Economic Impact Of Smes On The World Economy

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Literature Review Economic Significance of SMEs SMEs play a critical role in the stage of world business. This is evident from the fact that they form 95 % of the enterprises in the world and thereby contributing approximately 60 % of private employment (Ayyagari et al. 2011). SMEs can be found as a vital aspect of economic prosperity and social conditions in the case of certain developed countries such as Japan where 99 % of the total enterprises are SMEs (EIU, 2010). Further in the case of developing countries like India as well, SMEs play a pivotal role in economic development and this is evident from the data from Ministry of Micro Small and Medium Enterprises that there are 13 million SMEs in India as of 2008 statistics which is…show more content…
SMEs and Internationalisation It is argued that since the middle of twentieth century, the world economy has witnessed rapid internationalisation of markets, industries as well as companies. These changes in business environment are reflected in the accumulated research on international marketing, entrepreneurship and other allied areas. Nonetheless, even in the presence of many theoretical frameworks, internationalisation is still challenging for SMEs (Olejnik and Swoboda, 2012; Jones and Coviello, 2005). According to Welch and Luostarinen (1988, p. 36) define internationalisation as “the process of increasing involvement in international operations. This definition implies that internationalisation is a process of gaining experience outside of the domestic boundaries of an organisation. One of the widely used and discussed models in the area of internationalisation pertaining to Multinational Enterprises (MNEs) as well as SMEs is Uppsala model. As per this model, internationalisation is a self reinforced as well as incremental learning process where in gradual knowledge of foreign markets is gained by companies and based on the confidence gained of such experience and learning they increase their
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