The competitiveness of small and medium enterprises in the tourism sector: The role of leadership competencies

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Competitiveness

of SMEs in

tourism

The competitiveness of small and

medium enterprises in the

tourism sector: the role of

leadership competencies

299

Received 14 July 2020

Revised 14 October 2020

Accepted 29 November 2020

Le Chi Cong and Dao Anh Thu

Faculty of Tourism, Nha Trang University, Nha Trang, Vietnam, and

Vu Thi Thao

Institute of Tourism and Mobility,

Lucerne University of Applied Sciences and Arts, Luzern, Switzerland

Abstract

Purpose – This research aims to adopt competitiveness theory to analyse the effects of leadership

competencies on the competitiveness of small and medium-sized enterprises (SMEs) in the tourism sector.

Design/methodology/approach – This research collected data from 200 participants, who are in

management positions of tourism SMEs in Vietnam. Structural equation modelling was applied.

Findings – The results indicate satisfactory reliability and validity of the constructs and support for two

models within a structural equation modelling to evaluate the influence of leadership competencies on the

competitiveness of SMEs. The data from both customers and competitors show that the competitiveness and

the performance of the enterprise are affected by hands-on experience; relationships building competencies;

strategic vision; operations management competencies. Furthermore, customers also value professional

knowledge of the enterprises’ leaders.

Practical implications – The study suggests that the government agencies and tourism SMEs themselves

should focus more on leadership. Training courses, exchange programs, seminars and workshops should be

provided for SMEs leaders to improve their leadership competencies.

Originality/value – The research findings provide a more comprehensive view of internal and external

factors affecting the competitiveness of SMEs in the tourism sector in Vietnam. This also contributes to

competitiveness and leadership research by presenting the positive linkage between leadership competencies

and the competitiveness of SMEs.

Keywords SMEs, Leadership competencies, Tourism, Vietnam

Paper type Research paper

1. Introduction

Research on the competitiveness of enterprises is not a new topic in Vietnam academic field

(Tho an d T rang, 2009). Manystudies have conductedfrom theperspectiveofPorter’s theory of

competitivenessandcompetitiveadvantage(1985)todevelopconceptualandempiricalstudies

(Kamp an d P arry, 2017; Ma n e t a l., 2002). The concept of competitiveness has been continuedto

develop in three levels, which are enterprise, industry and country; and it has attracted the

attention of many business researchers (Bharadwaj et al., 1993; Goldberg et al., 2003). In

Vietnam, several researchers in different fields have applied the theory of competitiveness and

competitive advantage to explore the factors that contribute to the competitiveness of

businesses (Tho and Trang, 2009; An and Thi, 2012; Ai, 2013; Hieu et al., 2020). However, there

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Journal of Economics and

Development

Vol. 23 No. 3, 2021

pp. 299-316

Emerald Publishing Limited

e-ISSN: 2632-5330

p-ISSN: 1859-0020

DOI 10.1108/JED-06-2020-0080

has been no significant research on how leadership affects the competitiveness of small and

medium enterprises in practice. Therefore, researchers continue carrying out several types of

research in the Vietnamese context to form a comprehensive view of leadership factors

affecting the competitiveness of small and medium enterprises (Cong and Hai, 2015).

Leaders play a vital role in shaping business goals, strategies and decisions (Asree et al.,

2010). It has been recognised that leadership competencies are decisive factors for business

success (Asree et al., 2010; Clarke, 2010). The leadership process means creating social

influence to foster the voluntary participation of subordinates in implementing the vision,

goals and mission of the organisation (Asree et al., 2010; Clarke, 2010). Leadership is the

combination of knowledge, skills, experience, behaviours and attitudes to turn organisations

or enterprises into a cohesive body to ensure successful competition in the marketplace

(Church, 1995; Asree et al., 2010).

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300

Regarding small and medium-sized enterprises (SMEs), leaders/managers have an

important role in improving competitiveness, creating jobs, increasing incomes for employees

and mobilising social resources for business development investment (Clarke, 2010; Cannon

et al., 2010). However, most leaders/managers of SMEs, even those who have received higher

education, lack in-depth knowledge of economics, business administration, business law and

other key areas. This limitation has been found to have a significant impact on the

enterprises’ vision, goals, strategies and capability to cope with risks (Chawla et al., 1997).

Notably, due to their small scale, SMEs are particularly vulnerable to an adverse business

environment (Chawla et al., 1997).

Indeed, in Khanh Hoa during the past few years, there have been an increasing number of

SMEs, which have been dissolved, are in hiatus, or went bankrupt. Arguably, one of the key

causal factors is the weak management of human resources, especially the development of

leadership competencies of the management team and the managers. The lack of adequate

consideration of this aspect causes the difficulties for SMEs to develop (Cong and Hai, 2015).

As the chief executor of an enterprise, the SME manager has to exercise leadership activities

which are comprehensive and practical. Furthermore, he/she has to execute directly the

production process and business operations, as well as perform leadership activities in

human resources management.

To perform his/her role effectively, an SME manager needs strong leadership

competencies, sufficient knowledge and skill set, attitudes and qualities to effectively lead

not only himself/herself but also the team and the whole organisation. This serves the

ultimate purpose, which is to maintain and develop the position of the enterprise in the market

and generate legitimate income for the stakeholders and the manager himself/herself. This

study aims to apply competitiveness theories to analyse leadership competencies affecting

the competitiveness of SMEs. The results have practical implications to systematise

theoretical issues, investigate the situation, identify the competencies that constitute the

leadership of enterprises. Furthermore, the study offers recommendations on policy to

improve the competitiveness of SMEs in the future.

2. Literature review

2.1 Competitiveness

Over the past 30 years, competitiveness has always been an attracting topic among scholars,

businesses and government agencies. There are four levels of competitiveness, including

product, firm, industry and nation (Porter, 2008). Today, competitiveness is also considered in

terms of region and locality (Porter, 2008). Regarding the product, Goldberg et al. (2003) argued

that the concept of competitiveness is related to the aspects of competitive advantage or price

competitiveness, strategic management and historical, cultural – social aspects. Man et al.

(2002) also approached corporate competitiveness from the perspective of price, service quality,

gross profit and the ability to plan and achieve business goals compared to industry

competitors. For the industry, competitiveness is understood as the ability to maintain or

increase market share by low cost or product characteristics compared to a similar industry in

different countries (Porter, 2008). Finally, national competitiveness is the competitiveness of a

national economy to achieve and maintain high growth based on sustainable policies and

institutions (WEF, 2003). This research studies the enterprise competitiveness and is mainly

developed based on Porter’s theory of competitiveness and competitive advantage (1985, 2008).

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301

2.2 Small and medium enterprises (SMEs)

According to McAdam et al. (2004), there is no universal definition of SMEs, and this poses a

challenge for studying SMEs. Commonly, the definitions of SMEs fall into two criteria. A

quantitative criterion includes size, capital, annual turnover, invested capital, revenue, total

assets, market share and so on (Hossain and Kauranen, 2016). Amongst these, the number of

employees is the most common since it is available, easy to control and not affected by

inflation (Filion, 1990; cited in Buculescu, 2013). However, Gibson and Van Der Vaart (2008)

argued that it can be misleading because when an organisation develops or becomes more

efficient, it does not always entail the recruiting of more people, thus affecting the growth of

SMEs. Other qualitative categories such as turnover and balance sheet are also criticized as

being suitable explanatory factors because they do not consider the type of the economic

sector, and other business aspects (Buculescu, 2013). Furthermore, each country has its

definition. For example, in Vietnam, according to the Government’s Decree No. 39/2018/

ND-CP on March 11th, 2018, SMEs are business establishments that are legally registered.

They are divided into three levels: micro, small, medium scale according to the total capital

(total capital equal to the total assets determined in the enterprise’s balance sheet) or the

average number of employees per year, which is less than 200. The total capital is the

primary criterion. By comparison, European SMEs are classified by the number of

employees (under 250 people), and turnover or balance sheet (European Commission, 2003).

The number of employees in SMEs in the USA, however, can be a maximum of 500

employees regarding business sector (the United States International Trade Commission,

2010), which is double the standard size of European SMEs and much larger than

Vietnamese one.

A qualitative criterion considers the independent ownership of SMEs as the primary

category, and it can be combined with qualitative criterion. For example, Recklies (2001,

cited in Buculescu, 2013) defined an SME as a small entity, which is independent in terms of

capital and does not possess a majority of market share. Other categories are the

specification of the business sector, which is represented in the definitions of SMEs in the

USA and China (Hossain and Kauranen, 2016); or management hierarchy, low specialised

degree of executives (Mohamed et al., 2013). The qualitative criteria also focus on the

disadvantages of SMEs such as lack of strong negotiating position (Mohamed et al., 2013);

lack of sufficient financial resources (Abosede et al., 2016) as the owner has all responsibility

for funding (Buculescu, 2013). As can be seen, the criteria of SMEs do not consider the

business relationships, technology competencies, management competencies and

performance.

2.3 Competitiveness of small and medium enterprises

The concept of competitiveness of different levels (enterprise, industry, country), has

attracted the attention of both researchers and business managers (Bharadwaj et al., 1993;

Goldberg et al., 2003). The concept of competitiveness relates to aspects such as competitive

advantage, price competition, strategic management and other historical and socio-cultural

aspects (Goldberg et al., 2003). Competitiveness can also be seen as an independent variable,

intermediate variable or entirely dependent variable, depending on the perspective of the

approach in the studies (Asree et al., 2010). In the hospitality sector, the competitiveness of

small and medium-scale hotels can be seen through the competitiveness of price, service

quality, gross profit, planning and achieve business goals compared to their competitors (Fraj

et al., 2015).

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The competitiveness of enterprises is seen as the degree of interaction between the groups

of customers’ satisfaction and the value of shareholders by constantly improving service

quality, the capability to exploit the potentials, to implement or to respond through financial

strength (Asree et al., 2010). Business practices indicate that a SME is not a scaled-down

version of a large enterprise (Chawla et al., 1997). SMEs differ in organisational structure,

capital capacity, labour, technology, the capability to respond to the environment,

management style and, more importantly, the fashion in which they compete with other

enterprises (Chawla et al., 1997). Therefore, competitiveness studies focussing only on large

corporations may not be applied directly to SMEs (Man et al., 2002; Chawla et al., 1997).

Research, having studied the factors influencing the competitiveness of SMEs, has increased

significantly in recent years (Asree et al., 2010).

302

Robinson (2005) emphasised that the assessment of the SMEs competitiveness should be

considered in the wider interaction or placing it in the constant turbulence of the business

environment and considering the capability to access capital sources and the internal

capabilities of SMEs. Noticeably, to achieve a competitive advantage, internal resources play

a more vital role than external factors (Zainudin et al., 2018). Although the hospitality sector

has particular characteristics such as being influenced by seasonality, most of the enterprises

are household businesses, meaning they are highly independent. These companies are

equipped in advance; thus, they are not constrained by suppliers. Therefore, the

competitiveness of small and medium-sized hotels is heavily influenced by the

management competencies of business owners (Fraj et al., 2015; Cong and Hai, 2015). This

approach addresses the consideration of the various environmental influences and impacts

on the competitiveness of small and medium-sized hotels, with particular emphasis on the

internal factors of the enterprise (Asree et al., 2010).

2.4 Leaders

The concept of “leaders” is often misunderstood and confused with many other concepts,

especially with “managers”, or “business owners”. Misperceptions and inadequate

understanding of the leaders themselves have affected the performance of many

organisations or groups. Therefore, an understanding of the concept of “leader” is vital.

Overall, a leader must ensure three capabilities: shaping a vision, inspiring and influencing

(Anand and Punia, 2013). Stated differently, a leader is a person who is capable of creating

a vision for an organisation or group and exercises his/her power to influence who follow

that vision. More importantly, in the everchanging and turbulent business context, a

leader also needs to develop trusting relationships with his/her subordinates and empower

ꢀ

them by acknowledging and clarify their roles in the organisation (Martınez-Corcoles et al.,

2020). Depending on a particular research aspect, researchers have different definitions of

leaders.

2.5 The influence of leadership competencies on the competitiveness of small and medium

enterprises

The leaders of the enterprises can manage and lead the organizations effectively only if

they truly acquire knowledge of their business fields. In addition to requiring

fundamental knowledge, leaders always need to be eager to learn to improve their

awareness, knowledge and update new information (Anand and Punia, 2013) to develop

their competencies in managerial and entrepreneurial aspects (Lenka and Agarwal, 2017;

Man et al., 2002). Leaders play an important role in the establishment, survival and

sustainable development of the organisations (Anand and Punia, 2013; Man et al., 2002).

In particular, their role is even more important for SMEs because of their origins, size,

characteristics and the nature of their business operations. SME leaders oversee almost

all aspects of business operations. They are often referred to as general managers (GM)

rather than Sspecialist managers (SM). Many studies have shown that the nature of

general management, which involves almost all the activities, limits their strategic vision.

The long-term ideas are outweighed by short-term tasks (Anand and Punia, 2013; Man

et al., 2002). However, understanding and measuring the different influences of leaders on

the competitiveness of SMEs is the subject of much debate. Several empirical studies

show the strong influence of the factors belonged to leaders themselves on the

competitiveness of enterprises (OECD, 1993; Goldberg et al., 2003; Anand and Punia,

2013; Man et al., 2002).

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Some scholars emphasise that the professional knowledge of leaders relates to several

aspects such as business development; awareness of the market and competitors, knowledge

of marketing, knowledge of globalisation and integration. This competency also includes

knowledge of society, community and environment to the effectiveness in developing and

implementing the overall strategy. The results show that they affect the competitiveness of

SMEs (Anand and Punia, 2013; Man et al., 2002; Chawla et al., 1997; Cong and Hai, 2015). In

light of the arguments and analysis above, the context of SMEs in the tourism sector of Nha

Trang, the hypothesis H1, H2 is proposed as follows:

H1,2. There is a positive relationship between the professional knowledge of leaders and

the competitiveness of SMEs.

As a leader of a business, he/she needs to have a broad view and the capability to manage and

lead all units of the business in a systematic, orderly and comprehensive manner. This

competence will allow leaders to capture the overall business situations of the enterprise from

planning, organising, directing to monitoring, evaluating and adjusting; from finance, human

resources, marketing activities to production and services. Despite the differences in the

research context, the research results of Goldberg et al. (2003) and Robinson (2005) in the

context of developed markets as well as Cong and Hai (2015) in the context of the Vietnam

market, emphasised the aspects of management competencies of leaders such as the

capability to build organisational structure; managing business units; executive

competencies; leadership and direction; decision-making competencies; implementing and

evaluating, etc. These are considered as core competencies of leaders and thus relate to the

competitive advantage of small and medium enterprises. Therefore, the hypothesis H3, H4 is

presented as follows:

H3,4. There is a positive relationship between operations management competencies of

leaders and competitive advantage of SMEs.

The vision of a leader demonstrates the capability to recognise and anticipate the changes

taking place in the future business environment. If the leader has a clear vision, he/she can

develop feasible strategies, implement the right plans and bring long-term profits to the

business. Leaders must combine subjective awareness and the external factors to have a

comprehensive view of threats that the enterprises are about to encounter (Anand and Punia,

2013; Man et al., 2002). Additionally, good strategic vision allows leaders to be adaptive in

different circumstances, situations and environments. The ability to adapt, be sensitive and

flexible also allows leaders to capture the rapid changes of the business environment, predict

the trends of the market and incorporate these into suitable product development (Man et al.,

2002). Recently, the research of Cong and Hai (2015), developed based on the research of

Anand and Punia (2013), has added the factor of the importance of strategic vision for

business leaders. This study argued that strategic vision is a component that directly affects

the competitiveness of SMEs. Specifically, the components of a business leader’s strategic

vision include the capability to identify business opportunities; the capability to seize

opportunities to lead the enterprise to success; the capability to recognise and avoid risks and;

the capability to see the business potential to develop. This study was conducted on SMEs in

the tourism sector and showed that the strategic vision of leaders in SMEs affects the

competitiveness of businesses. Therefore, hypothesis H5, H6 is proposed as follows:

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H5,6. There is a positive relationship between the strategic vision of leaders and the

competitiveness of SMEs.

In the current trend of international integration, establishing and building relationships in

business is one of the key effective business strategies and an essential factor for business

survival. A successful enterprise and a successful leader must always have a strategic vision

in building and developing relationships and the capability to communicate effectively in

seeking, developing and maintaining future relationships. For business leaders, relationship

building is also considered one of the important criteria. It includes the capability to establish

good relationships not only with strategic partners, customers and suppliers but also within

the organisation. The support of firm managers to diversified, inclusive human resources

management has a positive association with business performance (Kundu et al., 2019).

Moreover, to retain profitable customers and gain competitive advantage, leaders need to

cultivate the innovation culture, which encourages and fosters the creative thinking of

employees (Hanifah et al., 2019). In particular, building relationships with local administrative

agencies is also one of the considerable factors. Extending from the relationship quality

perspective, the research of Tho and Trang (2009) found that the direct external effects of the

relationship quality of enterprises on business results. Based on recent research by Anand

and Punia (2013), Man et al. (2002), Chawla et al. (1997), Cong and Hai (2015), hypothesis H7,

H8 is stated as follows:

H7,8. There is a positive relationship between relationships building competencies of

leaders and competitive advantage of SMEs.

Anand and Punia (2013) stated that experience, knowledge and management skills are

particularly important competencies of leaders to increase the competitiveness of SMEs.

Chawla et al. (1997) argued that the experience and strategic orientation are two crucial

factors of leaders that positively influence the competitiveness of SMEs. On the other hand,

some studies refer to factors that belong to their characteristics such as age, gender,

educational background or psychological and behavioural characteristics as well as their

management skills, all of which have a profound impact on the competitiveness of SMEs.

Nevertheless, while some studies note that experience and knowledge acquired over time

both have a positive effect on competitiveness and performance of SMEs, the age factor

remains unclear and controversial (Goldberg et al., 2003; Robinson, 2005). For example,

Goldberg et al. (2003) suggested that the older entrepreneurs are, the better their capability to

make decisions is. However, Voola et al. (2012) stated the opposite. Therefore, the contrast in

previous research results requires empirical studies to identify intrinsic factors of leaders

influencing the competitiveness of SMEs. Thus, hypothesis H9, H10 is proposed as follows:

H9,10. There is a positive relationship between the hands-on experience of leaders and

the competitiveness of SMEs.

Based on both domestic and foreign studies, as well as on the fundamental theories, the

research model used here is developed to analyse how different characteristics of leaders

affect the competitiveness of SMEs in the tourism sector. The dependent variables are built

based on the measurement of the enterprise competitiveness in two aspects: (1)

competitiveness and performance of enterprises compared to competitors and (2)

competitiveness and performance of the enterprise from the perspective of customers.

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3. Methodology

3.1 Data collection and analysis

305

3.1.1 Data description. Currently, Khanh Hoa has over 1,600 enterprises in the tourism sector.

To be specific, the number of accommodation establishments accounts for a large proportion

of 710. Among them, 250 companies are operating in travel service; 580 establishments in

restaurants/food and beverage services and nearly 30 units in shopping and entertainment

service. Of these, the proportion of SMEs is around 92%. To gather a specific view regarding

the influence of leadership competencies on the competitiveness of SMEs in Khanh Hoa

tourism sector, a survey was conducted with 250 leaders/managers of SMEs in the province.

There were 215 questionnaires collected. The number of questionnaires, which were

incomplete and invalid, was 15. Amongst 200 participants, there were 117 males and 83

females, accounting for 58.5 and 41.5%, respectively. The number of participants with

undergraduate and post-graduate degree occupied the largest proportion (70.5%). The group

having a college degree ranked second (26.0%), and participants having attended junior

college only constituted 3.0%. The number of people with other educational backgrounds

was the lowest at 0.5%. The majority of participants were between 35 and 45 years old

(55.0%). The age group from 46 to 55 made up 26.0% with 52 participants. The group under

35 years old ranked third with 34 participants (17.0%). The smallest proportion (2.0%) was

the group over 55 years old with four participants. The characteristics of the sample reflect

the nature of the tourism sector, in which the workforce aged from 35 to 45 not only reaches

maturity but also has youth and enthusiasm. The number of participants holding a division

manager position was 130, accounting for 65.0%. There were 37 participants in the head/

deputy of department position (18.5%) and 33 participants in other positions (16.5%). 109

participants had been in the position for more than five years, occupying 54.5%. The number

of those who had worked for 3–5 years was 71 (35.5%). There were 20 participants with 20

years of working experience (10.0%). This indicates that people with more than five years of

working experience have been currently holding key management and leadership positions

in SMEs in the tourism sector.

3.1.2 Measurement. Based on the literature review, this study generated a research

measurement consisting of seven components in the research model. Leaders’ professional

knowledge is measured by five variables and was developed from the researches of Chawla

et al. (1997) and Cong and Hai (2015). Leaders’ operations management competence is

measured by 10 variables and was developed from the researches of Goldberg et al. (2003),

Robinson (2005) and Cong and Hai (2015). Leaders’ strategic vision were measured by six

variables and was developed from the study of Cong and Hai (2015). Leaders’ relationships

building competency is measured by six variables and was developed from the research of

Chawla et al. (1997) and Cong and Hai (2015). Leaders’ hands-on experience is measured by

six variables and was developed from the studies of Goldberg et al. (2003), Robinson (2005).

In particular, the competitiveness and performance of the enterprise in this study were

approached from two aspects: customers and competitors and was developed from the

works of Robinson (2005) and Cong and Hai (2015). This is because the competitiveness is

not only measured by comparing to competitors within the industry (Man et al., 2002;

Chawla et al., 1997) but also has to be assessed from the customer perspective (Cong and Hai,

2015). The fact that in the service industry the customers directly involve in the service

creation and also be the beneficiary of these services (Cong and Hai, 2015). Details of the scale

are in Appendix.

In prior, the research employed qualitative research to understand and select the

variables. A group of experts was interviewed independently with an open/closed

questionnaire. Each person was asked for their opinions on particular components of

leadership competencies (Cong and Hai, 2015; Chu and Hwang, 2008). A group of 10 experts

(researchers, lecturers; tourism enterprise leaders and government agency managers) was

selected, and they were asked to present their level of agreement regarding specific variables

presented by the values on the scale from 1 to 5: (1) very irrelevant indicators; (2) not highly

relevant; (3) somewhat relevant; (4) highly relevant; (5) very relevant (Cong and Hai, 2015; Chu

and Hwang, 2008). Based on the evaluation, standard deviation and differences of each

variable were calculated (Chu and Hwang, 2008). Research results show that all experts

agreed with the observed variables proposed to measure the competitiveness of SMEs in the

tourism sector in Khanh Hoa.

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3.1.3 Analytical procedures. The first goal of the quantitative analysis was to confirm the

related measures of intended constructs (convergent validity) and whether these constructs

differed from each other (discriminant validity). The second goal was to examine appropriate

constructs in the proposed conceptual model and causal relationships, as shown in Figure 1.

These analyses were performed using maximum likelihood estimation in AMOS 25.0.

According to Hair et al. (1998), structural equation modeling can apply a correlation matrix or

a covariance matrix as a key to building any model.

Additionally, it is appropriate to use covariance to test a theory. Some indicators such as

chi-squared (χ²), normed fit index (NFI), relative Fft Index (RFI), Tucker–Lewis index (TLI),

comparative fit index (CFI) and root mean square error of approximation (RMSEA) were

applied to assess the suitability of the overall model (measurement and construct model). The

appropriateness of the accepted model is denoted by NFI and CFI values, which were over

0.90; and RMSEA was below 0.08. These values represent moderate relevance, while values

which are less than 0.05 are relatively good (Browne and Cudeck, 1992).

4. Research findings and discussion

4.1 Reliability test

The Cronbach’s alpha analysis results indicate the scores of key factors as follows:

professional knowledge 5 0.832; operations management competencies 5 0.939; strategic

Competitiveness and

performance of the

enterprise compared to

competitors

Professional knowledge

Operations management

competencies

The competitiveness of SMEs

Strategic vision

Competitiveness and

performance of the

enterprises from the

perspective of customers

Relationships building

Figure 1.

Research model

Hands-on experience

vision 5 0.881; Relationships building 5 0.904; hands-on experience 5 0.836. The analysis

also indicates the score of the dependent scales including competitiveness and performance of

the enterprise from the perspective of customers 5 0.947; competitiveness and performance

of the enterprises compared to competitors 5 0.920. All of these are greater than 0.6. The

results show that the observed variables have the appropriate correlation coefficients, which

are greater than or equal to 0.3 (≥0.3) (Nunnally and Bernstein, 1994) (see Table 1).

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4.2 Confirmatory factor analysis

Table 2 displays the intercorrelations between the constructs in the theoretical model. All

correlations are significant (p < 0.001; p < 0.05). A confirmatory factor analysis (CFA) of the

measurement model, including five constructs in the theoretical model as in Figure 1, results

in a good fit with the data (χ²5 991.73; df 5 573. p 5 0.000; RMSEA 5 0.060; NFI 5 0.912;

CFI 5 0.917) (Browne and Cudeck, 1992). Tables 3 and 4 present the results of the CFA.

As shown in Table 3, all factor loadings on the constructs are highly significant (p < 0.001:

t-value > 9.040) with values ranging from 0.61 to 0.93. which shows the convergent validity of

Scale mean if item

deleted

Scale variance of item

deleted

Corrected item-total

correlation

Alpha if item

deleted

Items

Professional knowledge: Cronbach’s alpha 5 0.832

KL1 → KL5 14.89–15.04 8.909–10.284

0.479–0.693

0.688–0.793

0.671–0.774

0.686–0.721

0.625–0.79

0.779–0.840

0.931–0.934

0.843–0.867

0.88–0.89

Operations management competencies: Cronbach’s alpha 5 0.939

CL1 → CL8

32.84–33.07

54.105–54.86

Strategic vision: Cronbach’s alpha 5 0.881

VL1 → VL4 17.11–17.58

13.224–13.48

Relationship buildings: Cronbach’s alpha 5 0.904

RL1 → RL6 17.15–17.28 15.80–16.93

Hands-on experience: Cronbach’s Alpha 5 0.836

EL1 → EL3 6.81–6.98 3.42–4.02

0.67–0.84

Competitiveness and performance of the enterprise from the perspective of customers: Cronbach’s alpha 5 0.947

FPV1 → FPV5 21.96–22.06 26.89–27.25 0.788–0.847 0.936–0.941

Table 1.

Cronbach’s Alpha

analysis of the scale

Competitiveness and performance of enterprises compared to competitors: Cronbach’s alpha 5 0.920

FPC1 → FPC5

20.92–21.01

21.392–22.31

0.69–0.794

0.903–0.914

KL

CL

VL

RL

EL

FPV

FPC

KL

CL

VL

RL

1

0.247^**

0.359^***

0.238^**

0.232^**

0.353^***

0.341^***

5.52

1

0.404^***

1

0.431^***

0.249^**

0.328^***

0.398^***

5.51

0.366^***

0.404^***

0.488^***

0.375^***

5.67

1

EL

0.406^***

0.398^***

0.354^***

5.35

1

FPV

FPC

Mean

SD

0.247^**

0.580^***

5.84

1

0.293^**

1

5.38

1.21

Table 2.

Construct means,

standard deviation and

correlations

5.66

1.11

1.05

1.16

1.11

1.26

1.22

Note(s): ^**p < 0.05; ^***p < 0.001

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23,3

Factor

loadings

Standard

error

Standardised

factor loading

Constructs and indicators

t-value

CR

VE

Professional knowledge (KL)

0.91 0.67

KL1

KL2

KL3

KL4

KL5

1.000

1.038

1.085

1.067

1.294

–

0.825

0.829

0.806

0.827

0.819

–

0.075

0.082

0.078

0.096

13.798^***

13.242^***

13.744^***

13.543^***

308

Operations management

competencies (CL)

0.88 0.58

CL1

CL2

CL3

CL4

CL5

CL6

CL7

CL8

1.000

1.025

0.833

0.858

0.914

1.023

0.859

0.934

–

0.807

0.790

0.766

0.716

0.747

0.788

0.704

0.611

–

0.082

0.069

0.078

0.079

0.082

0.080

0.103

12.495^***

12.009^***

10.996^***

11.611^***

12.471^***

10.756^***

9.040^***

Strategic vision (VL)

0.88 0.64

VL1

VL2

VL3

VL4

1.000

1.140

0.972

1.100

–

0.803

0.849

0.771

0.774

–

0.088

0.084

0.095

12.918^***

11.559^***

11.615^***

Relationships buildings (RL)

0.90 0.72

RL1

RL2

RL3

RL4

RL5

RL6

1.000

1.235

1.079

1.143

1.232

1.175

–

0.804

0.933

0.804

0.825

0.756

0.823

–

0.076

0.080

0.095

0.090

0.086

16.144^***

13.513^***

11.994^***

13.688^***

13.676^***

Hands-on experience (EL)

0.90 0.75

0.88 0.58

EL1

EL2

EL3

1.000

1.050

1.093

–

0.859

0.870

0.877

–

0.069

0.071

15.331^***

15.475^***

Competitiveness and performance of

enterprises compared to competitors

(FPV)

FPV1

FPV2

FPV3

FPV4

FPV5

1.000

0.916

0.990

0.865

0.866

–

0.737

0.705

0.759

0.795

0.821

–

0.075

0.072

0.073

0.069

12.261^***

13.761^***

11.936^***

12.469^***

Competitiveness and performance of

the enterprise from the perspective of

0.90 0.64

customers (FPC)

FPC1

FPC2

FPC3

FPC4

FPC5

1.000

0.943

1.175

1.141

1.227

–

0.802

0.784

0.855

0.768

0.794

–

0.098

0.113

0.105

0.109

9.618^***

10.376^***

10.874^***

11.212^***

Table 3.

Standardised

confirmatory factor

analysis coefficients

and construct

reliability

Note(s): All factor loadings are significant at p < 0.001

CR: Composite reliabilities; VE: variance extracted estimate

Competitiveness

of SMEs in

tourism

Criteria

Indicators

χ

²- test

χ²

p < 0.05

<5

992.126

1.728 (992.126/574)

χ

²/df

Fit indices

GFI

IFI

NFI

TLI

>0.90

0.91

309

Alternative indices

CFI

RMSEA

Table 4.

The goodness of fit

indices of the model

>0.90

<0.08

0.91

0.06

the constructs. The composite reliabilities exceed the minimum value of 0.60, and the

variances extracted surpass the recommended threshold of 0.50.

4.3 Structural model

The estimated results of the structural model, including only direct effects in Figure 1,

indicate a good fit with the data: chi-square value 5 995.126; df 5 574; GFI 5 0.912;

CFI 5 0.917; TLI 5 0.914; RMSEA 5 0.06 (Browne and Cudeck, 1992). As shown in Table 5 all

hypotheses involving direct effects are supported by the data.

This study expected that the professional knowledge of leaders has a direct impact on the

competitiveness of SMEs, including the competitiveness and performance of the enterprises

from the perspective of customers (H1) and the competitiveness and performance of the

enterprise compared to competitors (H2). Both hypotheses are confirmed by the data, which

indicates that professional knowledge of leaders has a significantly positive effect on the

competitiveness and performance of the enterprises from the perspective of customers

(β₁5 0.318. t 5 4.155. p < 0.001) and the competitiveness and performance of the enterprise

compared to competitors (β₂5 0.318. t 5 3.290. p < 0.001).

Hypothesis 3 was that the operations management competencies of leaders have a direct

impact on the competitiveness of SMEs, including the competitiveness and performance of

the enterprises from the perspective of customers (H3) and the competitiveness and

Competitiveness and

performance of

enterprises compared

to competitors (FPV)

Std.

performance of the

enterprise from the

perspective of

customers (FPC)

Std.

Scales of leadership competencies

estimate

t-value

estimate

t-value Conclusion

Professional knowledge (KL)

Operations management competencies

(CL)

Strategic vision (VL)

Relationships buildings (RL)

Hands-on experience (EL)

0.318

0.173

4.155^***

2.090^***

0.318

0.159

3.290^***Supported

1.971^*

Supported

0.212

0.226

0.260

3.398^***

3.592^***

4.207^***

0.276

0.181

0.186

3.446^***Supported

Table 5.

Summary of

2.295^**

2.359^**

Supported

hypothesis testing

results

Note(s): ^*p < 0.10; ^**p < 0.05; ^***p < 0.001; ns: non-significant

performance of the enterprise compared to competitors (H4). Two hypotheses are supported

by the significantly positive effect of the operations management competencies of leaders on

the competitiveness of SMEs (β₃5 0.173. t 5 2.090. p < 0.005); (β₄5 0.159. t 5 1.971. p < 0.10).

Hypotheses 5 and 6 suggested that the strategic vision of leaders would increase the

competitiveness of SMEs, including the competitiveness and performance of the enterprises

from the perspective of customers (H5), and the competitiveness and performance of the

enterprise compared to competitors (H6). Both hypotheses are supported, indicating that the

strategic vision of leaders has a significantly positive impact on the competitiveness of SMEs

(β₅5 0.212. t 5 3.398. p < 0.001); (β₆5 0.276. t 5 3.446. p < 0.001).

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23,3

310

Hypotheses 7 and 8 proposed that the relationship building of leaders has a positive effect

on the competitiveness and performance of the enterprises from the perspective of customers

(H7), and the competitiveness and performance of the enterprise compared to competitors

(H8). These two hypotheses are supported, showing that the relationship building of leaders

are significantly positively related to the competitiveness of SMEs (β₇5 0.226. t 5 3.592.

p < 0.001); (β₈5 0.181. t 5 2.295. p < 0.005).

Finally, the results indicate that the hands-on experience of leaders has a strong

significant positive effect on the competitiveness and performance of the enterprises from the

perspective of customers (β₉5 0.260. t 5 4.207. p < 0.001), supporting H9. The hands-on

experience of leaders has a strong significant positive effect on the competitiveness and

performance of the enterprise compared to competitors (β₁₀5 0.186. t 5 2.359. p < 0.05),

supporting H10.

5. Recommendations on policy to improve leadership competencies to enhance

the competitiveness of small and medium enterprises

This study drew on competitiveness theory to analyse the influence of leadership

competencies on the competitiveness of SMEs in the tourism sector. A survey of several

enterprises indicates that there are two models for evaluating the influence of leadership

competencies on the competitiveness of SMEs. Firstly, the competitiveness and performance

of the enterprises from the perspective of customers are affected by (1) hands-on experiences;

(2) strategic vision; (3) relationship building, (4) professional knowledge and (5) operations

management competencies. Secondly, the competitiveness and performance of enterprises

compared to competitors are affected by (1) hands-on experience; (2) relationship building; (3)

strategic vision and; (4) Operations management competencies. Based on the findings, many

recommendations on the policy are proposed to improve the competitiveness of SMEs in the

tourism sector in Khanh Hoa province.

First, increasing the opportunities for SMEs managers in the tourism sector in Khanh Hoa

province to gain more hands-on experience. Regarding knowledge related to hands-on

experience, tourism SME managers should participate in training programs, seminars and

workshops organised by the Provincial SMEs Association, other consultancies and training

organisations. Besides, tourism SME managers should acquire knowledge of international

integration, including understanding its concept, nature, forms and characteristics; the

inevitability and consequences since international integration is a major phenomenon of the

modern world. Tourism SME leaders can actively find out more from books about change

management, international economic integration and learn the methods to manage

successfully the change from successful leaders in the country and around the world.

Secondly, increasing opportunities for tourism SME managers in Khanh Hoa province to

improve their strategic vision. Tourism SME leaders can systematically register and

participate in training courses, seminars and workshops for business leaders to equip

strategy and vision-related knowledge such as strategic thinking, creative thinking, strategic

management; strategic business development. Tourism SME leaders can choose training

courses in these areas from prestigious organisations or institutions, for example, the course

“Strategic Management in Enterprises” organised by the Center for Business Administration

Study (CBAS) of the University of Economics and Business (UEB) and Vietnam National

University, Hanoi (VNU). Through these courses, SME managers can understand the

importance of shaping a vision for their business, how strategic management can determine

the success or failure in the marketplace; know how to seize opportunities and create

competitive advantages; gain and apply knowledge to build optimal strategies, to implement

these strategies to each unit to ensure the efficiency, to evaluate the results and effectiveness

and to adjust these strategies to adapt to the changing conditions in the business. Moreover,

SME leaders can enhance their knowledge of vision and strategy development by visiting

and surveying successful businesses in Vietnam or other countries to learn from their

experiences. Furthermore, managers can participate in discussions amongst managers,

directors who are members of the associations, clubs to gather information, share experiences

and improve knowledge.

Competitiveness

of SMEs in

tourism

311

Thirdly, increase opportunities for tourism SME managers in Khanh Hoa province to

expand business relationships. Research on tourism SMEs in Khanh Hoa province shows that

the capability to build relationships is a component belonging to the leaders themselves, and

it has a direct and positive effect on the competitiveness of SMEs. Interpretation of the

differences in the research results shows that the influence of factors will vary greatly

depending on the object and context of the study. From the perspective of the long-term

orientation of tourism SMEs, to maintain position and sustainable competitiveness,

managers are required to shape and develop a long-term strategic vision. It is vital to have

a coherent strategy, which focuses on improving the quality of services, building the brand in

customers’ perceptions, enhancing the capability to establish relationships with partners to

enhance the value of supply chain in tourism services.

Fourthly, increasing opportunities for tourism SME managers in Khanh Hoa province to

improve operations management competencies. In terms of knowledge, tourism SME

managers need to raise their awareness of their roles to improve operations management

competencies. Leaders of tourism SMEs should attend training courses, seminars, exchange

programs, as well as join associations to enhance understanding and improve knowledge.

Specifically, the content includes building structure of each unit in the enterprise; the

management competencies, leading people, decision-making, monitoring and evaluation. It

also contains principles of training and development programs for employees in terms of

human resource management like the training program “Managing people” of PACE

Institute of Management. Leaders of SMEs can also learn more experiences, models of

management development from organisations around the world to have a comprehensive

view and skills; capability to evaluate, analysis, solve problems and plan strategy.

Fifthly, increase the opportunities for tourism SME managers in Khanh Hoa province to

improve management competencies in terms of professional knowledge. To be able to

understand professional knowledge in the tourism sector, managers are required to

participate in tourism management programs and courses at junior colleges, colleges,

universities in the mode of part-time courses or short-term training courses. Besides,

managers should attend courses related to business management, financial management,

market management, production management, personnel management organised by

provincial business associations, training centres, government departments/divisions. For

example, the training course “SMEs management skills” of AFC Institute for Financial

Management equips participants with the market knowledge; business planning and

production; organising of SMEs sales, human resources and financial systems; build and

manage a staff of SMEs. Through this course, tourism SME managers can improve their

knowledge of the domestic and foreign tourism markets, competitors, globalisation and

integration; have opportunities to talk with colleagues and lecturers who have extensive

experience in business administration and finance; expand opportunities to interact with

other enterprises and learn from successful examples.

JED

23,3

Finally, the above results allow researchers and SMEs in tourism sectors to have a more

comprehensive view of leadership factors affecting the competitiveness of SMEs in the

tourism sector in Khanh Hoa province. In particular, the results show that it is necessary to

focus more attention on the vital role of the leaders. At present, many enterprises hold the

belief that the limitations on finances, human resources and outdated technology and

facilities are considered as the major causes affecting the competitiveness SMEs in the

tourism sector. In contrast, the above results show that a leader, who play a key role in every

strategic decision, is the most crucial factor. Therefore, if the leaders of SMEs in the tourism

sector aim to enhance their competitiveness, it can be a tremendous issue for them to believe

in the fallacy of other causes rather than their leadership competencies.

312

This study is based on the competitiveness theory to develop the model showing the

influence of leadership competencies on the competitiveness of enterprises. However, to

achieve a comprehensive view, further studies need to expand other aspects based on

different theories such as resources-based theories or approach competitiveness theory in

terms of business fields and competitive contexts. This study collected data from managers

of the small and medium hotel in Nha Trang, who age from 36 to 55. Therefore, sample

representativeness is affected. Future researches are suggested to widen the sample size to

fully understand the factors affecting the competitiveness of small and medium enterprises.

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