The globalisation of production has reached an unprecedented extent, with the production of goods and services increasingly fragmented across enterprises and countries. If large and multinational companies (MNEs) of OECD countries clearly lead this process, small and medium-sized enterprises (SMEs) – their traditional partners, suppliers or distributors – are confronted by the diverse opportunities and challenges that arise from the new production context.

While underway for decades, the globalisation process has recently accelerated, as shown by the substantial growth of world imports and exports since the 1980s and, more recently, of foreign direct investment (FDI). The way production of goods and services is organised has also changed. Most notably, the set of productive activities that leads a product from conception to market is increasingly spread across several enterprises and countries. While the reasons are known why such a complex organisation of production emerged, less evident are the effects that the globalisation of value chains has on small and medium-sized enterprises (SMEs), which are more followers than leaders in this process. This study is concerned with the issue of how globalisation of value chains and of large enterprises affects the role of SMEs as traditional partners, suppliers or distributors for larger firms. It explores the benefits of SME participation in global value chains, the challenges SMEs face, and proposes policy actions when appropriate.

The globalisation of value chains has changed the way production is organised and has provoked important modifications in the relationships between partners along the value chain. This form of globalisation was determined mainly by the search for efficiency, which includes sourcing inputs from low cost or more efficient producers), the entry in new and growing markets, and the search for complementary and strategic assets. During the past two decades, the organisation of production has therefore undergone a dramatic evolution that has led to new forms of industrial and enterprise organisation on a worldwide basis. Despite the phenomenon being well acknowledged, it is still difficult to measure the extent of the globalisation of value chains. Evidence of this has been observed through indicators of economic globalisation, and notably in the increase of the share of intra-firm exports of affiliates under foreign control, the ratio of imported to domestic sourcing of inputs, and the export and import propensity of affiliates under foreign control in the manufacturing sector (OECD, 2007). 

This chapter provides an overview of globalisation issues in the five industries (i.e. automotive, scientific and precision instruments, software, tourism and cinema) analysed for this project and presents elements of comparisons between the globalisation patterns, on the basis of desk work and interviews conducted with major players in each industry. The concept of the GVC, as a set of economic processes, sets the frame and background for a closer observation and explanations of how, in different technological markets and contexts, roles are shared among enterprises, in particular large and small, local and global.

This chapter presents the findings of the case studies carried out in several OECD and non-OECD member economies in the five industries selected for the study (i.e. automotive, scientific and precision instruments, software, tourism, and film production and distribution). The case studies began by gathering the basic information necessary to draw an ‘identity card’ of the enterprises interviewed, in particular detailing the number of employees, the turnover, the ownership structure, the location(s), and the products or services supplied. The investigation then focused on the core issues in order to understand value chains and their structure; the co-operation with and dependence on other players in the chain(s); the role of technology, innovation, standards, and intellectual property rights (IPRs); and the SMEs’ expectations with respect to the role of government in facilitating and supporting their participation in GVC. As explained in Chapter 3, the main characteristics and emerging patterns of the five industries were analysed on the basis of desk work and interviews with key players. The results of that analysis constituted the background context for the interpretation of the case studies’ findings.

Although it is difficult to establish common trends in the diversified universe of SMEs, the case studies conducted in several OECD member and non-member economies provided some new insights on the performance of SMEs in global value chains. One result that stands out from the different findings across sectors is that successful participation in global value chains brings stability. Small firms that are able to remain in value chain(s) despite keen global competition, or SMEs that succeed in ‘jumping on board’ normally gain stability and even expand their business. This is often accompanied by the upgrading of technological and human capital, as a result of the greater exposure and facilitated access to information, business practices and technologies that SMEs experience in GVCs. Indeed, co-operation with the network appears a key factor in facilitating the upgrading process. Case studies in the automotive and tourism sectors indicated that co-ordination with upstream and downstream partners increases the chances of success of small firms in the value chain. This seems related to substantial benefits in terms of status, information flows and learning possibilities. Successful SMEs in GVCs acquire more autonomy from their larger counterparts and increase opportunities to grow further by leveraging on access to an extended network of partners and to superior technology and improved staff skills.