In recent years multinational companies have crowded out competition by small business by exerting their influence through size and money. Globally, small businesses serve many roles the multinational companies fail to serve. For example, entrepreneurs are closer to the consumer and must listen to peoples’ needs.
Multinational firms use supply-side economics and simply raise prices as the need for improved profits arises. These firms believe they control the market because of the lack of competition. Without competition no equilibrium exists to bring prices into line with supply and demand.
Small businesses can compete and satisfy consumers’ needs by exerting the power of global small business networks. Small business have an opportunity in the global marketplace to fill the gaps left by multinationals who look out for their own interests. Small businesses have the nimbleness to respond to what consumers want and need and do not need to wait for multinational companies.
Ide (2009) showed that small businesses account for 99.7% of businesses in the United States and 50.7% of employees in 2004. Similarly, in the same year small businesses in Japan accounted for 99.7% of businesses and 74.2% of employees. In 2003 Ide showed both Germany and the United Kingdom accounted for 99.6% of businesses. The United Kingdom and Germany reported small business yielded 59.2% and 64.8% of employment in those countries, respectively.
Global small businesses by this analysis should have more power to promote their interests. Global supply chains and social networks can improve conditions for small business entrepreneurs by joining forces (Weltzien Hoivik, & Shankar, 2011).
Wu, Park, Chinta, and Cunningham (2010) explained how the practice of “co-optition” works in China by forming supply-chain clusters and collaborate to create new products and fill gaps left in the market by multinational companies. BarNir and Smith (2002) defined interfirm alliances as independent companies cooperating to perform business activities.
Taking this idea a step further and settling common needs for all small businesses engaged in international trade can amass great power for small business. Anyone involved in small business should consider collaborating and developing common interests with other small business not only through interfirm alliances, but through small business social networks.
BarNir, A., & Smith, K. A. (2002). Interfirm alliances in the small business: The role of social networks. Journal of Small Business Management, 40(3), 219-232.
Ide, T. (2009). How to rectify unfair trade practices and to establish appropriate supply chains and better business culture under the global market economy. Pacific Economic Review, 14(5), 612-621. doi: 10.1111/j.1468-0106.2009.00475.x
Weltzien Høivik, H., & Shankar, D. (2011). How can SMEs in a cluster respond to global demands for corporate responsibility? Journal of Business Ethics, 101(2), 175-195. doi: 10.1007/s10551-010-0708-6
Wu, L., Park, D., Chinta, R., & Cunningham, M. (2010). Global entrepreneurship and supply chain management: A Chinese exemplar. Journal of Chinese Entrepreneurship, 2(1), 36-52. doi: 10.1108/17561391011019014