OPERATIONS MANAGEMENT | RESEARCH ARTICLE The impact of inventory management practice on firms’ competitiveness and organizational performance: Empirical evidence from micro and small enterprises in Ethiopia Daniel Atnafu 1 * and Assefa Balda 1 Abstract: This study aimed to empirically examine the impact of inventory management practice on firms’ competitiveness and organizational performance. Data for the study were collected from 188 micro and small enterprises (MSEs) operating in the manufacturing sub-sector and the relationships and hypothesis proposed in the conceptual framework were tested using structural equation modeling (SEM). The results indicate that higher levels of inventory management practice can lead to an enhanced competitive advantage and improved organi- zational performance. Also, competitive advantage can have a direct, positive impact on organizational performance. Therefore, it is recommended that policy makers, universities, NGOs and any concerned party who are engaged in sup- porting of MSEs need to work on providing the necessary training and resource to promote the inventory management practice of MSEs which will result in increasing their competitiveness and organizational performance. That would enhance their contribution to the economic development of the country. Note that, the conclusion obtained from this study may not be used to generalize to large and medium scale as well as overall sectors since its focus is only from the MSEs’ manufacturing sub-sector points of view. Subjects: Production, Operations & Information Management; Operations Management; Quality Management; Supply Chain Management; Organizational Studies Daniel Atnafu ABOUT THE AUTHORS Daniel Atnafu Gelagay: He has got his MBA degree from Bahir Dar University, Ethiopia. Currently he is working as a senior lecturer in the Department of Logistics and Supply Chain Management at Arsi University. Assefa Balda Hora: He received his MBA degree from Addis Ababa University, Ethiopia. Now he is a PhD candidate at Punjab University in the Department of Business Studies, India. PUBLIC INTEREST STATEMENT The main objective of this study was to examine the impact of inventory management practice of micro and small enterprises competitiveness and perfor- mance. The results of the study indicate that higher levels of inventory management practice can lead to an enhanced competitive advantage and improved organizational performance. The study also found a competitive advantage maintained, though the inventory management practice has a direct positive impact on organizational perfor- mance. Therefore, it is recommended for owners and managers of micro and small enterprises to promote the inventory management practice by using different scientific tools which will result in increasing their competitiveness and organizational performance. Atnafu & Balda, Cogent Business & Management (2018), 5: 1503219 https://doi.org/10.1080/23311975.2018.1503219 © 2018 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license. Received: 31 January 2018 Accepted: 18 July 2018 First Published: 23 July 2018 *Corresponding author: Daniel Atnafu, Department of Logistics and Supply Chain Management, Arsi University, Ethiopia E-mail: dandiboru@gmail.com Reviewing editor: Shaofeng Liu, University of Plymouth, United Kingdom Additional information is available at the end of the article Page 1 of 16