The Study Of Enterprises' Growth Based On Core Competence

Small and medium-sized enterprises (SMEs) are playing an important role in China's economic and social development. The development of growth-oriented SMEs are the significant forces in driving economic growth, expanding social employment opportunities, promoting technological innovation and prospering market supply. During the process of growth of SMEs, the core competence has played a crucial role. If the enterprise has the core competence, it means that the enterprise can surmount the competitor in the intense market competition, gain more profits, and sustain long-term development. High-growth SMEs tend to have strong core competence, reasonable capital structure, favorable profitability, excellent marketing capabilities,a good reputation and image,expansive sales market and firm solvency. This shows that there exist certain mutual relations between the growth of SMEs and the factors such as the core competence, capital structure and solvency.However, in the past researches, it often only attached importance to profitability, solvency, capital structure and other factors on the growth of SMEs. As for the core-competence-based approach to examining the question of the growth of SMEs tends to remain at the qualitative stage. Therefore, this paper takes core competencies as an entry point, with an empirical analysis of the function of their core competences upon the growth of SMEs, the relationship between core competencies and other factors, and the interaction between the growth of SMEs and other influencing factors.First of all, this paper, by reviewing the previous literature studies proposes that core competence not only exist direct relationships with the growth of enterprises, but also indirectly affect the small and medium enterprises growth by profitability, solvency, and capital structure for the intermediate variables. There are still some correlations among corporate profitability, solvency, and capital structure. What's more, this paper takes small sheet of China's listed company's from2004 to 2008 as an example, which introduces structural equation model, as the more advanced statistical analysis method, to empirically analyze and test the relationship between the core competence and the growth, the relationship between core competence, and the various influencing factors and the relationship between all factors. Finally, the paper reaches the following important conclusions: (1) the core competence of enterprises can be denoted by developing and researching competence, marketing competence and operation competence. (2) The core competence of enterprises indirectly influences enterprises' growth, through intermediary variable of profitability, solvency, and capital structure. The core competence of enterprises doesn't have directly effects on the growth of enterprises and profitability, solvency, capital structure have fully played an intermediary role between the core competence and the growth of enterprises.(3) Other factors also present complex structures. For example, the solvency has direct influence on the growth of enterprises, on the other hand, with capital structure for intermediary, indirectly affects the growth of enterprises.This paper seeks to make innovations in the following aspects: (1) using a structural equation model empirically to analyze the relationship between the core competence influencing the growth of SMEs and other factors, as well as how the factors influence the growth of SMEs, and to solve the defects in the empirical research method.(2) to thoroughly discuses intermediary correlation between the core competence and other influencing factors. The relationship between the core competence and other factors are not isolated, single, but the complex. The core competence doesn't directly affect the growth of enterprises, but indirect influences the growth of enterprises through the solvency, capital structure, profitability. The development of core competence can promote the enhancement of profitability, solvency, and promote with the purpose of growth in strength.