEs, Lean thinking, supplier selection and supply chain management, and Blockchain. He has published research papers in Business Strategy and the Environment, Production Planning & Control, Industrial Management & Data Systems, Journal of Manufacturing Technology Management, Journal of Enterprise Information Management, International Journal of Lean Six Sigma. He is a life member of IIIE.

Rakesh Jain

Rakesh Jain is a Professor in Mechanical Engineering Department at Malviya National Institute of Technology, Jaipur, India. His research areas include, supply chain management, lean manufacturing, new product development, strategic management and total quality management. He has authored over 45 research articles in these areas. He is a life member of ISTE. He is member of IIIE and chairman of Jaipur chapter of IIIE.

Murari L Mittal

Murari Lal Mittal obtained PhD Degree in Industrial Engineering from Indian Institute of Technology, Delhi (India) in 2006. He has teaching experience of about 25 years to both UG and PG (MTech and MBA) and PhD level. His areas of interest include production and operations management, project management and artificial intelligence. He has published more than 70 papers in international and national journals and conference proceedings.