Do Innovation and Cooperation Influence SMEs’ Competitiveness? Evidence From the Andalusian Metal-Mechanic Sector

101 journal revista innovar 101 correspondencia: departamento de economía aplicada i. facultad de Ciencias económicas y empresariales. Universidad de sevilla. avda. Ramón y Cajal, nº 1. C.P. 41018. sevilla. spain. citación: tamayo, J. a., Romero, J. e., Gamero, J., & martínez-Román, J. (2015). do innovation and Cooperation influence smes’ Competitiveness? evidence from the andalusian metal-mechanic sector. Innovar, 25(55), 101-115. doi: 10.15446/innovar.v25n55.47226. enlace doi: http://dx.doi.org/10.15446/innovar.v25n55.47226. clasiFicación jel: m10, o32, C81. recibido: Junio de 2012, aprobado: abril de 2014. do innovation and cooperation influence smes’ competitiveness? evidence From the andalusian metal-mechanic sector Juan A. Tamayo Ph.d., is an associate Professor in the department of Business administration and marketing at the University of seville. He currently teaches in the school of Computer engineering and the tourism and finance school of the University of seville. spain. Country: spain. e-mail: [email protected] José E. Romero Is an Associate Professor in the Department of Applied Economics – Quantitative Methods – at the University of Seville. He currently teaches in the School of Business and Economics and the tourism and finance school of the University of seville. spain. Country: spain. e-mail: [email protected] Javier Gamero Ph.D., is an Associate Professor in the Department of Applied Economics – Quantitative Methods – at the University of Seville. He currently teaches in the School of Business and economics and the tourism and finance school of the University of seville. spain. Country: spain. e-mail: [email protected] Juan A. Martínez-Román Ph.d., is an associate Professor in the department of applied economics at the University of seville. He currently teaches in the school of Business and economics, the tourism and finance school, the law school and the international Postgraduate Centre of the University of seville. spain. Country: spain. e-mail: [email protected] abstract: this study’s main objective is to determine the influence of innovation and cooperation on the competitiveness of smes in the metal-mechanic sector of andalusia (spain). Using information obtained by interviewing managers of a sample of 80 firms, we proposed a model of structural equations based on the Partial least squares (Pls) technique. this model, which explained 37% of the variability of competitiveness, also allowed us to test hypotheses about the positive influence of quality management, knowledge, financial resources and cooperation on innovative outcomes. along with the contrasted hypotheses, the most noteworthy finding was that cooperation does not significantly influence the innovative outcomes of firms in this sector. Keywords: Competitiveness, innovation, cooperation, quality management, knowledge, smes, andalusia (spain). introduction since the european Union adopted the strategic goal of becoming the world’s most competitive and dynamic knowledge-based economy with the capacity to grow economically and create more and better jobs (european Council, 2000), interest in competitiveness has increased. following Empresas de Menor Tamaño ¿inFlUye la innoVación y la cooperación en la competitiVidad de las pymes? eVidencia en el sector metalmecánico andalUZ resUmen: el principal objetivo de este artículo es determinar la influencia de la innovación y la cooperación sobre la competitividad de las pymes en el sector metalmecánico de andalucía (españa). Con la información obtenida en entrevistas a los directivos de una muestra de 80 empresas, se ha propuesto un modelo usando ecuaciones estructurales basadas en la técnica Partial least squares (Pls). este modelo, que explica el 37% de la variabilidad de la competitividad, también nos ha permitido testear hipótesis sobre la influencia positiva de la gestión de la calidad, conocimiento, recursos financieros y cooperación sobre los resultados innovadores. Junto a las hipótesis contrastadas, la conclusión más destacada fue que la cooperación no influye de manera significativa en los resultados innovadores de las empresas en este sector. palabras claVe: Competitividad, innovación, cooperación, gestión de la calidad, conocimiento, pymes, andalucía (españa). l’innoVation et la coopÉration inFlUent-elles sUr la compÉtitiVitÉ des pme ? exemple dans le secteUr andaloU de la mÉtallUrgie mÉcaniqUe rÉsUmÉ : le principal objectif de cet article consiste à déterminer l’influence de l’innovation et de la coopération sur la compétitivité des pme dans le secteur de la métallurgie mécanique d’andalousie (espagne). avec l’information obtenue lors d’entretiens avec les directeurs d’un échantillon de 80 entreprises, a été proposé un modèle en utilisant des équations structurelles basées sur la technique Partial least squares (Pls). Ce modèle, qui explique 37 % de la variabilité de la compétitivité nous a également permis de tester l’hypothèse sur l’influence positive de la gestion de la qualité, de la connaissance, des ressources financières et de la coopération sur les résultats innovateurs. Ces hypothèses s’étant vérifiées, la conclusion la plus remarquable est que la coopération n’influe pas significativement sur les résultats innovateurs des entreprises de ce secteur. mots-clÉs : Compétitivité, innovation, coopération, gestion de la qualité, connaissance, pme, andalousie (espagne). tem inFlUência a inoVação e a cooperação na competitiVidade das pmes? eVidência no setor metalmecânico andalUZ resUmo: o principal objetivo deste artigo é determinar a influência da inovação e a cooperação sobre a competitividade das Pmes no setor metal-mecânico da andaluzia (espanha). Com a informação obtida em entrevistas aos diretores, de una amostra de 80 empresas, foi proposto um modelo utilizando equações estruturais baseadas na técnica Partial least squares (Pls). este modelo, que explica 37% da variabilidade da competitividade, também nos permitiu testar hipóteses sobre a influência positiva da gestão da qualidade, conhecimento, recursos financeiros e cooperação sobre os resultados inovadores. Junto com as hipóteses contrastadas, a conclusão mais destacada é que a cooperação não tem influência, de maneira significativa, nos resultados inovadores das empresas neste setor. palaVras-cHaVe: Competitividade, inovação, cooperação, gestão da qualidade, conhecimento, Pmes, andaluzia (espanha). 102 rev. innovar vol. 25, núm. 55, enero-marZo de 2015 Empresas de Menor Tamaño the 2005 assessment, which affirmed that the european economy had not reached the goals set (european Commission, 2005), the so-called Competitiveness and innovation framework Program for the period of 2007-2013 was developed, proposing a coherent framework for improving competitiveness and innovative potential within the european Union. the current economic crisis has had a strong impact on unemployment in countries such as spain. as competitiveness is a key factor in the recovery of employment (european Commission, 2010), it is logical that peripheral regions of the european Union have begun to formulate strategies for promoting competitiveness. as part of this effort, the scientific community can contribute to increasing knowledge of the factors that positively influence competitiveness. this knowledge may be useful in helping those in charge of economic policy to implement more effective measures. this paper studies competitiveness at the micro-level: the units of analysis are firms in the andalusian metalmechanic sector. this approach complements others that have determined the level of competitiveness of a sector as a whole, and that have produced aggregate indices of competitiveness. our empirical research evaluated how competitiveness is influenced by two of the most important variables: innovative outcomes (as a measure of innovation), and cooperation. accordingly, we first answered two specific questions in relation to this industrial sector: does innovation influence competitiveness in a meaningful way? and does cooperation influence competitiveness? thus, a primary objective of the work was to determine the direct influence of innovative outcomes and cooperation on firm competitiveness. the secondary objective consisted in determining the influence exerted by cooperation, quality management, knowledge, and financial resources on innovation. in order to achieve these objectives, we proposed a new model and formulated research hypotheses. a structural equations model (sem) based on the Pls technique was used for the contrast of the hypotheses. this model allowed us to contrast the existence of relationships in a rigorous manner, in addition to offering an informative view of causal relationships. for the empirical validation of the model, we used data from personal interviews with managers, guided by a survey. the sample included 80 firms in the metal-mechanic sector, all located in provinces of andalusia, as well as information from the trade Register referring fundamentally to firm profitability. in the second section of this paper we describe and justify the model by proposing a conceptual model and its hypotheses. We reflect on the concept of competitiveness and on the variables and potential relationships included in the model. the third section indicates the fundamental characteristics of the empirical study, and the fourth section presents and discusses the empirical results. finally, the fifth section offers the main conclusions of the work. theoretical Framework and Hypotheses this work attributes special importance to the potential influence of the variables of innovative outcomes and cooperation on competitiveness (figure 1). the relationships of these two variables with competitiveness constitute the nucleus of the model to be developed. Hence, we dedicate this section to justifying the theoretical basis of the relationships between the variables and explain what each of these constructs constitutes. FigUre 1. the core of the model innovative outcomes Cooperation Competitiveness source: own elaboration. the next subsection deals with the concept of competitiveness—an elusive concept at different levels of analysis—and discusses how it can be evaluated through variables such as firm performance or profitability, market extension, size and age. We also describe the concept of competitiveness employed in the empirical study. subsequently, we argue for the inclusion of innovative outcomes in the model, and after the justifying the importance of cooperation for competitiveness, we proceed to explain the variables for the rest of the model. in figure 4, all variables and relationships are summarized. the elusive concept of competitiveness Competitiveness is a very relevant concept for firm survival, the development of an industry, and the prosperity of a territory. its importance is unquestionable within economics and management, and thus it has naturally been used in much of the specialized literature. However, the journal revista innovar 103 rev. innovar vol. 25, núm. 55, enero-marZo de 2015 variety of uses of the concept and the lack of consensus surrounding it in the scientific community could lead us to wonder whether the term has any specific meaning (Connor, 2003). it seems obvious that competitiveness is the ability to compete. firm competitiveness is defined as the ability of a firm to successfully compete in its environment (mesquita, lazzarini & Cronin, 2007). the practical problem consists in pinpointing the concept so that it may be measured and made operative in empirical studies. the conceptual problem varies depending on the level of analysis to which the concept refers. in general terms, a greater conceptual clarity appears to exist on the meaning of the term when it refers to the firm itself rather than to the industry or the territory (aiginger, 2006). it has even been proposed that the term competitiveness could be a dangerous, meaningless, and elusive obsession (Krugman, 1996, 1994a, 1994b). the appropriateness of the definition of competitiveness at the firm level is also debatable; there are authors who think that on a firm level, the definition of competitiveness is vague and problematic, though advances have been made (ali, 2000). in a certain sense, the concept of competitiveness seems to be better defined for other specialties than that of the scholar, in such a way that from the perspective of economic theory with a macroeconomic focus, the concept of competitiveness on a firm level could seem more precise, whereas for experts in the fields of organization and business economics, the aggregate-level view is more acceptable. Perhaps part of the problem lies in the lack of connection between the lines of investigation with different levels of aggregation (Chikan, 2008). the connection between the macro level, or that of the region, and the micro level, or that of the firm, can be found in the approach taken by Porter (1990), who offers a framework for analysis on the industrial level, valid for the study of competitiveness at both the territorial and the firm level (Chikan, 2008). in his model, generally referred to as Porter’s diamond, this author establishes the foundations that allow for an understanding of how macro-level factors become micro-level factors that directly affect firms’ capabilities. it is normally thought that competitive firms must have a high level of profitability (Caridi, 1997). in small and 104 rev. innovar vol. 25, núm. 55, enero-marZo de 2015 Empresas de Menor Tamaño medium firms, profitability and competitiveness are related (Chew, yan & Cheah, 2008; oksanen & Rilla, 2009). However, profitability in itself does not guarantee the competitiveness of a firm. at times a speculative nearsightedness can occur and future profitability can be sacrificed for short-term benefits (Blaine, 1993). these present benefits, deceptively high, are not necessarily a sign of competitive strength. on the other hand, many real business opportunities imply sacrificing part of present and future benefits (tangen, 2003). Given the limitations of financial performance (tangen, 2003), more variables should be considered in defining competitiveness. Competitive firms increase their market share or access new markets (oksanen & Rilla, 2009). openness to international markets offers firms opportunities to maintain competitiveness (Hitt, Keats & demarie, 1998; loyka & Powers, 2003). Growth in sales is one of the variables that serves to measure competitiveness in small and medium firms (Chew et al., 2008). this aspect of competitiveness can constitute a type of counterweight in the absence of profitability. Competitive firms will normally obtain benefits and grow at the same time. However, they may sacrifice part of their profitability in pursuit of growth, or, alternately, they may forego market extension, focusing on a niche or restricted market, in order to increase benefits. firms that try to widen their market also tend to increase in size. in this sense, competitiveness can be used to denote a firm’s ability to grow and thrive alongside other firms in the market (Han, Chen & ebrahimpour, 2007). Growth has been considered a fundamental business objective that contributes to competitiveness (Correa, acosta, González & medina, 2003). Business strategy seeks to simultaneously achieve both competitiveness and growth (Pehrsson, 2007). When measuring the growth of a firm, the number of workers has frequently been used, as this is an uncontroversial and easily obtainable measurement (dobbs & Hamilton, 2007). However, since we can logically assume a link between market extension and increase in firm size, we omitted this variable from the definition of the construct of competitiveness in our study. this decision was made for a number of reasons. the contribution of increase in size (measured by number of employees) to competitiveness is not always so direct, as it depends on other factors such as productivity per worker. moreover, firms in this sector are smes, meaning that the effect of size on productivity is more limited. finally, it is preferable to adopt the most simple and parsimonious definition possible for competitiveness. it also seems natural that competitive firms show an ability to survive, and therefore it is not too far-fetched to assume that competitive firms tend to be more long-lived. although this is not always the case, the fact they remain in the market for a longer period of time is an indicator that these firms have been profitable and have provided their customers with valuable products and services. in addition, older firms tend to be larger and to have access to more financial resources (levinthal, 1991). thus, it is not unusual that a certain relationship exists between a firm’s size and its performance (Birley & Westhead, 1990). in this study, however, we opted not to include firm age in the construct of competitiveness. although it is true that by demanding more age or survival of a firm, we ensure that they have a track record of profitability, we chose to eliminate the age factor on the assumption that, implicitly, some of the nuances that it would provide to the definition of competitiveness are adequately explained by profitability. concept of competitiveness there are two alternatives for defining firm competitiveness: to focus on the internal aspects of the organization that make it competitive; or to focus on variables directly related to the market or the environment of an organization. the first option, fundamentally of an internal nature and centered on organizational variables, would be directly consistent with the Resource-Based view (RBv). this perspective is important for analyzing the resources and capabilities contributing to firms’ ongoing competitive advantage (Barney, 1991). the second way of defining competitiveness attributes a crucial role to the market and, thus, to clients and the organization’s interactions with other organizations within the environment. these alternatives are complementary, as it is possible to describe competitiveness with variables of an internal and external nature simultaneously. to define competitiveness, we chose an intermediate option in the continuum between the organization and the market (figure 2). the variables of market extension and performance reflect, respectively, the external and internal aspects of competitiveness. the most competitive organizations are in a better position to reach wider markets. similarly, an organization’s performance indicates its competitive strength: Profitability is a guarantee of competitiveness, meaning that more-profitable firms tend to be more competitive and vice-versa. it is probably true that the definition of a term such as competitiveness is never right or wrong in an absolute sense and must be adjusted to each research or policy problem that arises (Ketels, 2006). financial performance and market share are vital to the existence of a firm (li, 2000). in this study, we will designate a firm as competitive if it journal revista innovar 105 rev. innovar vol. 25, núm. 55, enero-marZo de 2015 grows and expands from national to international markets and also obtains benefits. accordingly, as shown in figure 3, in the model developed, competitiveness is a construct formed by two variables: market extension, measured by level of internationalization, and firm performance. this last variable was assigned a value on an ordinal scale according to profitability. FigUre 3. competitiveness as a two-dimensional concept Performance Competitiveness market extension source: own elaboration. innovative outcomes this paper gages innovation through innovative outcomes, that is to say, through innovations in products. to define innovative outcomes, two respective indicators were used. the first refers to the level of product innovation and the second to the level of product innovation foreseen in the future. innovation is viewed as a source of competitive advantage for internationalized firms (mcadam, moffett, Hazlett & shevlin, 2010). the direct link between innovation and firm competitiveness has frequently been highlighted (Guan & ma, 2003; Hernández-espallardo, malmberg & Power, 2005; sánchez-Pérez & segovia-lópez, 2011; yam, lo, tang & lau, 2011). However, although innovation contributes to competitiveness, especially in small firms, we must understand the factors that restrict innovation (Hewitt-dundas & Roper, 2011). in our case, the relationship between innovation and competitiveness can be understood in light of the variables that form competitiveness. many studies in the literature have suggested that innovation has a meaningful impact on organizational variables such as profitability (li, 2000). for these reasons, we proposed the following hypothesis: Hypothesis 1: innovative outcomes exert a positive influence on competitiveness. cooperation We considered three variables in describing cooperation between organizations in this sector: distributor collaboration, national networks, and international networks. Cooperation with distributors is focused on the relationships that an organization establishes with firms situated downstream in the value system. Connections with national networks and international networks refer to the relationships established between firms and other national and international firms, respectively. Cooperation can boost competitiveness (enright & Roberts, 2001). it is a source of competitive strength (Jarillo, 1988), which contributes to success in the global network (thoumrungroje & tansuhaj, 2004). in fact, international competition is increasingly seen as occurring at the level of the organizational network more than at that of the individual organization (soeters, 1993). inter-firm cooperation is an efficient way to improve firms’ competitiveness (Chen & Karami, 2010). Cooperation can be considered a contributing factor in the success of smes (Chittithaworn, islam, Keawchana & yusuf, 2011). for these reasons, we proposed the following hypothesis: Hypothesis 2: Cooperation exerts a positive influence on firm competitiveness. the rest of the model: some Factors that influence innovation the rest of the model aims to analyze the influence of cooperation, quality management, knowledge, and financing on innovative outcomes. to justify this part of the model, we used table 1, which summarizes the contributions in the literature that justify the relevance of these variables to innovation. following the table, the last four hypotheses of the model are explained and argued, specifically those related to cooperation, quality management, knowledge, and funding. FigUre 2. continuum of competitiveness definition organizational variables internal market and environment variables external Performance market extension Competitiveness source: own elaboration. 106 rev. innovar vol. 25, núm. 55, enero-marZo de 2015 Empresas de Menor Tamaño cooperation networks of cooperation can contribute to different types of innovation (Chen, 2008), and international networks contribute to the spread of innovation. more specifically, relationships established between organizations along the supply chain, such as intermediaries and consumers, can contribute to the rapid spread of innovation after overcoming any obstacles related to cultural differences between countries and conflicting goals (steward & Conway, 2000). in general, cooperation with other levels of the value system—suppliers, distributors, and customers—can be the key to innovation. a close relationship with distributors and customers provides firms with a vital source of innovation (von Hippel, 1986). this commonly accepted idea explains that in order to promote innovation, firms often look to stimulate cooperation (falck, Heblich & Kipar, 2010). Cooperation appears to have a positive effect on the development of new products (enright & Roberts, 2001). enough theoretical reasons exist to propose the following hypothesis: Hypothesis 3: Cooperation exerts a positive influence on innovative outcomes. quality management We included two variables in the quality management construct: certified systems of quality management and teams. there are many reasons to analyze the relationship between innovative outcomes and quality management. it is an important factor that can help foster firms’ innovative capability (Perdomo-ortiz, González-Benito & Galende, 2006). Quality standards, which imply certified systems, have demonstrated a significant positive correlation with success in introducing new products to the market (Cho & Pucik, 2005; Cooper & Kleinschmidt, 1987; martínez- Román et al., 2011). the product innovation process can be improved by applying the principles of quality management (Gobeli & Brown, 1993). table 1. review of literature of the rest of the model dimensions and Factors description references cooperation distributors influence of cooperation with distributors freel, 2003; Hernández-espallardo, sánchez-Pérez & segovia-lópez, 2011 Business networks influence of cooperation with business networks amara, landry, Becheikh & ouimet, 2008; forsman, 2011; Romijn & albaladejo, 2002 quality management Quality standards significant influence of quality on the successful introduction of new products into the market Cho & Pucik, 2005; Cooper & Kleinschmidt, 1987; Hung, lien, yang, Wu & Kuo, 2011; martínez-Román, Gamero & tamayo, 2011. specialized teams existence of permanent groups and specialized teams such as liaison resources and communication systems Brockman & morgan, 2003; damanpour, 1991; Guan & ma, 2003; Hurley & Hult, 1998; Jiménez-Jiménez & sanz-valle, 2011; li & Kozhikode, 2009 Knowledge Research and experimentation evaluation of internal effort to acquire knowledge of a technological nature (annual budget spent) and the output obtained (patents) Chen & yang, 2009; forsman, 2011; furman, Porter & stern, 2002; Hull & Covin, 2010; Keizer, dijkstra & Halman, 2002; Kroll & schiller, 2010; li & Kozhikode, 2009; Quintana & Benavides, 2008; Romijn & albaladejo, 2002; subramaniam & youndt, 2005; vega-Jurado, Gutiérrez-Gracia, fernández-de-lucio & manjarrés- Henríquez, 2008 Universities and others influence of cooperation with universities, laboratories, and technological centers audretsch & lehmann, 2005; Caloghirou, Kastelli & tsakanikas, 2004; freel, 2003; fukugawa, 2005; Kaufmann & tödtling, 2001, 2002; Keizer et al., 2002; Rondé & Hussler, 2005; Galende & de la fuente, 2003; yam, lo, tang & lau, 2011 technological acquisition frequency of access to the technology market (technology purchase) Beneito, 2003; vega-Jurado, Gutiérrez-Gracia & fernández-de-lucio, 2009 Financial resources internal and external funding importance of internal and external funding to innovation Giudici & Paleari, 2000; Galende & de la fuente, 2003; Kaufmann & tödtling, 2002; martínez-Román et al., 2011 source: own elaboration. journal revista innovar 107 rev. innovar vol. 25, núm. 55, enero-marZo de 2015 Besides quality management standards and principles, human resources are also very important. therefore, it is appropriate to include quality management practices such as leadership and human resources management in this construct. they have a positive impact on the firm’s innovativeness (dinh, igel & laosirihongthong, 2006). Because of the complex problems that firms currently face, teams have become one of the key elements in today’s quality management systems (mehra, Hoffman & sirias, 2001). it is thus logical that the existence of these teams is considered more and more frequently a prerequisite for work in organizations that seek to implement quality control systems (irani, Choudrie, love & Gunasekaran, 2002; mehra et al., 2001). incremental innovation is reinforced by quality management, and the ongoing improvement which characterizes quality management is also key in the culture of innovative firms and contributes to the development of new products (mcadam, armstrong & Kelly, 1998). Quality management seems in general to have a strong impact on innovative outcomes (martínez-Román et al., 2011; satish & srinivasan, 2010). Hence, we proposed the following hypothesis: Hypothesis 4: Quality management exerts a positive influence on innovative outcomes. Knowledge in this study, the knowledge construct included the variables internal R&d, R&d collaboration, and technological acquisition, all of these being potentially relevant factors in the development of innovation. R&d is a source of internal knowledge that exerts a clear influence on innovative outcomes. R&d can help measure internal efforts made by the firm in order to develop technological knowledge (Bertrand, 2009; Hull & Covin, 2010; Quintana & Benavides, 2008; Romijn & albaladejo, 2002; subramaniam & youndt, 2005). likewise, R&d collaboration and technology acquisition are mainly related to external knowledge sourcing (Kang & Kang, 2009). Collaboration with other institutions takes on greater importance for innovation when the firm lacks the resources to rely on internal R&d (Chen, 2008; lin, 2003). for this reason we included R&d collaboration in this construct. it may be a natural complement to R&d in small- to medium-size organizations that lack resources for internal R&d. Cooperation with partners who have complementary knowledge bases increases learning capacity, development and the implementation of innovation (Hitt et al., 1998). R&d collaboration and technology acquisition influence perceived number of product innovations (Kang & Kang, 2009). in a generic sense, it is logical to propose the following hypothesis: Hypothesis 5: Knowledge exerts a positive influence on innovative outcomes. Financial resources the financial resources construct is composed by the variables of external funding and internal funding. the specialized literature indicates that financial resources are important to innovative activity in firms (furman et al., 2002). several research studies have indicated that a positive correlation exists between internal funding and innovation (Kamien & schwartz, 1978). the results have not been as conclusive with regards to how factors such as type of innovation (Galende & de la fuente, 2003), characteristics of the credit market, and firm life cycle (Giudici & Paleari, 2000) affect this relationship. But while internal resources clearly assist the innovative efforts of firms, the influence of external funding is more complex to evaluate in general terms. Wang and thornhill (2010) highlighted the non-linear behavior of external funding in relation to innovative effort in large firms, in contrast to the linear and positive effect that internal resources have on innovation in these corporations. the research of Gundry and Welsch (2001) demonstrated the importance of diversification of funding sources, including several equity and debt sources, in processes of commercial expansion, start-up, and early growth of smes. However, the role of external funding does not reduce the importance of internal resources in the development of these types of firms (Gundry & Welsch, 2001) and, especially, the contribution of internal capital in the first stages of the new firm (elston & audretsch, 2011). We must also consider the inherent difficulties a small firm faces in efforts to access external funding. in fact, small and young firms tend to face greater obstacles to receiving bank loans in a context free of credit restrictions (levenson & Willard, 2000). Without doubt, well-founded reasons exist for investigating the relationship between financial resources and innovative outcomes. thus, we proposed the following hypothesis: Hypothesis 6: financial resources exert a positive influence on innovative outcomes. 108 rev. innovar vol. 25, núm. 55, enero-marZo de 2015 Empresas de Menor Tamaño complete model the conceptual model in figure 4 shows the constructs and the relationships proposed in the six previous hypotheses. Hypotheses 1 and 2 formulate the main questions of the work, related to the potential influence of cooperation and innovation on competitiveness. in addition, the influence of cooperation, quality management, knowledge and financial resources on innovative outcomes is also studied. as can be observed, innovative outcomes play a fundamental role in the model by focalizing most of the relationships. FigUre 4. influence of innovation and cooperation on competitiveness: the mediating role of innovative outcomes Quality management Knowledge financial Resources innovative outcomes H1 Cooperation Competitiveness H2 H3 H4 H5 H6 source: own elaboration. methodology of the empirical research this section addresses several aspects related to the sample, the methodology, and the variables used for the empirical research. sample our study centered on the andalusian metal-mechanic sector. the sample size was 80 firms, which were selected by experts from the andalusian institute of technology (iat). the selection process sought to include the organizations most representative of their sector in the entire andalusian territory (see table 2). the average size of firms, measured by number of employees, was 36.8. table 3 shows the distribution of firms in intervals based on size. as a whole, the sample describes the makeup of smes in andalusia. the data for the study were obtained through two alternative means: 1) from personal interviews in which a questionnaire was applied to owners and Ceos in the firms selected; and 2) from the trade Register, which includes items of profitability used in the model. in the selection of sample elements, we sought to put data quality first with regards to both the business entities studied, and the method used for gathering information. for this reason, we decided that the most appropriate system for collecting information was the personal interview with managers or business owners guided by a questionnaire. in general, to determine the minimum sample size in a Pls model, one must select the greater of the following two possibilities (Barclay, Higgins & thompson, 1995; Chin, marcolin & newsted, 2003): 1) the number of indicators in the most complex formative construct; or 2) the greatest number of constructs that precede an endogenous construct. in our case, that number is 4. the sample size of 80 firms is thus sufficient for the analysis to be carried out. table 2. distribution of Firms by province province number of firms seville 22 málaga 12 Huelva 4 Cádiz 10 Córdoba 13 Jaén 9 almería 4 Granada 6 total 80 source: own elaboration. table 3. size of Firms in the sample size number of firms 0-19 43 20-49 26 50-149 7 150-249 3 > 250 1 total 80 source: own elaboration. methodology and Variables to formulate the model that proposes the set of hypotheses, we used sem. this statistical method includes multiple regressions between visible and latent variables. among the different techniques available, we opted for Partial least square (Pls) since the model features a construct with formative indicators (Henseler, Ringle & sinkovics, 2009; Ringle, Götz, Wetzels & Wilson, 2009) and, moreover, the sample size is reduced (Reinartz, Haenlein & Henseler, journal revista innovar 109 rev. innovar vol. 25, núm. 55, enero-marZo de 2015 2009). the treatment of data was carried out with the program Pls Graph (version 3, Build 1130). table 4 shows the observed variables that were included in the model along with their scales. results the Pls model that we proposed can be seen in figure 5. it was tested in two stages (Barclay et al., 1995). firstly, the measurement model was evaluated for validity and reliability. at this stage, it was necessary to evaluate the table 4. description of Variables observed Variables description scales Cesy Certified systems of quality management does the firm include a certified system of quality management? dichotomous team specialized teams are specialized teams created for the analysis and solution of problems? dichotomous inRd internal R&d level of effort in R&d in the firm ordinal (1-6) RdUn R&d collaboration (universities) intensity of R&d collaboration with universities and technological centers ordinal (1-6) teaC technological acquisition frequency of access to the technology market ordinal (1-6) efUn external funding difficulty in obtaining mid-term bank loans ordinal (1-6) ifUn internal funding importance of self-funding ordinal (1-6) dCol distributor collaboration level of collaboration with distributors ordinal (1-6) nnet national network level of integration in national networks ordinal (1-6) inet international network level of integration in international networks ordinal (1-6) inn1 innovations made level of activity in product innovations during the last 3 years ordinal (1-6) inn2 innovations predicted level of activity in product innovations predicted for the next 3 years ordinal (1-6) PeRf Performance Profitability for 2008-2009 average values of ordinal scales (1-6) meXt market extension market extension: 2*(percentage of sales corresponding to the international market) + percentage of sales corresponding to the national market numerical source: own elaboration. FigUre 5. complete model of competitiveness: r2 coefficients, weights, and b coefficients source: own elaboration. INET FRE QMA KNO COO INNCOM CESY TEAM INRD RDUN TEAC IFUN EFUN DCOL INN2INN1 PERF MEXT NNET 0.808 0.715 0.876 0.649 0.593 0.602 0.883 0.200 0.521 0.218 -0.001 0.367 0.404 0.368 0.929 0.9210.939 0.8360.736 0.762 0.370 0.378