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The Importance of Project Management in SMEs for the Development of New

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DOI: 10.5897/AJBM10.1265

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African Journal of Business Management Vol.5 (30), pp. 11844-11855, 30 November, 2011
Available online at http://www.academicjournals.org/AJBM
DOI: 10.5897/AJBM10.1265
ISSN 1993-8233 ©2011 Academic Journals

Full Length Research Paper

The importance of project management in small- and

medium-sized enterprises (SMEs) for the development
of new products through E-collaboration
Marjan Mohammadjafari1*, Shamsuddin Ahmed1, Siti Zawiah Md Dawal1 and Hadi
Zayandehroodi2
1
Department of Engineering, Design and Manufacturing University of Malaya, Lembah Pantai, 50603 Kuala Lumpur,
Malaysia.
2
Department of Electrical Engineering, Kerman Branch, Islamic Azad University, Kerman, Iran.
Accepted 29 November, 2010

The research in this paper seeks ways for manufacturing companies to accomplish projects in real time
with less cost. This paper describes a new model using critical success factors of implementing
projects in small- and medium-sized enterprises (SMEs). The factors in the conceptual model were
identified in past studies and are validated from interviews with 20 project managers in the electronics
industry in Iran. Several prior researches have suggested critical success factors for reducing time and
cost in the development of a new product. These factors are related to design, product, planning and
procurement. However, none of these studies has proposed a model that specifies practices that
should be undertaken to facilitate the progression to reduce time and cost in developing new products
in SMEs. Following this, a development of a new model will likely prove important to help SMEs to
understand what is required in order to be an effective global organization in terms of reducing time
and cost through electronic collaboration (E-collaboration) and project management. The concept and
value of E-collaboration and project management, and its strengths and weakness on SMEs, is also
explained.

Key words: E-collaboration, project management, small- and medium-sized enterprises (SMEs), new product,
reduces time, reduce cost.

INTRODUCTION

The manufacturing industry plays a vital role in the
economy of many countries (Mahaney and Lederer,
2009). A large number of small- and medium-sized
enterprises (SMEs) make up the manufacturing industries
of these countries, but they have some limitations for
entrance into and sustainability in the market, especially
on a global scale (Mohammadjafari et al., 2011). SMEs
are often suppliers to big companies and are producers
of final products for ultimate customers. In the case of
their final products, SMEs cannot compete with larger
companies without paying due attention to customer
*Corresponding author. E-mail:
marjan_mohamadjafari@yahoo.com. Tel: 0060173141328.
needs. In the current customized market environment,
SMEs are able to increase product varieties, but the time
for developing a new product is often more than initially
thought.
However, new product introduction must be very timely
and cost competitive. One of the paths to time and cost
reduction in new product development is to create a
collaborative environment between the various
departments of one factory. Four departments, namely
design, production, planning and procurement, have a
key role in SMEs (Bashir, 2008; Kusar et al., 2004;
Roberts, 2006; Xie et al., 2002; Zhou et al., 2008).
Collaboration can be established in different ways using
different tools, one of which is E-collaboration (Bafoutsou
and Mentzas, 2002). The use of E-collaboration
technologies has become essential for supporting

Figure 1. Project management process.
product development projects (Qureshi et al., 2005).
Alternatively, in many manufacturing industries, project-
oriented management has become a way to develop a
better work environment (Mohammadjafari et al., 2010a).
The research on which this paper is based seeks to
understand how companies based in the electronics
industry in Iran have approached the implementation of
their projects in real time with less cost. By investigation
into and interview with some of these companies, it
emerges that a major problem faced in new product
development by such companies is a lack of coordination
between different parts of the company. If the related
sections engage in electronic collaboration, led by the
project manager, the information for production of a new
product will be integrated, and the project will be finished
in real time. Furthermore, the cost for production will
likely decrease. The focus of this paper, then, is to
propose a conceptual model with which to improve new
product development in SMEs through E-collaboration
and project management.
E-collaboration
E-collaboration is an active cooperation among different
individuals to accomplish a joint task using electronic
technologies (Cai and Kock, 2009). “E-collaboration and
collaborative tools bring geographically dispersed teams
together for virtual meetings across great distances”
(Bafoutsou and Mentzas, 2002). “The field of
collaborative computing encompasses the use of
computers to support coordination and cooperation of two
or more people who attempt to perform a task or solve a
problem together” (Borenstein, 1992). In this study, the
authors consider E-collaboration between different
departments of one factory.
Project management
Initially, a project emerges because there is something
important and complex to be solved. The project
Mohammadjafari et al. 11845
organization then develops due to a need for a
purposeful organizational effort and a high level
coordination in order to execute a number of activities
(Sِderlund, 2004). Project management is a methodology
for managing a project (Ramaprasad and Prakash,
2003). “Project management, including the tools,
techniques, and knowledge-based practices applied to
manage the creation of products and services, is
becoming an increasingly accepted and applied discipline
across industry sectors” (Jugdev et al., 2007). Project
management is “the manner of implementation, of
expertise, paraphernalia, knowledge and modus operandi
to an extensive range of activities for the fulfillment of
prerequisite of the specific project” (Qureshi et al., 2009).
Project management has become a distinctive way to
manage business activities nowadays (Filippov and Mooi,
2010). Project management is becoming a key strategy
for managing organizational change in contemporary
organizations, with corporations, government, academia
and other organizations recognizing the value of common
project approaches and of educated employees for the
execution of projects (Rooij, 2009). Most of all, project
managers are in the front-line when it comes to assuring
customer satisfaction (Kirsilä et al., 2007). By these
definitions, and due to the importance of the role of
project management in the success of projects, the
authors consider related department collaboration on
product development by the project manager through e-
collaboration.
Project management process
All projects have a beginning and an ending, and project
management has corresponding initiating and closing
processes. The middle, or work of the project, is
managed by planning, executing, and monitoring and
controlling processes (Guide, 2004). Effective project
management involves repeated performance of these
processes, as illustrated in Figure 1. For this research,
the project manager leads the projects through the steps
presented in the Figure.
11846 Afr. J. Bus. Manage.

Table 1. Project management institute project management area.

Project management area Description

Integration management Unifying the activities and resources of the project to complete.
Ensuring that the project includes all the work required, but only the work required to meet the project
Scope management
requirements.
Time management Ensuring timely completion.
Cost management Ensuring that the project can be completed within the project budget.
Quality management Ensuring that the project product will satisfy the project requirements.
Managing the purchasing and acquisition of outside goods and services required to complete the
Procurement management
project.
Risk management Identifying and managing project risks.
Communications
Ensuring timely and appropriate project communication.
management
Human resource
Organizing and managing the project team.
management
Adapted from Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK Guide), 3rd ed., Project M anagement
Institute, Inc., 2004. Copyright and all rights reserved.

Project management area
Projects are typically part of an organization. The
relationship between the project and organization varies,
and that relationship affects the scope of project
management responsibilities. Although the nature of
project management responsibility varies by organization
and by project within an organization, project
management encompasses many areas. The Project
Management Institute in the United States in 2004
(Project Management Institute, 2004), listed project
management areas, summarized in Table 1, which
provides a sense of the breadth of the project
management task. The Project Management Book of
Knowledge (Project Management Institute, 2004)
provides comprehensive description of activities
associated with each area, the interaction of the areas
with the key project management processes described
earlier, available management tools and techniques for
each area, and input and outputs of each area (Jacobson
et al., 2006).
In this research, the authors attend to two areas of
project management from nine existing areas, because of
the operation of the conceptual model. One is integration
management and the other is communications
management.
Small and medium enterprises in developing E-
collaboration
Small and medium enterprises (SMEs) play an important
role in promoting economic development (Ale Ebrahim et
al., 2009a). In most countries, SMEs dominate the
industrial and commercial infrastructure (Deros et al.,
2006). SMEs play a very important role in national
economies, providing job opportunities, act as supplier of
goods and services to large organizations, and any lack
of product quality could adversely affect the competitive
ability of the larger organizations (Deros et al., 2006).
“Small firms are indeed the engines of global economic
growth” (Acs et al., 1997). SMEs have an important role
in flows of foreign direct investment (Kuo and Li, 2003).
SMEs also serve as the key engine behind equalizing
income disparity among workers. SMEs are increasingly
internationalizing their business activities (Beck et al.,
2005).
According to Ale Ebrahim, there are many accepted
definitions of SMEs. The classifications vary from industry
to industry and from country to a country, different
countries accept dissimilar criteria such as employment,
sales or investment for defining small and medium
enterprises. In the absence of a definitive classification,
an agreement has developed around the European
Commission (EC) criteria for SME classification. This
definition adopts a quantitative approach emphasizing
“tangible” criteria, employee numbers (up to 250
employees), turnover (less than 50 million EUR) and
balance sheet statistics (less than 43 million EUR) (Ale
Ebrahim et al., 2009b).
Our attention in this study is focused on SMEs in Iran.
While the term SME has varied definitions from different
organizations, the most acceptable one is similar to the
EC definition, except for financial criteria. According to
these definitions and the importance of SMEs in
manufacturing industries in this research, the author
chose these types of companies.
Strengths and weakness characteristics of SMEs in
developing E-collaboration
For a better understanding of SME activity, summary
information of SME characteristics is listed in Tables 2

Table 2. Strength characteristics of SMEs.
Strength
Easily adaptive to new market conditions, flexible to change, developing
customized solutions for partners and customers, dynamic in activities
Knowledge creating
Excellent at multi-tasking
Powerfully correlated and inter-related with respect to innovation
Capable to answer quickly to customer requests and market changes,
customers focused
Quick decision making process
Able of going global rapidly
Routine processes, flexible structures
Useful
and 3.
New product development
New product development (NPD) is a business process
for developing new products for a company, whether it is
an upgrade of an existing product or a new concept
(either for the company or for the customer). It includes
all activities from the development of an idea or a concept
for a product, to the realization of the product during the
production stage and its introduction into a market place
(Hohenegger et al., 2007).
SMEs need to develop their products for competing in
the market, and then they need to develop new products.
In that case, the authors tend to focus on new product
development in SMEs.
RELATED STUDIES
By investigation into prior research, the author finds one
of the problems in many industries is the long time
required to develop a new product. From the literature
review, it is discovered that four departments are
influential in reducing time and cost in new product
development in manufacturing companies. These
departments are those of design, procurement, planning
and production (Bashir, 2008; Carter, 1997; Clift and
Mohammadjafari et al. 11847
Reference
(Ale Ebrahim et al., 2009b; Aragón-Sánchez and Sánchez-
Marín, 2005; Davis and Sun, 2006; Mezgár et al., 2000)
(Ale Ebrahim et al., 2009b; Egbu et al., 2005)
(Ale Ebrahim et al., 2009b; Schätz, 2006)
(Bhagwat, 2006; Gray, 2006; Huang et al., 2001; Jutla et
al., 2002)
(Abdul-Nour et al., 1999; Ale Ebrahim et al., 2009b; Kim et
al., 2008)
(Lawson et al., 2006; Schätz, 2006)
(Ale Ebrahim et al., 2009b; Gassmann and Keupp, 2007)
(Bhagwat, 2006; Gassmann and Keupp, 2007; Haga,
2005)
(Beck et al., 2005)
Vandenbosch, 1996; Griffin, 1997; Roemer and Ahmadi,
2010; Selvaraj et al., 2009; Tan and Vonderembse, 2006;
Xie et al., 2002). A summary of the prior studies is shown
in Table 4.
METHODOLOGY
Model verification methodology
The primary ideas on the development of a conceptual model were
devised based on a brainstorming process with academics.
Following the primary expansion of the conceptual model, feedback
was obtained from participants in the industry and academics. The
objectives of obtaining feedback on the model include:
(1) Identify how integration can be achieved among different parts
of a manufacturing company.
(2) Reduce new product development time by using the conceptual
model.
(3) Reduce the cost of new product development by using this
model.
The validation of the conceptual model was conducted through one-
to-one semi-structured interviews with 20 participants. All
participants were from the electronics industry and each held a
project management position. All had related knowledge and
experience.
The interviews were conducted via video conferencing. The
duration of the interviews lasted between 50 min to 1 h. The
participants were given an explanation regarding the purpose of the
feedback, the purpose of the conceptual model, some background
of the research that lead to the development of the model, and key
11848 Afr. J. Bus. Manage.
Table 3. Weakness characteristics of SMEs.
Weakness
Lagging in the export, lack the resources necessary to enter foreign
markets
Weak at converting research and development into effective innovation
Scarce resources and manpower
Strategy formulation on the basis of what available, lack a long run
perspective
Limited degree of information technology (IT) implementation
Lack of industrial engineers or right kind of manpower to apply various
statistical and managerial methods or tools
SMEs shy away from formal projects and long-term initiatives and instead
only participate in small-scale, once-off initiatives
concepts from the literature. In the feedback process, the opinions
of the industrialists and academics were obtained based on their
knowledge and experience.
Methodology for review of the related articles
The review is based on reliable publications. It covers aspects like
scope of reduced time and cost by E-collaboration through project
management approaches. The articles are collected from leadings
journals and books related to the topic published since 1992.
There is a poor track record of reducing time and cost by E-
collaboration through project management. Only a few studies have
been conducted on this subject. In order to prove this allegation, the
distribution of published articles per year extracted from the Web of
Science database is demonstrated in Figures 2 and 3. However,
the tendency of publication has shown that E-collaboration, SMEs,
project management and new products are an interesting topic. In
order to prove this assertion, the distribution of published articles
per year extracted from the Web of Science database is
demonstrated in Figures 4 to 7. Therefore, in order to determine the
formation of active management involvement in the field, we
consider a broader scale of literature. The references used contain
approximately 55 articles out of 400 selected articles, which were
taken from 670 pre-investigated items, shown in Figure 8.
Theoretical foundations and conceptual model
As indicated by the review of the literature, it is almost
universally accepted that the time needed for new
product development is a major concern for SMEs (Hung
et al., 2007; Langerak and Hultink, 2008; Roemer and
Ahmadi, 2010; To et al., 2009). However, an examination
of the interdisciplinary literatures identifies four
departments that affect the completion of projects in
Reference
(Jansson and Sandberg, 2008; Mahajar et al., 2006)
(Ale Ebrahim et al., 2009b; O'Regan et al., 2006)
(Abdul-Nour et al., 1999; Chou, 2008, Kim et al., 2008;
Westerlund and Rajala, 2008)
(Ojeda-Gomez et al., 2007; Yusuff et al., 2005)
(Chou, 2008; Egbu et al., 2005; Eikebrokk and Olsen,
2007; Sarosa and Zowghi, 2003)
(Ahmed and Hassan, 2003; Ale Ebrahim et al., 2009b)
(Burke and Gaughran, 2006)
terms of time and budget: design, planning, production
and procurement. The effects of these four departments
have been studied separately under several theoretical
perspectives in recent years (Mohammadjafari et al.,
2011; Roberts, 2006; Roemer and Ahmadi, 2010;
Selvaraj et al., 2009). However, none of these studies
has proposed a model that specifies practices that should
be undertaken to facilitate the progression to reduce time
and cost in developing new products in SMEs.
To understand the importance of coordinating these
sections with the project manager and validated the
model, the author interviewed 20 project managers. The
majority of project managers interviewed stated that the
lack of coordination between the related departments in
production was the major problem in the inability to
reduce time and cost. Our interviews led us to the
primary conclusion that the long time required for new
product development results from a lack of coordination.
The companies interviewed were in the electronics
industry. The purpose of these interviews was to
understand the companies’ process for collaboration
among four departments into product and process
development and to elicit insights into how they had
overcome barriers along the way.
Using the information from these interviews, we
developed a conceptual model that is characterized by
the major activities required for interdepartmental
collaboration in new product development. Our case
studies suggest that companies that had achieved
reduced time for new product development had more
effective interdepartmental collaboration. Four critical
elements of this process are captured in the explanatory
 Mohammadjafari et al. 11849

Table 4. Numerous of influence factors for reduce time and cost based on literature review.

Search Subject Source information

result

CAD technology
Simplification of
Project strategy
Team structure

Setting buffers
Involvement of
Quality control
Manufacturing

Technologies

Development
compression
management

Procurement

Organization

critical chain
Training and
engineering

Techniques
Concurrent

Concurrent

production
complexity

integration
Innovation

identifying

Reference
rewarding

Lead user
structure
Planning

capacity
partners

Supplier
Process
Product

Product

product
Project

Design

Virtual

Speed
Time
Tool
√ √ √ (Clift et al., 1996)
√ √ √ √ (Griffin, 1997)
√ √ (Carter, 1997)
√ √ (Hartley et al., 1997)
√ (Athakorn et al.,
2001)

√ √ √ (Xie et al., 2002)

√ √ (Kusar et al., 2004)
√ √ (Petersen et al 2005)
√ (Tan and
Vonderembse, 2006)

√ (Roberts et al.,
2006)

√ √ √ √ (Zhou et al., 2008)

√ √ √ √ (Bashir, 2008)
√ √ √ √ √ √ (Ahlemann, 2009)
√ (Selvaraj et al.,
2009)

√ √ √ √ √ (Xia-Bao et al.,
2009)

√ (Lifang et al., 2009)

√ √ (Vinodh et al., 2009)
√ √ (Hebert et al.,
2010)
√ √ √ √ (Roemer and
Ahmadi, 2010)
11850 Afr. J. Bus. Manage.

Table 4. Continued.

Performance effect Research methodology Source information

Case study(small n)

Empirical(large n)

creative software
pattern matching
Theory -Building
E-collaboration

Math. Modeling
Process Model

www-based
Experiment
Framework
Reference

Simulation

pilot study
prototype
statistical
Review
Quality

variety

Other
Time

cost

√ √ (Clift and Vandenbosch, 1996)

√ (Griffin, 1997)
√ √ (Carter, 1997)
√ √ (Hartley et al., 1997)
√ √ (Athakorn et al., 2001)
√ √ √ √ √ (Xie et al., 2002)
√ √ √ (Kusar et al., 2004)
√ √ √ √ (Petersen et al., 2005)
√ √ √ √ (Tan and Vonderembse, 2006)
√ √ √ √ (Roberts et al., 2006)
√ √ √ √ √ √ (Zhou et al., 2008)
√ √ (Bashir, 2008)
√ √ (Ahlemann, 2009)
√ √ √ (Selvara et al., 2009)
√ √ √ (Xia-Bao et al., 2009)
√ √ √ √ (Lifang et al., 2009)
√ √ √ √ (Vinodh et al., 2009)
√ √ √ (Hebert et al., 2010)
√ √ (Roemer and Ahmadi, 2010)

model (Figure 9) and supported by prior
researchers (Petersen et al., 2005; Roemer and
Ahmadi, 2010; Xia-Bao and Li-Xi, 2009; Zhou et
al., 2008). In this model, we consider four sets of
hypotheses:
H1: The communication between a designer in the
department of design and project manager is
essential before starting production.
H2: Coordination between product manager and manager must report to the project manager
project manager is necessary for reducing time for before arriving at the project in the line of product.
new production development before the start of
production.
H3: The procurement manager must report to the Conclusion
project manager about preparing equipment
before starting a project. This paper looks at the development of a new
H4: The project manager must be familiar with the model using critical success factors of reduce time
product plans and then the control project and cost that were identified in past studies and
 Mohammadjafari et al. 11851

Figure 2. Number of publication in field E-

collaboration, project management and new product
(source: Web of Science ® 2010).

Figure 3. Number of publication in field e-

collaboration, project management and SMEs
(source: Web of Science ® 2010).

Figure 4. Trend of E-collaboration (source: Web of

Science ® 2010).

validated from a survey. Increasingly, more studies design, planning, procurement and production.
create awareness of the critical success factors that are Additionally, the author presented some definitions of the
important in reducing time and cost in new product value of E-collaboration, project management, SMEs and
development. These factors are the departments of new product development. Future research can improve
11852 Afr. J. Bus. Manage.

Figure 5. Trend of project management (source: Web of

Science ® 2010).

Figure 6. Trend of SMEs (source: Web of Science ®

2010).

Figure 7. Trend of new product (source: Web of Science

® 2010).
 Mohammadjafari et al. 11853

Figure 8. Schematic diagram of the literature.

Department
of Design
H1
Reduce Time
Department of Product
of Production H2
Project
Manager by Production Line
E-Collaboration
Department H3
of Procurement Decrease Cost
of Product
Department H4
of Planning

Figure 9. Conceptual model for reducing time and cost.

new product development in SMEs by this information.
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