The competitive efficiency of Costa Rican small and medium-sized businesses: a data envelopment analysis approach

Building on the resource-based view theory, this paper aims to evaluate the role of innovation on competitiveness and competitive efficiency among Costa Rican small and medium-size enterprises (SMEs).

The study uses a sample of 231 Costa Rican small and medium-size firms for 2019. The authors compute a competitiveness index that includes four pillars: innovation, strategy, markets and human capital. To estimate competitive efficiency, the authors use a non-parametric model, namely, data envelopment analysis, with a single constant input.

The results confirm that competitive and efficient SMEs present a more homogenous distribution of resources and capabilities. The innovation pillar is positively correlated with competitive efficiency. A positive correlation exists between market experience (business age) and innovation and between innovation and business size in terms of the number of employees.

The study contributes to the understanding on how SME managers’ decision-making processes affect resource allocation within the business, and on how SMEs can introduce strategic actions based on improvements of those resources that will likely have a greater impact on competitive efficiency.

This study contributes to better grasping how the configuration of resources and capabilities, in which innovation plays a decisive role, and contributes to shape the competitive efficiency of small and medium-sized businesses in a developing economy.