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Trading Places – SMEs in the Global Economy

A Critical Research Handbook

Edited by Lester Lloyd-Reason and Leigh Sear

Lester Lloyd-Reason and Leigh Sear bring together leading researchers and thinkers in this critical guide to the ongoing, worldwide research shaping the role played by SMEs within today’s global economy. The expert contributors contend that the past twenty years have seen an explosion in research into international SMEs, resulting in a considerable body of academic literature and thinking. This research, they argue, may merely serve to increase our lack of understanding in this area, and often results in myths and misconceptions upon which SME policies and support programmes have been developed and introduced.
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Chapter 2: Doing Business: The Nature of Global Trading

Alan Griffiths, Stuart Wall and Carsten Zimmermann


Alan Griffiths, Stuart Wall, Carsten Zimmermann and Ronald Klingebiel Introduction: context and overview For the purposes of this chapter, small and medium-sized enterprises (SMEs) are defined as in the EU, namely as consisting of firms employing less than 250 employees, with firms having less than 50 employees being regarded as ‘small’ and firms having 50–249 employees being regarded as ‘medium’ in size. The economic environment within which such SMEs operate has been subject to accelerating change over the past half century, including significant sectoral shifts in the composition of national economies combined with the increasing ‘openness’ of the global economy, sometimes caricatured as ‘shrinking space, shrinking time and disappearing borders’. Such changes have had important effects on the strategic behaviour of SMEs as they adjust to a context in which value chains are increasingly reconfigured, not least in terms of geographical location, by multinational enterprises and even by SMEs themselves. Prahalad (1999) paints a vivid picture of a progressively ‘discontinuous competitive landscape’ under the forces of globalisation, with the established boundaries of industrial and service sectors shifting as technologies converge and new forms of organisational and institutional arrangements emerge. There is broad agreement on the merits of devising policies to enhance the contribution of SMEs to global trading, since it is widely recognised that SMEs are under-represented in the global economy. For example SMEs typically contribute some 50 per cent of GDP in the developed economies and some 60 per cent of total employment,...

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