The Industrialisation Process of Asian Small and Medium Firms

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The Industrialisation Process of Asian Small and Medium Firms

Author Info

Hodgkinson, A. () (University of Wollongong)

Abstract

National governments throughout the Asia-Pacific Region have identified small and medium enterprises as an important source of economic growth and employment. In the past, SME business strategies have focused on production, relying on their subcontracting and sales contacts with large firms for technological innovation and marketing and on abundant domestic labour forces for comparative advantage. Recently, structural problems in the region arising from the Japanese recession, currency appreciation and rising labour costs have upset these relationships forcing SMEs to move offshore (DFI) to restore cost competitiveness and to upgrade their internal technological and organisational capacities to international standards in order to compete for contracts within more open, international markets. This paper analyses this process of change, analysing the development of SMEs within four Asian countries using a six stage evolutionary model. The majority of SMEs in these countries are still in the earlier second (dependency) or third (internalisation) stages. The more advanced SMEs have moved into the fourth (externalisation) stage, where firms develop independent technology and marketing capacities. To the extent that localisation (stage five) had occurred, it involved local embedded relationships which had limited scope for further internationalisation. Little evidence of regional integration or networking among SMEs was found.

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Paper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp00-10.

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Length: 27 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:uow:depec1:wp00-10

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This paper has been announced in the following NEP Reports:

NEP-ALL-2002-04-03 (All new papers)
NEP-ENT-2002-04-03 (Entrepreneurship)
NEP-IFN-2002-04-03 (International Finance)
NEP-MIC-2002-04-03 (Microeconomics)
NEP-SEA-2002-04-03 (South East Asia)

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Dieter Ernst, 1997. "Partners For The China Circle? The Asian Production Networks Of Japanese Electronics Firms," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series 1094, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley. [Downloadable!]
Other versions:
- Dieter Ernst, 1997. "Partners for the China Circle? The Asian Production Networks of Japanese Electronics Firms," DRUID Working Papers 97-3, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
Homin Chen & Tain-Jy Chen, 1998. "Network Linkages and Location Choice in Foreign Direct Investment," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 29(3), pages 445-467, September. [Downloadable!] (restricted)
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Linsu Kim & Nugent, Jeffrey B., 1994. "The Republic of Korea's small and medium size enterprises and their support systems," Policy Research Working Paper Series 1404, The World Bank. [Downloadable!]
M-R Cho, 1997. "Large - small firm networks: a foundation of the new globalizing economy in South Korea," Environment and Planning A, Pion Ltd, London, vol. 29(6), pages 1091-1108, June. [Downloadable!] (restricted)
Chon, Soohyun, 1996. " Small and Medium-Sized Enterprises in the Republic of Korea: Implications for the Development of Technology-Intensive Industries," Small Business Economics, Springer, vol. 8(2), pages 107-20, April.

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