Small business is paramount for economic development; however, this is often not recognized by governments as an essential element of economic growth. Put simply: How can small business help developing countries compete in today’s global market? The following articles, books, and reports discussed here constitute a major step forward in this debate. The papers are:
The globalization of small companies to multinational corporations has created new institutionalized and trans-generational relationships among transnational firms, affecting national economic policies. Growth in China led to increased competition with the U.S., European Union, Japan, South Korea, and similar large-scale industrial players. The emerging consensus regarding the importance of international trade and its impact on the global economy points to the necessity for comprehensive internationalization strategies.
Prominent international journals and policy research suggest that this new kind of trans-generational business relationship is creating new kinds of networks among members of transnational firms, with implications for growth in developing countries. However, some researchers argue that these networks are not as pervasive and profound as proponents suggest. The argument presented here is that many of the new kinds of networks built between small suppliers, such as through the informal networks of small companies and families in developing countries, are not grounded in existing patterns of exchange and are therefore much less important for development than is commonly assumed. This new kind of network is not necessarily unique to small companies, but was noted as a distinguishing feature of the Chinese scenario.
On the one hand, there is the critical argument that traditional forms of bilateral trade arrangements among small units are no longer relevant due to the diffusion of technologies and the increasing importance of international competition. On the other hand, there is the view that new forms of economic cooperation are necessary to boost development and facilitate the emergence of viable economic alternatives. The emerging consensus on the need for new forms of economic relationships, especially in terms of the sharing of information and technology, is reflected in the increased interest of transnational corporations in engaging in small unit-based collaborative manufacturing practices. Small and medium businesses, especially those that lack resources to establish traditional production and service processes, are particularly vulnerable to such policies.
The rise of the concept of collaborative manufacturing led to the establishment of small business assistance programs and the growth of the Small Business Administration in the United States. This agency was designed to provide support and assistance to small companies in the United States that are facing difficulties in sustaining their growth, developing international markets, dealing with international competition, and increasing worker productivity. It also provides assistance to companies that are considering expanding their capacity to do business internationally. Business help helps in attaining a set of predetermined goals, while preparing for future challenges, which can help a business increase productivity and market share.