While large companies could invest directly in building their reputation in a particular market, small companies need to concentrate on developing skills that will help them build a local reputation. To date, the RBV theory reveals that companies manage their capacities to develop higher-order skills, which gives them a competitive advantage this is especially true in companies that are not knowledge intensive. For instance, knowledge is fundamental to being considered the heart of business management. Theoretically, the resource-based view (RBV) framework explains the role of skills within the companies. Previous studies established that companies can turn their internal capabilities into assets to build their local reputation in the market. Therefore, companies must communicate the innovations developed to the market before they can see a better result in their operations. Empirically, in the Colombian context, when small companies are seen to be doing things differently, they capture more customers in a defined market. As a rule, businesses invest in their image to build a reputation however, this does not positively impact their performance. Regarding recognition, MSMEs must be cautious with their use of resources to build their reputation. In other words, there are various challenges for nascent companies, and the salient ones in an emerging economy include financial leverage, logistics, hiring specialized personnel, and gaining recognition in the sector in which they operate. In addition, companies need to develop and implement strategies that allow them to reach their target market. Although Colombian companies have a strong entrepreneurial and productive capacity, it is reasonable for nascent companies to be concerned with their economic sustainability. In general, these statistics reveal that about 50% of the companies created that year had to close down. The 2018 closure and bankruptcy figures are striking, causing the favorable business situation to be reconsidered since approximately 180,507 enterprises in Colombia went bankrupt. However, companies in the orange economy sector are not immune to the challenges typically faced by newly created companies, including being acknowledged by others in the market and ensuring better business performance.Īn additional phenomenon has happened in Colombia in the last few years. Hence, different mechanisms have been implemented to favor their development of the sector. Companies in the orange economy have gained importance in Colombia as a result of their successful exploitation of the talent and cultural wealth of the country to drive economic growth. According to the Confecámaras, companies belonging to the orange economy grew even more: “it was found that during 2019 a total of 9,122 companies were created, that is, a growth of 7.7% in this segment compared to the same period last year”. Micro, small, and medium-sized enterprises (MSMEs), are growing considerably in Colombia according to the Confederación Colombiana de Cámaras de Comercio (Confecámaras), 309,463 enterprises were created in Colombia in 2019, which represents a 2.1% increase from 2018 (303,027). It is recommended that entrepreneurs invest resources in accumulating internal (tacit) knowledge to improve skills that enhance reputation. However, it is proposed to refine the original model by considering the manager’s perspective. Innovation was found to not impact the performance of companies, but this can be associated to factors that were not considered in this research. For this, a survey was conducted in 320 orange economy MSMEs located in Bogotá, Colombia, and the relationship of these variables was statistically tested through a quantitative analysis of multivariate data. Therefore, this research accounts for how MSMEs can build their reputation through innovation and accumulated knowledge. In this paper, the purpose is to understand the internal reputation-building process carried out by MSMEs and the variables that intervene. In this regard, the study is based on the work of Hormiga and Garcia-Almeida (2016) who proposed the relationship between accumulated knowledge and innovation as background of reputation. Firms with a non-technological emphasis also require knowledge, innovation, and reputation to perform better. In doing so, this study focuses on companies classified as promoters of Colombia’s “orange economy,” which relates to the country’s cultural and creative diversity. This study seeks to understand how micro, small, and medium-sized enterprises (MSMEs) can be innovative while developing their reputation.
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