IDEAS home Printed from https://ideas.repec.org/p/eab/microe/22812.html
   My bibliography  Save this paper

The Internationalization of Small and Medium Enterprises in Regional and Global Value Chains

Author

Listed:
  • Hank Lim

    (Asian Development Bank Institute)

  • Fukunari Kimura

Abstract

Production networks and the regional division of labor have been established in East Asia resulting in massive vertical intra-industry trade in parts and components within the region. This phenomenon is known as cross-border production sharing or the fragmentation of production processes into many stages across different countries. New development strategies claim that participation in international production and distribution networks is the key to accelerating economic development in the era of globalization. This process suggests that vertical input-output linkages between local firms and multinational corporations are the most powerful channels to accelerate technology transfers and spillovers. Given the trends of globalization and economic integration in East Asia, there is significant potential for the small and medium enterprise (SME) sector to increase its contribution to the regions development through greater participation in global value chains. However, multiple market failures exist with regard to the development of SMEs and local entrepreneurship. These risks can be mitigated by proper policy measures such as strengthening technological and human resource capabilities through better networking and facilitating access to financing for SMEs. Despite many distortions and inefficiencies in implementing regional economic integration schemes in East Asia, there are many cumulative positive effects contributing to the emerging trend internationalization of SMEs in the region. This process can be significantly strengthened by creating a positive business environment through the standardization of products and services, rules and regulations, and a seamless market infrastructure in the region.

Suggested Citation

  • Hank Lim & Fukunari Kimura, 2010. "The Internationalization of Small and Medium Enterprises in Regional and Global Value Chains," Microeconomics Working Papers 22812, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:microe:22812
    as

    Download full text from publisher

    File URL: http://www.eaber.org/node/22812
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jan Wengel & Edgard Rodriguez, 2006. "SME Export Performance in Indonesia After the Crisis," Small Business Economics, Springer, vol. 26(1), pages 25-37, February.
    2. Luostarinen, Reijo, 1994. "Internationalization of Finnish Firms and their Response to Global Challenges," WIDER Working Papers 295309, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    3. Etemad, Hamid & Wright, Richard W, 2003. "Internationalization of SMEs: Toward a New Paradigm," Small Business Economics, Springer, vol. 20(1), pages 1-4, February.
    4. Fukunari KIMURA, 2006. "International Production and Distribution Networks in East Asia: Eighteen Facts, Mechanics, and Policy Implications," Asian Economic Policy Review, Japan Center for Economic Research, vol. 1(2), pages 326-344, December.
    5. Jan Johanson & Jan-Erik Vahlne, 1977. "The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 8(1), pages 23-32, March.
    6. Giuliani, Elisa & Pietrobelli, Carlo & Rabellotti, Roberta, 2005. "Upgrading in Global Value Chains: Lessons from Latin American Clusters," World Development, Elsevier, vol. 33(4), pages 549-573, April.
    7. Kimura, Fukunari & Ando, Mitsuyo, 2005. "Two-dimensional fragmentation in East Asia: Conceptual framework and empirics," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 317-348.
    8. Madsen, Tage Koed & Servais, Per, 1997. "The internationalization of Born Globals: An evolutionary process?," International Business Review, Elsevier, vol. 6(6), pages 561-583, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. THORBECKE William, 2016. "Increasing the Resilience of Asian Supply Chains to Natural Disasters: The Role of the Financial Sector," Working Papers DP-2016-08, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Alessandro Nicita & Victor Ognivtsev & Miho Shirotori, 2013. "Global Supply Chains: Trade And Economic Policies For Developing Countries," UNCTAD Blue Series Papers 55, United Nations Conference on Trade and Development.
    3. Willem THORBECKE, 2016. "Understanding the Flow of Electronic Parts and Components in East Asia," Discussion papers 16072, Research Institute of Economy, Trade and Industry (RIETI).
    4. Banacloche, Santacruz & Cadarso, María Ángeles & Monsalve, Fabio, 2020. "Implications of measuring value added in exports with a regional input-output table. A case of study in South America," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 130-140.
    5. Yothin Jinjarak & Paulo Jose Mutuc & Ganeshan Wignaraja, 2014. "Does Finance Really Matter for the Participation of SMEs in International Trade? Evidence from 8,080 East Asian Firms," Trade Working Papers 24047, East Asian Bureau of Economic Research.
    6. Ganeshan Wignaraja, 2012. "Engaging Small and Medium Enterprises in Production Networks : Firm-level Analysis of Five ASEAN Economies," Governance Working Papers 23316, East Asian Bureau of Economic Research.
    7. Dmitry Alexandrovich Izotov, 2012. "The Foreign Trade of Domestic and External Sectors of the Chinese Economy," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 4, pages 49-66.
    8. Arudchelvan, Menaka & Wignaraja, Ganeshan, 2015. "SME Internationalization through Global Value Chains and Free Trade Agreements: Malaysian Evidence," ADBI Working Papers 515, Asian Development Bank Institute.
    9. Ganeshan Wignaraja, 2015. "Factors Affecting Entry into Supply Chain Trade: An Analysis of Firms in Southeast Asia," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 2(3), pages 623-642, September.
    10. THORBECKE, Willem, 2014. "Rebalancing Trade within East Asian Supply Chains," Discussion papers 14002, Research Institute of Economy, Trade and Industry (RIETI).
    11. Thorbecke, Willem, 2018. "Investigating ASEAN’s electronic and labor-Intensive exports," Journal of Asian Economics, Elsevier, vol. 55(C), pages 58-70.
    12. Ganeshan Wignaraja, 2014. "Joining the supply chain: a firm-level perspective," Chapters, in: Richard Baldwin & Masahiro Kawai & Ganeshan Wignaraja (ed.), A World Trade Organization for the 21st Century, chapter 4, pages 71-109, Edward Elgar Publishing.
    13. Willem Thorbecke, 2021. "The weak rupiah: catching the tailwinds and avoiding the shoals," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 23(3), pages 521-539, December.
    14. Lanz, Rainer & Lundquist, Kathryn & Mansio, Grégoire & Maurer, Andreas & Teh, Robert, 2018. "E-commerce and developing country-SME participation in global value chains," WTO Staff Working Papers ERSD-2018-13, World Trade Organization (WTO), Economic Research and Statistics Division.
    15. -, 2014. "Regional integration: towards an inclusive value chain strategy," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 36734 edited by Eclac.
    16. Calabrese, Giuseppe Giulio & Manello, Alessandro, 2018. "Firm internationalization and performance: Evidence for designing policies," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1221-1242.
    17. Blagica Petreski & Despina Tumanoska & Tereza KÐ¾Ñ ovska & Simon Miloseski & Besnik Mustafa, 2019. "Impact evaluation of the program for training and mentoring of domestic small and medium-sized enterprises to include in the value chains of multinational companies operating in North Macedonia," Finance Think Policy Studies 2019-11/25, Finance Think - Economic Research and Policy Institute.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paul, Justin, 2020. "SCOPE framework for SMEs: A new theoretical lens for success and internationalization," European Management Journal, Elsevier, vol. 38(2), pages 219-230.
    2. Maria Alejandra Gonzalez-Perez & Eva Cristina Manotas & Luciano Ciravegna, 2016. "International SMEs from emerging markets—Insights from the Colombian textile and apparel industry," Journal of International Entrepreneurship, Springer, vol. 14(1), pages 9-31, March.
    3. Adli Abouzeedan & Michael Busler, 2007. "‘Internetization Management’," Global Business Review, International Management Institute, vol. 8(2), pages 303-321, December.
    4. Gordian Rättich & Kim Clark & Evi Hartmann, 2011. "Performance measurement and antecedents of early internationalizing firms: A systematic assessment," Working Papers 0031, College of Business, University of Texas at San Antonio.
    5. Paul, Justin & Parthasarathy, Sundar & Gupta, Parul, 2017. "Exporting challenges of SMEs: A review and future research agenda," Journal of World Business, Elsevier, vol. 52(3), pages 327-342.
    6. Marina Dabić & Jane Maley & Leo-Paul Dana & Ivan Novak & Massimiliano M. Pellegrini & Andrea Caputo, 2020. "Pathways of SME internationalization: a bibliometric and systematic review," Small Business Economics, Springer, vol. 55(3), pages 705-725, October.
    7. Sandberg, Susanne & Sui, Sui & Baum, Matthias, 2019. "Effects of prior market experiences and firm-specific resources on developed economy SMEs' export exit from emerging markets: Complementary or compensatory?," Journal of Business Research, Elsevier, vol. 98(C), pages 489-502.
    8. Braunerhjelm, Pontus & Halldin, Torbjörn, 2019. "Born globals – presence, performance and prospects," International Business Review, Elsevier, vol. 28(1), pages 60-73.
    9. Taguchi, Hiroyuki & Murofushi, Harutaka, 2014. "International production networks in ASEAN economies," MPRA Paper 64409, University Library of Munich, Germany.
    10. Quan Anh Nguyen & Gillian Sullivan Mort, 0. "Conceptualising organisational-level and microfoundational capabilities: an integrated view of born-globals’ internationalisation," International Entrepreneurship and Management Journal, Springer, vol. 0, pages 1-23.
    11. Gammeltoft, Peter & Cuervo-Cazurra, Alvaro, 2021. "Enriching internationalization process theory: insights from the study of emerging market multinationals," Journal of International Management, Elsevier, vol. 27(3).
    12. Christina Theodoraki & Alexis Catanzaro, 2022. "Widening the borders of entrepreneurial ecosystem through the international lens," The Journal of Technology Transfer, Springer, vol. 47(2), pages 383-406, April.
    13. Alex Rialp Criado & Josep Rialp Criado & Gary A. Knight, 2002. "The Phenomenon of International new Ventures, Global Start-ups, and Born-Globals: What do we know After a Decade (1993-2002) of Exhaustive Scientific Inquiry," Working Papers 0211, Departament Empresa, Universitat Autònoma de Barcelona, revised Dec 2002.
    14. D’Angelo, Alfredo & Presutti, Manuela, 2019. "SMEs international growth: The moderating role of experience on entrepreneurial and learning orientations," International Business Review, Elsevier, vol. 28(3), pages 613-624.
    15. Mockaitis, Audra I. & Vaiginiene, Erika & Giedraitis, Vincent, 2006. "The internationalization efforts of lithuanian manufacturing firms--strategy or luck?," Research in International Business and Finance, Elsevier, vol. 20(1), pages 111-126, March.
    16. Obashi, Ayako, 2010. "Stability of production networks in East Asia: Duration and survival of trade," Japan and the World Economy, Elsevier, vol. 22(1), pages 21-30, January.
    17. Kimura, Fukunari & 木村, 福成 & キムラ, フクナリ, 2007. "The mechanics of production networks in Southeast Asia: the fragmentation theory approach," CEI Working Paper Series 2007-8, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    18. Elisa Ughetto, 2016. "Growth of born globals: the role of the entrepreneur’s personal factors and venture capital," International Entrepreneurship and Management Journal, Springer, vol. 12(3), pages 839-857, September.
    19. Marzanna K. Witek-Hajduk, 2013. "Wczesne umiędzynarodowienie a wyniki ekonomiczne przedsiębiorstwa," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 11-12, pages 73-92.
    20. Jean–François Hennart, 2014. "The Accidental Internationalists: A Theory of Born Globals," Entrepreneurship Theory and Practice, , vol. 38(1), pages 117-135, January.

    More about this item

    Keywords

    East Asia; Production Networks; input-output linkages; SME;
    All these keywords.

    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eab:microe:22812. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shiro Armstrong (email available below). General contact details of provider: https://edirc.repec.org/data/eaberau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.