The Nexus between Logistics Management, Competitive Advantage, and Organizational Performance in SMEs: Evidence from the Jordanian Fabric Sector
Drawing on the Resource-Based View and data from 130 Jordanian fabric SMEs, this study reveals that while logistics management significantly enhances both competitive advantage and organizational performance directly, it does not significantly mediate performance through competitive advantage, suggesting that firm-level capabilities may impact outcomes via pathways other than competitive advantage in this specific developing-economy context.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the bustling economy of the Middle East, small and medium-sized businesses are the lifeblood of local communities, providing jobs and keeping trade moving. Yet, for many of these firms, the path from raw material to a satisfied customer is often blocked by logistical hurdles: inconsistent supplies, slow deliveries, and costly mistakes. To understand how these businesses can thrive, researchers look to a concept called logistics management. In plain terms, this is simply the art of moving goods and information efficiently from the supplier to the customer. When a company masters this, it can lower its costs and serve its clients better than its rivals. This ability to outperform competitors is known as competitive advantage. The big question for economists and business leaders is whether these operational skills directly make a company more successful, or if they first create a special market position that then leads to success.
A recent study focused on the fabric and textile sector in Madaba Governorate, Jordan, to answer this question. The researchers surveyed 130 small fabric companies, asking their owners and managers about their daily operations, their relationships with suppliers, and how they view their own success. They wanted to see if better logistics practices led directly to a stronger business, or if those practices first had to build a competitive edge that would then drive growth. The study found that for these small fabric firms, the answer is surprisingly direct. The data showed that when a company improved its logistics—by partnering better with suppliers, sharing information clearly, and managing customer orders smoothly—it saw an immediate boost in its overall performance. This improvement happened without needing to first establish a distinct market advantage over competitors.
The researchers discovered that while good logistics did help a company stand out from the crowd, that standing out was not the main reason the company performed better. Instead, the efficiency gained from good logistics practices translated directly into better financial results, happier customers, and a more secure future for the business. It is as if the company's internal engine was tuned so well that it ran faster immediately, rather than waiting for a special racing license to be issued. The study suggests that for small businesses in this sector, the value of logistics lies in its immediate ability to cut costs and reduce errors, rather than in building a long-term strategic shield against competition.
This finding challenges a common belief in business theory that suggests capabilities must first create a unique market position before they can improve performance. The author proposes that in small firms, where owners are often deeply involved in day-to-day operations, the benefits of good logistics are felt instantly. When a manager ensures a shipment arrives on time or a defect is caught early, the savings and customer satisfaction are realized right away. The study indicates that while having a competitive advantage is still valuable, it plays a smaller role in driving performance for these specific firms than the direct improvements in how the business runs.
The author was careful to note that their results are based on a snapshot in time and rely on the opinions of the business owners themselves, rather than hard accounting records. Because of this, they describe their findings as strong associations rather than absolute proof of cause and effect. They also acknowledged that their sample was limited to one specific industry in one region, so the results might look different for larger companies or in other sectors. However, the clear pattern in the data offers a practical lesson: for small fabric manufacturers in Jordan, investing in the basics of moving goods and managing information is a direct route to a healthier bottom line. The path to success, it seems, is often found not in complex strategies to outmaneuver rivals, but in the reliable, efficient execution of daily tasks.
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