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Enhancing the Role of SMEs in Global Value Chains

image of Enhancing the Role of SMEs in Global Value Chains

The globalisation of production processes characterises the current phase of globalisation. Participation in global value chains (GVCs) can bring stability to small and medium-sized enterprises (SMEs) and allow them to increase productivity and expand their business. This OECD report identifies the ways in which governments, the business community, and international organisations can facilitate SMEs’ gainful participation in global value chains through policies, practices and targeted support programmes. It presents the findings of case studies carried out in five industries (the automotive sector, scientific and precision instruments, software, film production and distribution and tourism).

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Conclusions and Policy Recommendations

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. 

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