Globalization's Impact on SMEs: A London Business Review

This literature review investigates the impact of globalization on small to medium-sized enterprises (SMEs) in London. It aims to evaluate the benefits, challenges, and relationships between global businesses and SMEs, as well as the impact on the labor market. The study employs a secondary data analysis approach, utilizing qualitative data from sources like Google Scholar. Key benefits identified include access to larger markets, increased cross-border investment opportunities, and technological advancements. Challenges include trade war risks, increased competition, and disproportionate growth. The review also explores the relationship between global businesses and SMEs, highlighting the potential for specialization and innovation. Recommendations are provided for SMEs to operate effectively in a global market. Desklib provides access to similar documents and solved assignments for students.

RESEARCH TOPIC: To investigate the
impact of globalization on small to medium
businesses

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 be 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). 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:
• 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 be 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.
1 | P a g e

Methodology
The data collection for this investigation involves usage of secondary data. This involved data
qualitative data collection. This type of data was collected by using secondary sources such as
Google scholar.
Data processing: This part of the research methodology looks at the ways in which data
is collected and translated into set of useful and valuable information which can be used to reach
specific research conclusion. The selection of suitable data processing methodology is essential
because it helps convert raw data into format which can be used in the investigation such as
graph, report or chart which is easy to understand and interpret. The justification for using
electronic data processing is that it can be used to protect data through digital processing and is
also time saving in comparison to other alternatives present for data processing. Manual and
mechanical data processioning both require manual completion of tasks which can be simplified
and completed quickly by using electronic data processing.
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
Theme 1: To evaluate the benefits of globalisation on small and medium business scale
As per the viewpoint 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. 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,
2 | P a g e

resources and labour for SME. Thus, the concept of the globalisation tends 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). But this, benefit of globalisation is
being critically argued by the Batas, S., 2022, as it has been reviewed and presented that
globalisation not only lead to the expansion of a firm at global level but also created issue such
as higher operational cost, ineffective communication, etc. that are presenting critique for the
concept of globalisations. Further, As per the opinion of the Belitski, M. and Mariani, M., 2022,
it has been that another key benefit of globalisation for SME tend to comprise 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 support 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 (Pereira and et. al., 2022).
However thus, benefit has been critically reviewed by the Hourvouliades, N.L., 2022, who have
an analysis that globalisation not only supported higher international investment but many
complexities in form of tariff and cross border that has been also faced. Beside this, as per the
information provided by Pedron, Z., 2022, it has been that 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. However as per the view point of the Sanchez, J.M.I., 2022, it has been
seen that upgrade technology is not only a benefit but crated issues in form of higher investment
and requirement of more money for automation of business operations.
Theme 2: To evaluate the challenges caused by globalisation to the small and medium
business scale.
3 | P a g e

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 is being
created by the globalisation comprise of the risk of trade war between nation that creates an
unstable business environment for the SME. As per the view point of Morris, J., Morris, W. and
Bowen, R., 2022, 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. This increased level of competition tends to be negatively affecting and impacting
the overall the productivity and efficiency level of SME (Batas, 2022). Further, the Pedron, Z.,
2022, has supported the positive aspect of this challenge is that small and medium business are
able to gain access to technologies and processes which has supported growth of globalization.
With increased globalization small and medium businesses have increased opportunities to work
and collaborate with industry wide businesses and suppliers to reduce cost and enhance
profitability. In this way increased competition brings increased expansion and collaboration
opportunities for small and medium sized businesses. Beside this, with respect to the information
provided by the Rubino, F.E., Multari, C. and Valenza, G., 2022, it has been seen that 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 transaction (Vrontis and et. al., 2022). However, as per the
opinion of the Sindakis, S. and Aggarwal, S., 2022, the positive aspect of this challenge is that
small and medium sized businesses can attract loyal consumer base in order to face multinational
businesses and survive in the industry for long time period. This helps the gain protection from
pressure of multinational organization. Constructing loyal consumer base is essential for small
and medium firms because to helps the company face disadvantage and challenges associated
with globalization while also reaping the benefits of eradication of economic borders.
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
4 | P a g e

easier for new companies to start competing with old incumbents therefore globalisation tend to
support a larger number of creation of global company and business.
Figure 1: Relationship between global businesses and small to medium business scale, 2021
It has been seen and evaluated based on above chart that a direct and constant relationship tends
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 tend to have a
reach and access to the international market and 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 support 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).
5 | P a g e

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
6 | P a g e

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 bringing 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 (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.
Figure 4: Impact of globalisation on labour market, 2021
7 | P a g e

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 ensure 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 viewpoint 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.
Figure 5: Employment created by SME, 2021.
8 | P a g e

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 tends 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.
Figure 6: UK Small Business Statistics, 2019.
9 | P a g e

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.
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 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
10 | P a g e

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 efficient
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
investigation that would support the first hand and more authentic set of information to achieve
set objective.
REFERENCES
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.
11 | P a g e

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.
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/
12 | P a g e