SME's are acknowledged as effective sources of jobs and incomes, gaining an important position in the development agenda, subsequently 'cluster' policies were conceived as a framework to augment the effects of SMEs and to optimize resources used to support them. Based on case studies from Brazil, Vietnam, Indonesia and India, this volume examines SME clusters and argues that unless they counteract common problems such as very low wages, poor working conditions, poor quality products and lack or environmental regulation, they will be pushed out of the market and so become unsustainable. This book suggests that the SME clusters currently being stretched should react by 'socially upgrading' in order to improve their innovation capacity, as well as social, environmental and labour standards. It puts forward conceptual frameworks which explain the way firms can upgrade: through markets, interaction among cluster members, through Corporate Social Responsibility and other such public policy, and through the better enforcement of regulation.
Economic and social progress requires a diverse ecosystem of firms that play complementary roles. Making It Big: Why Developing Countries Need More Large Firms constitutes one of the most up-to-date assessments of how large firms are created in low- and middle-income countries and their role in development. It argues that large firms advance a range of development objectives in ways that other firms do not: large firms are more likely to innovate, export, and offer training and are more likely to adopt international standards of quality, among other contributions. Their particularities are closely associated with productivity advantages and translate into improved outcomes not only for their owners but also for their workers and for smaller enterprises in their value chains. The challenge for economic development, however, is that production does not reach economic scale in low- and middle-income countries. Why are large firms scarcer in developing countries? Drawing on a rare set of data from public and private sources, as well as proprietary data from the International Finance Corporation and case studies, this book shows that large firms are often born large—or with the attributes of largeness. In other words, what is distinct about them is often in place from day one of their operations. To fill the “missing top†? of the firm-size distribution with additional large firms, governments should support the creation of such firms by opening markets to greater competition. In low-income countries, this objective can be achieved through simple policy reorientation, such as breaking oligopolies, removing unnecessary restrictions to international trade and investment, and establishing strong rules to prevent the abuse of market power. Governments should also strive to ensure that private actors have the skills, technology, intelligence, infrastructure, and finance they need to create large ventures. Additionally, they should actively work to spread the benefits from production at scale across the largest possible number of market participants. This book seeks to bring frontier thinking and evidence on the role and origins of large firms to a wide range of readers, including academics, development practitioners and policy makers.
Does enterprise participation in global markets ensure sustainable income growth? Policies have often been designed in the belief that this is true, but competitiveness and participation in international markets may take very different forms, and developing countries do not always benefit. This book presents a series of rich and original field studies from Latin America, conducted by the authors with the same consistent methodological approach, and represents a theory-generating exercise within clusters and economic development literature. The main question addressed is how Latin American small and medium-sized enterprises (SMEs) may participate in global markets in ways that provide for sustainable income growth, the “high road” to competitiveness. In contrast, the “low road” is often typically followed by small firms from developing countries, which often compete by squeezing wages and revenues rather than by increasing productivity, salaries, and profits.
Based upon the experiences of a diverse set of countries - including Denmark, Egypt, Germany, Ghana, Indonesia, Italy, Japan and the United States - this analysis describes the elements of a model small-firm network, and sets out the conditions, institutions and policies conducive to a successful strategy of upgrading industrial sectors. It is a valuable source of ideas and experience on this innovative approach to industrial development.
Small firms - including 'microenterprises' and 'small and medium enterprises' (SMEs) - play a vital economic role in developing countries. They typically provide half of all jobs. In addition, they foster entrepreneurship and help key sectors adapt to changing market conditions. In light of these benefits, programs promoting small firms have become a cornerstone of economic development policy. Increasingly, however, scholars and policymakers are also exploring the link between small firms and the environment. The first compendium of research and policy analysis on this topic, this book is organized around three questions: How important is small firm pollution? Will forcing small firms to comply with environmental regulations exacerbate unemployment and poverty? And what policy options are available to control small firm pollution? Eleven case studies from China, Ecuador, Honduras, India, Malaysia, and Mexico address these questions. They compare the environmental damages caused by small firms and large ones. They explore the positive and negative economic consequences of pollution control strategies focusing on small firms, the administrative challenges of regulating thousands of firms which are often unregistered and unknown to the government, and they describe innovative approaches for persuading small firms to implement effective pollution controls. The case studies cover a variety of industrial sectors including ceramics, leather tanning, textiles, and agro-industry, and evaluate a wide range of environmental management strategies that include encouraging collective action among small firms, creating economic incentives for pollution control, and helping small firms adopt clean technologies and environmental management systems. Many of the chapters are groundbreaking, addressing topics new to the literature?for example, the role of international trade in greening small firms, and funding small firm pollution control projects by linking them to efforts to stem global warming. Highly readable, Small Firms and the Environment in Developing Countries is a valuable text for courses in development policy and economics that have an environmental component or focus. It will also prove of interest to development workers, policymakers in developing countries, and students and scholars of environmental policy and law.
This book sheds new light on the role of industrial districts in the industrial development of the past and present. Industrial districts, which refer to the geographical concentration of enterprises producing similar or closely related commodities in a small area, play a significant role in the development of manufacturing industries not only historically in Europe and Japan but also at present in emerging East Asian economies, such as China and Vietnam and low-income countries in sub-Saharan Africa. The book identifies similarities in the development patterns of industrial districts in history and the present and analyzes the reasons for these similarities. More specifically, the book examines whether Marshallian agglomeration economies provide sufficient explanations and seeks to deepen understanding about the important factors that are missing. Despite the common issues addressed by economic historians and development economists regarding the advantages of industrial districts for industrial development, discussion of these issues between the two groups of researchers has been largely absent, or at best weak. The purpose of this book is to integrate the results of case studies by economic historians interested in France, Spain, and Japan and those by development economists interested in the contemporary industries still developing in China, Vietnam, Bangladesh, Tanzania, and other countries in sub-Saharan Africa.
The World Bank, Japan International Cooperation Agency (JICA) Research Institute, and the Foundation for Advanced Studies on International Development (FASID), in collaboration with researchers affiliated with the African Economic Research Consortium (AERC), recently conducted a study on Africa s domestic enterprises to improve the understanding of the constraints micro and small enterprises in Africa face in improving productivity and expanding their markets. In Africa, there are stark performance gaps between domestically owned enterprises and foreign-owned enterprises in terms of sales performance, productivity, and ability to reach distant markets. Among others, size appears to be a dominant factor in explaining the gap. Against this background, the study analyzes how naturally formed industrial clusters concentrations of enterprises engaged in same or closely related industrial activities in specific locations could potentially mitigate constraints Africa s micro and small enterprises face and enhance their business performance. The study is one of the first comprehensive quantitative inquiries on industrial clusters in Africa. The analysis specifically focuses on the role of spontaneously grown clusters of light manufacturing industries based on a set of original case studies of industrial clusters conducted for this research project. One of the key findings from the case studies was that cluster-based micro and small enterprises are performing better than similar micro and small enterprises outside of the clusters in terms of sales performance and ability to reach distant markets. Market access is a leading reason for cluster-based enterprises to choose their current locations. However, cluster-based enterprises face another set of unique growth constraints. By the very nature of spontaneous agglomera tion, new enterprises continue to flow to the clusters seeking the profit opportunities and better access to markets at such locations. The result can be intense competition in addition to increased congestion. Space constraints often impede growth within clusters. The lack of alternative locations available for industrial activities in the same cities, generic infrastructure bottlenecks, and unclear zoning policies and their unpredictable changes limit firms location choices and constrain their mobility. While competition should improve efficiency, lack of capacity among those competing cluster-based enterprises to invest and innovate does not generate growth out of the competition. The vast majority of naturally formed clusters of light manufacturing industries in Africa are still at a survival level, where agglomeration externalities are only limited to expand quantity but not quality as we observe in more advanced innovation-oriented clusters in elsewhere in the world. Existing studies on such natural industrial clusters in Africa have found that the lack of managerial skills among entrepreneurs running micro and small enterprises is a major constraint for innovation and growth in the clusters. As a part of this study, pilot managerial skills training programs were conducted in two industrial clusters on an experimental basis, where a group of randomly selected entrepreneurs within the clusters were given three-week long crush course of based management such as bookkeeping, marketing, business planning, and production management. The impact evaluation of the experiments showed significant positive impacts of the training programs on value added and gross profits of enterprises. Raising the current survival-type industrial clusters, which have been formed as a coping mechanism to weak investment climate, into more dynamic innovating clusters will be an important avenue for fostering growth of micro and small enterprises in Africa. While national efforts to improve investment climate and investments in human capital are undoubtedly important, there could be more targeted policies to be formulated, in complementing general policies, to support growth of micro and small domestic enterprises using existing industrial clusters as a natural springboard for their growth. In that context, the study discusses the merit of cluster-based managerial human capital development to build steps toward more innovation-oriented clusters, the importance of sound spatial planning policy, particularly at the local level in the context of urban planning, the need to expand market access and economic linkages for industrial clusters including regional integration and linkages with large enterprises.
The vast majority of businesses globally are small. If business is to be socially responsible, we need to go beyond the westernised concept of 'Corporate Social Responsibility', to develop 'Small Business Social Responsibility'. This agenda-setting Research Handbook on Small Business Social Responsibility includes leading research from around the world, including developed and developing country contexts. It provides a foundation for the further development of small business social responsibility as a scholarly subject and crucially important practice and policy field.
