1. Introduction
Firm Foundations reports on the findings of the Business Practices and Performance Survey 2001 (BPPS) and follow-up interviews with firms. The study was undertaken to gain an updated picture of how successful the New Zealand business sector has been in adopting good business practices, as described in the original Leading the Way study of 1994 and the follow-up study Gearing Up in 1999. It was also developed to evaluate how business capability has evolved over the last decade, following from the report cards signalled in Islands of Excellence (1991) and A Season of Excellence? (1996). Improved business capability is critical to the ability of all firms, particularly small New Zealand firms distant from major markets, to compete in the business environment they face in the new millennium.
Since the 1999 report, Government has devoted quite significant effort and resources to better understanding barriers and opportunities facing businesses, sectors and regions, and to introducing new industry and regional development policy and initiatives to improve information and assistance available to businesses. These industry development initiatives have had a particular focus on building business capability.
Research at the level of the firm, on the dynamics of New Zealand business and on the evolution of competitive capability, has unfortunately declined over the last three to four years. This contrasts with significant research efforts in the early and mid-1990s, which focused on how the business sector was adjusting to an increasingly open and competitive environment. Notable exceptions in recent years have been the Competitive Advantage in New Zealand Project (Victoria University), Research into Service Sector Competitiveness (Otago University) and Treasury's series of Economic Transformation research projects.
In this context, the BPPS is a timely and important study, which fills a gap in the ongoing assessment of the underlying strengths and weaknesses of the New Zealand business sector.
Specifically, the BPPS was designed to:
- determine the current state of organisational capability in New Zealand firms
- assess the current level of business practices, innovation, and use of IT (Information Technology) in New Zealand firms
- measure business performance across a range of indicators
- examine the relationship between the adoption of business practices, innovation, IT and business performance
- examine the relationship between the adoption of business practices, innovation, IT and company structure and profile
- identify the attributes of higher and lower performing firms
- identify firms' commitment to capability improvement and innovation, and
- assess the underlying strengths of aggregate firm performance and firms' ability to develop sustainable competitive advantage.
These findings have important implications for all groups interested in the business improvement process including government, industry associations, advisors, managers, and employees. The findings will better inform policymakers' input and advice on industry and regional development programmes; for academics, the study offers the most comprehensive database of business practices, strategies, and outcomes ever produced in New Zealand, and is therefore a mine of information for future research; industry associations and advisors will be able to use the information to consider the ways in which their own services are geared towards addressing business weaknesses; and managers and employees will be able to consider their own business practices in the light of how leading firms perform.
As with the preceding 1994 and 1999 studies, this report does not attempt to resolve all the policy implications that arise from the findings. However, it does highlight particular issues, which could deserve the further attention and debate of policy makers.
Each chapter of the report provides an analysis of the results for particular business activities covered by the survey, compares these results to related New Zealand research that has been undertaken in the last few years, and describes the latest "accepted wisdom" in each area of business practice. Most chapters also have a separate section on manufacturing, where we have compared this survey's results with comparable results from the Gearing Up (1999) study.
Observations obtained from 48 site visits, undertaken to test the survey data and illuminate the findings, are also incorporated into this report.
The survey was administered by Statistics New Zealand and was overseen and analysed by the Ministry of Economic Development, with the assistance of Colin Campbell-Hunt (Professor, Department of Management, University of Otago), Lawrence Corbett (Associate Professor, School of Business and Public Management, Victoria University of Wellington), Claire Massey (Director, New Zealand Centre for SME Research, Massey University) and Ken Carlaw (Department of Economics, University of Canterbury).1
Peer review and an international perspective was provided by Danny Samson (Professor, Operations and Strategy, Department of Management, Melbourne University), David Yarrow (Principal Lecturer, Centre for Business Excellence, Northumbria University) and Karen Brown (Professor, Operations and Production Management, University of Washington, Bothell). We also appreciate the comments and input provided by Business New Zealand, Chambers of Commerce, the New Zealand Business Excellence Foundation, Employers and Manufacturers Associations, and contributors from Auckland, Waikato, Victoria, Massey and Otago Universities.
We are particularly pleased that Sweden, through NUTEK (the Swedish Business Development Agency) and the Swedish Pressure Vessel Association, agreed to replicate the study in three regions to provide some international comparison on manufacturing practices and performance.2 A discussion on these results is provided in chapter 15. With time, we hope to encourage other OECD countries to also adopt the survey, which will allow New Zealand firms to compare themselves to the world's best businesses.
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