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Firm Characteristic Determinants of SME Participation in Production Networks

  • Charles HARVIE

    (Centre for Small Business and Regional Research School of Economics, University of Wollongong, Australia)

  • Dionisius NARJOKO

    (Economic Research Institute for ASEAN and East Asia (ERIA))

  • Sothea OUM

    (Economic Research Institute for ASEAN and East Asia (ERIA))

This paper provides an empirical analysis of small and medium enterprise (SME) participation in production networks. It gauges firm characteristic determinants of SME participation in production networks. The empirical investigation utilizes results obtained from an ERIA Survey on SME Participation in Production Networks, conducted over a three month period at the end 2009 in most ASEAN countries (i.e., Thailand, Indonesia, Malaysia, Philippines, Vietnam, Cambodia, and Laos PDR) and China. The results suggest that productivity, foreign ownership, financial characteristics, innovation efforts, and managerial/entrepreneurial attitudes are the important firm characteristics that determine SME participation in production networks. The paper extends the analysis to identify the determinants that allow SMEs to move from low to high quality or value adding participation in production networks. The results suggest that size, productivity, foreign ownership, and, to some extent, innovation efforts and managerial attitudes, are the important firm characteristics needed by SMEs to upgrade their positions in production networks. The finding suggests that SMEs really exploit competitiveness from economies of scale only when they are able to engage in production networks.

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Paper provided by Economic Research Institute for ASEAN and East Asia (ERIA) in its series Working Papers with number DP-2010-11.

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Length: 52 pages.
Date of creation: 01 Oct 2010
Date of revision:
Handle: RePEc:era:wpaper:dp-2010-11
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  1. Aw, B. -Y. & Hwang, A. R., 1995. "Productivity and the export market: A firm-level analysis," Journal of Development Economics, Elsevier, vol. 47(2), pages 313-332, August.
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