Determinants of process reengineering and waste management as resource efficiency practices and their impact on production cost performance of Small and Medium Enterprises in the manufacturing sector

Abstract

The effect of resource efficiency practices of large enterprises is well-documented; however, very limited research studies have been conducted in this field on Small and Medium-sized Enterprises (SMEs) contributing to the manufacturing sector. This research study identifies how various driving forces differ depending on the type (i.e., process reengineering and waste management) of resource efficiency practices. Moreover, the impact of these practices on production cost is evaluated. For this purpose, we have utilized the secondary data gathered for the Flash Eurobarometer in September 2015 to investigate the determinants of resource efficiency action of 2055 manufacturing SMEs across Europe and the USA. We have employed binary logistic regression to classify the impact of several factors on the extent of resource efficiency activities such as process reengineering and waste management practices and determined how these activities contribute to production cost performance. Our results demonstrate that cost reduction and anticipating future legislation are two of the most significant motivations for implementing process reengineering actions. Moreover, customer demands and competition with rivals are two primary reasons for adopting waste management practices.