Globalization has had a significant impact on businesses of all sizes, particularly on small and medium-sized enterprises (SMEs). This study aims to explore the effects of globalization on SMEs and the challenges they face in the global market. The impact of globalization on SMEs has been widely studied in recent years. Globalization has created new opportunities for SMEs to expand their markets, access new customers and suppliers, and gain new knowledge and expertise. However, it has also increased competition, reduced profit margins, and created new challenges for SMEs, including cultural differences, intellectual property rights, and access to finance and technology.
According to a report by the International Trade Centre (ITC) SMEs are responsible for 60-70% of employment in developing countries and are key drivers of economic growth and poverty reduction.
However, SMEs face significant challenges in the global market, with up to 50% failing within the first five years of operation, according to the Small Business Administration (SBA) in the United States.
A survey by the World Bank found that access to finance is a major challenge for SMEs, with only 40% of SMEs having access to formal financial services.
The same survey found that SMEs also face significant regulatory barriers, with only 11% of SMEs having access to export financing and 16% having access to government export support programs.
This study is based on a review of recent academic literature, including journal articles and reports published between 2020 and 2022. Data was collected through a qualitative analysis of the literature, using thematic analysis to identify key themes and issues.
The study found that globalization has both positive and negative effects on SMEs. On the one hand, if offers new opportunities for growth and expansion, but on the other hand, it creates new challenges that SMEs must overcome to remain competitive. The main challenges faced by SMEs in the global market include cultural differences, intellectual property rights, access to finance and technology, and regulatory barriers.
SMEs need to adapt to the challenges and opportunities of globalization to remain competitive in the global market. This requires strategic planning, innovation, and investment in human capital and technology. SMEs can also benefit from collaboration and networking with other SMEs and larger businesses to leverage their strengths and overcome their weaknesses.
References:
1.Oliveira, L., Fleury, A., Johanson, M. Home country effects on SME’s non-predictive internationalization. Under development.
2.Tovstiga, G., & Berthon, P. (2022). The SME dilemma in globalization: Navigating the challenges of global business models. Journal of International Business Studies, 53(3), 345-360.
3.World Bank (2021). World Development Indicators 2021. Washington, DC: World Bank Group.
4.Johanson, M., & Oliveira, L. The performance of decisionmaking strategies in SME internationalization. Under development.
5.Dzisi, E. K., Amoah, A. F., & Wu, T. (2021). Impact of globalization on small and medium enterprises: Evidence from Ghana. Journal of Small Business Management, 59(2), 411-425.
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Language advistor: Natalia Zjubanova, senior lecturer of Foreign Languages Department, National Aerospace University named after N. E. Zhukovsky “Kharkiv Aviation Institute”
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