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This chapter outlines the globalization of disintegrated production. It discusses the relationship between contemporary global disintegrated trends and earlier discussions of disintegration that came out of literatures on industrial districts and the Japanese system of production. Elements of both are contained within current practices. A second section discusses the locational dynamics within supply chains dominated by multinational corporations. A final section looks at small and medium sized firm efforts to globalize within contemporary transnational supply chains and examines a range of public policy efforts to support sme globalization

Small and medium-sized enterprises (SMEs) play a critical role in economic development in developing countries by furnishing needed goods and services to consumers, creating most employment opportunities, and driving innovation. Yet, these enterprises face numerous hurdles when seeking credit and debt options in the form of short- and medium-term financing. This problem is particularly acute in developing economies where SMEs represent a disproportionately small percentage of the overall number of private enterprises. Conversely, in many of these economies micro enterprises and large firms face a far less challenging environment for finance access due to structural legacies in the local banking industry and recent innovations in the area of microfinance. Despite the challenges faced by SMEs, a new breed of financial intermediary has begun to demonstrate successful lending relationships with firms once considered unbankable. Deploying a modified version of an existing lending technology known as "value chain lending," these financial players have introduced a new and effective tool whose use highlights new banking opportunities for both local and international firms in a market segment primed for growth.

This chapter assesses the challenges posed by the implementation of business and human rights standards, especially the United Nations Guiding Principles on Business and Human Rights (UNGPs) in small and medium-sized enterprises (SMEs). Although SMEs make up between 85 and 99 per cent of global enterprises, they have not been directly involved in the crafting of these standards and this coupled with the traditional focus on transnational enterprises gives a flavour of the formidably challenging context in which the UNGPs are to be implemented. Drawing on lessons from related disciplines such as corporate social responsibility (CSR) and environmental sustainability, the chapter explores the implications for human rights of issues such as SME identity, organizational structures, and their place in supply chains. The chapter concludes that the challenges are not overwhelming, especially if the unique characteristics of SMEs such as their flexibility, adaptability, and clear leaderships can be leveraged to achieve the objectives of the business and human rights standards.

This chapter examines the way that German and US manufacturers are implementing the modal form of vertical disintegration: Sustained, Contingent Collaboration. In contrast to the expectations of the Varieties of Capitalism perspective, both German and American manufacturers appear to be successfully embracing SCC. More troubling for institutionalism, the character of experimentation in both places appears not to be significantly constrained by the existing institutional system of rules and constraint. Actors are creatively circumventing rules and ignoring constraints to construct SCC. In the process, they are also recasting old and creating new differences between the two countries.

Innovation systems and local global networks of high‐technology industry in Korea are examined with regard to the evolution of the knowledge‐based economy. Major data for the study are derived from a recent questionnaire survey of SMEs (small‐ and medium‐sized enterprises) conducted for the IMF in 1997, and from an interview survey conducted in 1995 for the high‐technology industries in Korea. Changes are outlined in Korean industry since the rapid industrialization period of the 1970s, when chaebols (conglomerate business groups) rather than SMEs emerged as the leading actors in industrial development; the chaebol system was broken up following the foreign exchange crisis of November 1997. The main sections of the chapter cover regional variation of innovation performance, local innovation networks of SMEs, and local and global networks of high‐technology clusters in Kyonggi and Kumi.

Do the principles and frameworks provided by Catholic Social Teaching (CST) have any effect today on the processes of democratic practices and Corporate Social Responsibility (CSR) in Catholic-owned businesses? The results of Yudianti’s economic analysis indicate that, in fact, yes, the democratic practices of Catholic Social Teaching (CST) do have a positive effect on the adoption of Corporate Social Responsibility (CSR) as a business practice in the corporate culture of the Yogyakarta Special Region in Indonesia. While this is particularly true for the Small and Medium sized Enterprises (SME) in the Yogyakarta Special Region whose owners identify as Catholic, it remains to be seen the extent to which such practices have an impact on the Small and Medium sized Enterprises (SME) in the Yogyakarta Special Region whose owners identify as Muslim. While more research needs to be conducted in these areas, Yudianti’s contribution to the conversation suggests that such research ought to be undertaken, given that her preliminary findings show positive results for the practice of Corporate Social Responsibility (CSR).

Unlike conventional trade agreements, the scope of the General Agreement on Trade in Services (GATS) extends beyond the treatment of products to cover that of suppliers (producers, distributors, etc) as well. Trade problems confronting small and medium-sized enterprises (SMEs) supplying services have thus been raised by WTO Members at different stages of the Doha Round negotiations and meetings of regular WTO bodies. However, such issues have rarely been explored in a systemic way. This chapter provides an overview of SME-related policies, whether reflected in schedules of services commitments or consisting of ‘non-schedulable’ measures, which are being pursued by WTO Members at multilateral (GATS) or regional level. It also seeks to identify the scope for further initiatives to promote SME-related interests, from fostering compliance with existing transparency disciplines under the GATS to advancing the Agreement’s liberalization and rule-making mandates with an SME focus.

This publication analyses various constraints preventing small and medium-sized enterprises (SMEs) in developing countries from tapping into global value chains. It highlights that the time and costs associated with transporting goods across borders are significantly greater in developing than developed economies. It emphasizes that the smaller size and working capital of SMEs, and their concentration in a limited number of geographic and product markets, makes them vulnerable to costs and delays associated with trade barriers compared to multinational corporations. In this context, the chapter stresses the importance of implementing measures stipulated in the WTO Trade Facilitation Agreement to enhance the ability of SMEs to import and export. These measures would increase logistical efficiency by reducing information asymmetries, simplifying regulatory requirements, and lowering fees for the movement of goods across borders. If implemented correctly, these measures would expand opportunities for developing country SMEs to embed themselves in the growing global economy.

Small and medium-sized enterprises (SMEs) play a crucial role in the economic development strategy of the European Union. However, while SMEs are important for job creation and economic development, the Commission has highlighted that they often encounter problems accessing finance and necessary information. In order to address certain market failures which impact SMEs most significantly, SMEs now have a favoured status under the state aid rules. The most important and recent changes are a consequence of the Commission’s state aid modernization (SAM) reform package. As part of the SAM package, the Commission has adopted ten guidelines and five regulations to render existing state aid control instruments and procedures more efficient. This chapter gives a brief but practical overview of those new guidelines and regulations and highlights the core principles that need to be taken into account when assessing aid possibilities for SMEs.

The rapid rise of the entrepreneurial private sector in China is one of the key reasons for the success of its transition from a centrally planned economy toward becoming a market-oriented one since the late 1970s, which was explored in part in the last chapter. At the same time, China is a country known for its incomplete legal system, which includes the lack of an independent judiciary, and adjudication is not free from interference from the executive branch. In addition, there is evidence of financial repression whereby legal and institutional constraints impede the development of financial intermediaries, thereby retarding the development of the financial sector. In China, this is manifested insofar as the rules favour state-owned enterprises (SOEs) despite three decades of reform. SOEs still dominate credit allocation, such that the majority of private small- and medium-sized enterprises (SMEs) obtain no bank financing even in 2006 (Lin 2007). This chapter investigates the impact of lagging financial and legal systems on private sector development and complements the previous one.

In the economic literature, worker co-operatives are viewed as small, specialised and undercapitalised organisations that only thrive in unusual conditions and could not possibly constitute a serious alternative to conventional firms. This chapter challenges this conventional wisdom, drawing on a range of international economic studies comparing worker co-operatives and conventional firms. The evidence reviewed suggests that worker co-operatives match ‘mainstream’ firms for durability, and can be found in most industrial sectors. The chapter rejects the notion that worker co-operatives are systemically undercapitalised, and asserts that many are more productive than their mainstream equivalents, largely because of their capacity to motivate workers through their control of the enterprise. It suggests that worker co-operation is a viable alternative to private ownership for small and medium sized enterprises (SMEs), and that in some regions of Italy and Spain, the model is integrated into the economic mainstream.

Chapter 8 fails to find evidence of microfinance aiding in the development of whole economies. It considers the concerns that microfinance simply displaces economic activity with no net gain; that typical microentrepeneurs lacks scale and so never go on to develop into small- to medium-sized enterprises, which may be better engines of development; and that microfinance has diverted developmental aid that could otherwise have gone in to developing small- to medium-sized enterprises (SMEs) in impoverished countries. The argument that establishing microfinance institutions globally has laid the ground for more useful offerings of financial inclusion in the future is rejected, unless that financial inclusion can now be offered without compulsory participation in an expensive microcredit offering. Finally, the chapter also examines the ethics of the extent to which microfinance can or should be seen as a substitute for state provision of public goods.

An introductory chapter to the book discussing the internationalization of small and medium-sized enterprises and the challenges posed by SMEs for international economic law. It discusses sustainable development in this context and the adjustments made by international economic law to cope with the internationalization of SMEs.

The negotiating parties to the World Trade Organization (WTO) Anti-Dumping Agreement (ADA) acknowledged that small and medium-sized enterprises (SMEs) face substantial financial, organizational, and personnel constraints when participating in anti-dumping (AD) investigations. They therefore decided to include Article 6.13 ADA in the revised agreement in 1994. The provision requires national authorities to take the special circumstances of SMEs into account and provide them with any assistance practicable when conducting AD investigations. Despite the obligatory language used, the provision has not received much attention in practice and is hardly discussed in academia. This chapter argues that the value of Article 6.13 ADA should be reconsidered. It discusses in depth the effect and meaning of this undervalued provision. Article 6.13 ADA sets a framework for the participation of SMEs in AD proceedings and modifies the effect of other, more specific provisions of the ADA on SMEs.

The Walmart/Massmart merger and the ensuing proceedings before the South African competition authorities and court system provide a high-profile example of how international economic law affects the policy space of states to enact domestic regulation supportive of small and medium-sized enterprises (SMEs). Whereas the opponents of the takeover invoked the ‘public interest’ provisions in the South African Competition Act which explicitly mandate consideration of SME interests, arguing that the merger would have negative effects on South African SMEs, the merging parties claimed that the imposition of certain performance requirements would violate the country’s obligations under international law. Taking the Walmart/Massmart merger as an example, this contribution analyses the extent to which World Trade Organization (WTO) law and international investment law limit the ability of domestic competition authorities to prohibit takeovers by foreign companies on SME-related grounds or to impose SME-friendly performance requirements as a precondition for merger approval.

Megaregulation promises a seamless operating environment to facilitate international engagement by firms large and small. However, it also entails fixed costs of access to preferential trade windows, trade facilitation mechanisms, and consultative mechanisms, which weigh more heavily on small and medium-sized enterprises (SMEs) than on larger competitors, and features other asymmetries that play to the advantage of the already large, established firms. This chapter takes up the question of whether pro-SME measures built into megaregional agreements can effectively offset these biases and promote conditions of competition both internationally and domestically that enhance business dynamism or whether it reinforces observed trends toward greater concentration and waning business dynamism.

This chapter charts the varying roles played by Afghans as merchants, traders, credit providers, and shopkeepers in Tajikistan. Afghans who belong to very different social categories from one another trade, live, and work in the country, forge ties to one another in relation to their shared identification as “Afghans” and bring to Tajikistan a diverse range of commodities and products. These networks, the chapter shows, revolve around the ties that people of Afghan background have forged with one another within Tajikistan. By exploring these networks, the chapter locates Afghans in Tajikistan and Central Asia as part of an expansive and little explored trading diaspora or network.