Evaluating the Impact of Globalisation on SMEs in the UK: A Report

This report critically evaluates the impact of globalization on small to medium-sized enterprises (SMEs) in London. It examines the benefits of globalization, such as access to global markets, increased cross-border investment, and upgraded technology, while also addressing challenges like increased competition, disproportionate growth, and the risk of trade wars. The study uses a systematic literature review of secondary data to analyze the relationship between global businesses and SMEs, as well as the impact on the labor market. The research employs a positivist philosophy and deductive approach, providing recommendations for SMEs to operate effectively in a global market. It explores how globalization affects SMEs' economic growth, investment opportunities, and technological advancements, while also considering the complexities of trade, competition, and labor market dynamics. The report concludes with effective recommendations for SMEs to navigate the global business environment.

RESEARCH TOPIC: Globalization impact
on small to medium business scale

Abstract
The current project is based on the topic of the impact of globalisation on small and medium
business scale. Further, the main purpose of current study is to review about the benefits of
globalisation on small and medium business scale, the challenges caused by globalisation to the
small and medium business scale along with relationship between global businesses and small to
medium business scale. Besides this, the current study is based on use of only secondary source
of data that supports a cost and time efficient way of data analysis based on review of pre-
existing information. Along with this, the current study includes a systematic literature review to
have better analysis and accomplishment of set objective. Besides this, the current study also
provides and supports effective recommendation for SME to operate in more effective way
within a global market.

Table of Contents
Abstract............................................................................................................................................2
Introduction......................................................................................................................................1
Aim, objectives, research questions.................................................................................................1
Methodology....................................................................................................................................2
Review of the literature....................................................................................................................3
Conclusion and Recommendation.................................................................................................12
REFERENCES..............................................................................................................................13

Introduction
The concept of globalisation is tending to associated and related with the process that leads
to easy movement of the people, goods, information and technology across the borders. Thus, the
term globalisation is tending to use to describe that how the trade and technology made and lead
to a world into a more internationally connected and interdependent place (Kraus and et. al.,
2022). Beside this, it has been seen that the concept of the globalisation tends to also creates the
improved business process that lead to building improved and higher interaction level between
the business organisation and people across the world at global level based on building and
leading improved trade relationship. Thus, a vital impact of globalisation is being tend to seen on
the small and medium sized origination based on higher interconnectivity and rising trade
relationship across the various nation. The small and medium sized business are the one which
tend to have a limited number of employees and access to limited resources. Further, the
definition of SME within UK is generally a small or medium-sized enterprise with fewer than
250 employees. Further, the other characteristics and implication of SME defined within UK
tend to comprises of the business with fewer than 250 employees, and a turnover of less than €50
million, or a balance sheet total of less than €43 million (Wang, P. and et. al., 2022). It has been
seen and analysed that in the recent times a key and most vital role is being played by the SME
in supporting improved development and growth of the economy of a nation through
contributing in GDP and encouraging employment level. The concept of globalisation is leading
both positive as well as the negative impact of the business operation and functioning of the
SME by the way of supporting higher growth opportunity along with creating issues of high
competition. Therefore, current study is being undertaken and conducted to find out and
evaluated about the Globalization impact on small to medium business scale.
Aim, objectives, research questions
Project aim
The aim of current project is, “To critically evaluate the impact of globalisation on small
and medium business scale in London”.
Research objectives
Following are the main research objectives that are being analsysed and reviewed through
current study:
1

• To evaluate the benefits of globalisation on small and medium business scale
• To evaluate the challenges caused by globalisation to the small and medium business
scale.
• To evaluate the relationship between global businesses and small to medium business
scale.
• To evaluate the globalisation impact on labour market in relation to the small and
medium business scale.
Research question
the current secondary based data is tends to conducted to find out and come up with the
answers and evaluation of the following set research questions:
• To evaluate the benefits of globalization on small to medium business scale in the
UK.
• To evaluate the challenges caused by globalization on small to medium business scale
in the UK.
Methodology
This section of research project is tend to related and concerned with the providing
information about the method and philosophy that are being used and applied to undertake and
conduct a study in systematic manner. With respect to current study, the use of the positivisms
philosophy is tend to made which supports and leads to practical and systematic way of the
investigation. Further, application of the deductive approach is also being made within current
project to ensure and have the better testing as well as systematic scanning of the facts (Alinasab
and et. al., 2022). Further, the research strategy that has been applied within current project is
based on surveys strategy based on undertaking systematic literature review to have better
analysis and review of the large set of pre-exiting data on a specific topic.
Choice of method- There are two main choices of method includes of the qualitative and
quantitative method of research out of which one is selected based on the nature of the study. the
use and application of qualitative method of research is made for undertaking a detailed and
textual form of study that is subjective in nature thus tend to be more complex and time
consuming. Thus, for current study based on the topic of impact of globalisation on SME use of
the quantitative nature of the research method has been made that supports and lead to review of
2

facts in numeric form which provides better analysis and measurable set of research results
(Sindakis and Aggarwal, 2022).
Data collection and analysis- From the two main sources of the data collection (primary
and secondary) use of the secondary source of data has been made within current project that
supports a better base and framework for creation of knowledge. The data collection process for
analysing secondary sources of data comprises of selection of authentic and relevant article and
online journals that would be served through making use of aesthetic search engines such as
Google scholars, etc. to maintain the reliability of collected facts. Further, to ensure the selection
of the relevant article use of the Keywords has been made which comprises globalisation, SME,
impact, key challenges, benefits, unemployment rate, labour market, etc. Along with this, to
maintain the authenticity and reliability of the facts and data only those articles are being
selected that have proper date, name of authors and copyrights to maintain the higher quality,
validity, reliability and significance of data (Morris, Morris and Bowen, 2022).
Review of the literature
Literature review forms out a vital and effective research strategy that supports and lead to a
systematic review of pre-exiting facts and data that supports a better framework for creation of
knowledge and achievement of set objectives. Literature review is significant to support the
analysis and survey of relevant literature and articles related with a specific topic to lead and
ensures an improved knowledge and underdoing level. The current review of literature is based
on topic of the impact of globalisation on SME for which a range of online articles and journals
are being reviewed and analsysed, a discussion and evaluation of which has been provided as
below:
Theme 1: To evaluate the benefits of globalisation on small and medium business scale
As per the view point of the Flynn, A. and Harris, I., 2022, it has been analsysed that in
current age of world wide web and advanced technology a high level of interaction, integration
and interdependent is seen at global level based on astounding technological advancement. Thus,
today the concept of globalisation is tend to carte and supports many benefits for the small
business also as SME can also go global in a much more easier way. A detailed review and
analysis of the key benefits of globalisation on small and medium business scale has been
discussed below with the help of following points:
3

Access to the global market- The first and foremost benefit of globalisation for SME tend
to includes and comprises of the leading opportunity to have higher economic growth based on
aces to the global market. It has been seen and analsysed that the globalisation gives an improved
level of interaction and connection across various nation of world that provide access to larger
number of customers, resources and labour for SME. Thus, the concept of the globalisation tend
to be very beneficial for the SME of UK as they over higher availability of resources and
customers to have improved economic growth and expansion (Lee, Chong and Sia, 2022).
Increased level of cross border investment- The another key benefit of globalisation for
SME tend to comprises and includes of going an increase opportunity and chances of cross
border investment. At the macroeconomic level it has been seen and reviewed that the concept of
the globalisation tends to supports a higher international investment for the SME that enhances it
capability and internal strength level. Along with this, globalisation also supports a better and
effective ways for SME to have a higher return on aboard investment through leading improved
inflow of capital benefits because that capital contributes to investment and, therefore, to
productivity. Beside this, the concept of globalisation also tend to supports higher Foreign
investment also often comes with, or in the form of, technology, know-how, or access to
distribution channels that can help the recipient nation that lades to and creates significance of
globalisation foe SME (Pereira and et. al., 2022).
Upgraded technology- The concept of globalisation also supports and leads to higher
transformation and upgradation of the technology and ensures the easy access of SME to
improve and automated technology that supports reduction in cost of operation and higher
efficiency for SME. Globalisation supported better use of technology within SME through
allowing its access and reach to improved technology prevailing in the global and international
market which is beneficial for SME to have higher operational efficiency. Along with this, use of
the Digital and online technology also supports better connection and interaction with customers
at global level that also supports higher sales and revenue for the SME.
Theme 2: To evaluate the challenges caused by globalisation to the small and medium
business scale.
With respect to the information provided by the Hourvouliades, N.L., 2022, it has been
seen and reviewed that many challenges are also there which are caused and created by flotation
on the overall business operation and success of the SME. The first and foremost challenge that
4

is being created by the globalisation comprise of the risk of trade war between nation that creates
an unstable business environment for the SME. Along with this, many complexities in form of
tariff and taxes imposed on exports and imparts is also creating challenges and higher level of
employability for the SME along with the rising shipping and logistics costs. Beside this, the
other challenges caused by globalisation to the small and medium business scale are discussed
and listed as below:
Increased level of the competition- The increased level of the interconnection and
interaction of the global economy has created the threat and challenges of the higher level of
competition for the SME within UK. It has been seen and reviewed that the global free trade has
increased the access of multinational company within the local market of the SME along with
they also have to compete and match with the global standard and quality level that is creating
many challenges and threats for the SME. This increased level of competition is tend to be
negatively affecting and impacting the overall the productivity and efficiency level of SME
(Batas, 2022).
Disproportionate growth- The concept of the globalisation has also created and leads to
the challenge of the having disproportionate growth for SME as it become more complex and
difficult to set a balance between and within the cross nations transactions. It has been reviewed
that the globalization often tends to have the effect of the increasing immigration which tend to
affect the increases gross domestic product (GDP), which can be an economic boon to the
recipient nation. But still in certain cases the higher level of the Immigration may reduce GDP
per capita in the short run if immigrants’ income is lower than the average income of those
already living in the country thus, creates and leads to the issue of Disproportionate growth for
the SME (Vrontis and et. al., 2022).
Theme 3: To evaluate the relationship between global businesses and small to medium
business scale.
As per the opinion of the Rubino, F.E., Multari, C. and Valenza, G., 2022, it has been seen
and analysed that the Globalization tend to supports and has enabled the firms with a higher level
of the specialize and it tend to also increase the intensity of R&D, innovation and capital in their
output. Therefore, an implication and analysis can be made that the Globalization has made it
easier for new companies to start competing with old incumbents therefore globalisation tend to
supports a larger number of creation of global company and business.
5

Figure 1: Relationship between global businesses and small to medium business scale, 2021
It has been seen and evaluated based on above chart that the a direct and constant relationship is
tend to be exists global businesses and small to medium business scale as both are target and
tend to lead out for higher opportunity for having improved sales and profit level (Pedron, 2022).
It tends to be also reviewed and analsysed that the global business are the one who are tend to
have a reach and access to the international market and are tend to be working and having its
operation in more than one nation of the world. On the other hand, the SME or the small to
medium business are the one who are working and operating at a local and domestic level thus
have limited access to resource and customers. Small business tends to supports and creates
many beneficial aspects for global business that reflects and presents their effective relationship
by the way of offering effective outscoring services and meeting the needs at improved and
efficient level. companies go international because they want to grow or expand operations
(Kraus and et. al., 2022).
6

Figure 2: relationship between global businesses and small to medium business scale, 2021
Figure 3: relationship between global businesses and small to medium business scale, 2021
Further, the above graph is depicting the relationship between the global and small to
medium business can also be established based on the fact that the companies that engage in
international trade are 20 percent more productive, produce 20 percent greater job growth than
non-exporters, and they are 9 percent more likely to stay financially solvent (Wang, P. and et. al.,
2022). Further, the direct connection and relationship of small to medium business to become
and liked with global business can also be set out as there are many benefits of the entering
7

within the international markets tend to comprises and include of the advantage of the generating
more revenue as well as the high and a competing for new sales. Apart from this the global
business have positive relationship with the local business as it also ensures and leads to the
higher investment opportunities along with supporting and brining out the diversifying as well
as the reducing costs and the expenses made on the recruiting new talent which defined the
relationship between global businesses and small to medium business scale.
Theme 4: To evaluate the globalisation impact on labour market in relation to the small and
medium business scale
According to the view point of the Belitski, M. and Mariani, M., 2022, globalisation tend
to have significant impact on the labour market as globalisation is the concept that is tend to
creating a decline within the labour income share and at the same time supporting the rising
return and increase level for the skilled workers. Apart from this, it has been also seen and
analsysed that the concept of the globalisation is also tend to creating and effectively
contributing to the higher and increased level of the integration of the labor market along with
supporting and bringing out the closing wage gap between the workers residing and present
within the advanced and developing economies (Alinasab and et. al., 2022). Further, it has been
also seen and elated that the globalisation has leading and supporting to the employment shifts
within the small and medium business scale that is also leading and encouraging the cross border
labour mobility. Beside this, it has been also seen and evaluated that the globalisation also tend
to lead and have a significant impact on the level of the distribution and wage inequality along
with creating the challenges for small and medium business ale based on the changing within the
regulation that are governing and work together within the changing nature of the economy.
8

Figure 4: Impact of globalisation on labour market, 2021
Further, it has been seen and evaluated based on above chart that the providing of
globalisation is having significant impact on the labour market as it tends to lead to the higher
movement of people across the nation (Sindakis and Aggarwal, 2022). Therefore, the
globalisation tends to support a more skilled workforce and labour for the small and medium
sized enterprise. Along with this, the globalisation is also tending to ensures and brings out a
higher level of the equilibrium for the labor market through meeting the demand of labor and
reducing and mitigate the risk and challenge of unemployment through leading higher job
opportunity for people. Thus, a vital role and positive impact on the globalisation is seen in
creating improved labour market for the small and medium scale business.
Theme 5: Effects of small scale enterprise (SME) on reducing the unemployment in the UK
along with analysing challenges faced by SME
According to the view point of the Sanchez, J.M.I., 2022, it has been seen and analsysed
that a vital role is being played by the SME in reducing the unemployment level within UK by
the way of leading and supporting equal job opportunity for all individuals. Along with this, it
has been seen that the assets and resource requirement of SME are limited thus supports a fair
opportunity for all to show case their talent and creates higher job level especially within the
local market.
9

Figure 5: Employment created by SME, 2021.
With respect to above drawn of the graph it can be reviewed and evaluated that small
business are vital part of UK economy as they tend to supports and accounts for near around
48% of the total part of the employment along with supporting a near around 33 % of turnover
together with forming out the 99.3% part of private business sector. Further, it has been also
reviewed that the medium scale and size of the business is tend to be having 14% part in turnover
as well a contribution of the 12 % within the level of the employment. In comparison to this the
large scale enterprise only having 0.1% of the total participation in business together with 40%
level of the employment along with the 53% turnover (UK SME Data, Stats & Charts, 2017).
Therefore, based on the above data an analysis and implication can be made that the SME are
playing a vital role in reducing and mitigating the risk of the unemployment through supporting
generation of higher number of jobs.
10

Figure 6: UK Small Business Statistics, 2019.
The above data is showing that small as well as the medium scale business tend to be
having maximum level of the contribution in turnover as well as within the number of business
thus, it is playing a crucial and most important role in growth as well as the better development
of UK economy (UK Small Business Statistics, 2019). It has been analsysed and observed based
on the above graph that within UK, 76.0% business are with no employees (mini business)
whereas as 23.3% are hold by micro business and 0.6% are small business and only 0.1% are
accounted by large organisation out of which SME accounts for and supported the maximum
level of the employment.
11

Figure 7: Private sector business, 2021
It has been shown and reflected by the above graph that in context to micro level and size
of the businesses, they impact through having and making a contributing 7.3% of turnover,
together with supporting the 17.6% of employment as well as leading if 76.0% on other
businesses. It has been also seen that small businesses are also tend to impact through making the
contribution of about 14.3% in economic turnover as well as the 15.3% in improving
employment situation together with supporting the 19.7% in helping other businesses to grow
within the UK economy (Morris, Morris and Bowen, 2022). Therefore, am analysis and
implication can be made that a vital role of SME is seen in increasing the growth of economy
along with creating higher job opportunity which supports reduction in the issue of
unemployment in UK.
Conclusion and Recommendation
On the basis of above literature review, a conclusion can be made that the access to global
market along with it become mush for inexpensive, easy to sell and show case the business
product and services at global level along with sending of money online that has carted many
benefits for the small business. Beside this, it has been summarised that higher level of
competition is a big threat lead out by globalisation that is creating challenge for SME. Further, a
crucial impact of globalisation has been seen on labour market along with the important role of
SME in resolving and mitigating issue of unemployment through leading higher job opportunity.
Further, based on the findings of current investigation a recommendation about
supporting effective use of upgraded technology along with regular training of employees could
be made for SME to have higher growth opportunity in global market. Further, making effecient
use of resources to build internal capability is also recommended for SME to have higher
competitive strength at global level. Beside this, the current study is based on secondary form of
data collection so use of primary set of data could be recommended for conducting future
12

investigation that would support the first hand and more authentic set of information to achieve
set objective.
REFERENCES
Books and journal
Alinasab, J. and et. al., 2022. Managing SMEs' internationalisation process. A Delphi approach
for identifying antecedent factors. International Journal of Managerial and Financial
Accounting, 14(1), pp.1-19.
Batas, S., 2022. Megatrends in International Business: Examining the Influence of Trends on
Doing Business Internationally. Springer Nature.
Belitski, M. and Mariani, M., 2022. The effect of knowledge collaboration on business model
reconfiguration. European Management Journal.
Flynn, A. and Harris, I., 2022. Media reporting on public procurement: an analysis of UK press
coverage, 1985–2018. Journal of Public Procurement.
Hourvouliades, N.L., 2022. Financing Small Businesses: The Agony of Securing Funding.
In Small Business Management and Control of the Uncertain External Environment.
Emerald Publishing Limited.
Kraus, P. and et. al., 2022. The ambidextrous interaction of RBV-KBV and regional social
capital and their impact on SME management. Journal of Business Research, 142,
pp.762-774.
Lee, H.S., Chong, S.C. and Sia, B.K., 2022. Financial services and globalisation in belt and road
countries. The Service Industries Journal, 42(3-4), pp.249-276.
Morris, J., Morris, W. and Bowen, R., 2022. Implications of the digital divide on rural SME
resilience. Journal of Rural Studies, 89, pp.369-377.
Pedron, Z., 2022. Small Businesses to Overcome Skill Shortages and Talent Mismatches.
In Small Business Management and Control of the Uncertain External Environment.
Emerald Publishing Limited.
Pereira, V. and et. al., 2022. An exploratory study into emerging market SMEs’ involvement in
the circular Economy: Evidence from India’s indigenous Ayurveda industry. Journal of
Business Research, 142, pp.188-199.
Rubino, F.E., Multari, C. and Valenza, G., 2022. The Internationalization of Family SMEs: A
Literature Review and Research Agenda. The International Dimension of
Entrepreneurial Decision-Making, pp.115-136.
Sanchez, J.M.I., 2022. Attributes of scaling up SMEs in the IT sector towards sustaining high-
performance business results. Journal of Entrepreneurship in Emerging Economies.
Sindakis, S. and Aggarwal, S., 2022. E-business Adoption by Small Businesses: Benefits and
Drawbacks. In Small Business Management and Control of the Uncertain External
Environment. Emerald Publishing Limited.
Vrontis, D. and et. al., 2022. Editorial Introduction: Business Under Crisis—Avenues for
Innovation, Entrepreneurship and Sustainability. In Business Under Crisis, Volume
III (pp. 1-17). Palgrave Macmillan, Cham.
Wang, P. and et. al., 2022. Sensemaking and Sustainable Development: Chinese Overseas
Acquisitions and the Globalisation of Traditional Chinese Medicine. Global Policy.
13

Online
UK Small Business Statistics. 2019. [Online]. Available Through: <https://www.fsb.org.uk/uk-
small-business-statistics.html>
UK SME Data, Stats & Charts. 2017. [Online]. Available Through:
<https://www.merchantsavvy.co.uk/uk-sme-data-stats-charts/
14