1.1 Book Context and Theoretical Foundations
The role and importance of small and medium-sized enterprises (SMEs) have largely remained unchanged over many decades, and SMEs, diachronically, have been characterized by scholars, practitioners and administrators as economic drivers, major employers and innovators. The identity of SMEs, along with their characteristics, attributes and competencies, had been considered to be distinctly different from that of their much larger counterparts. And, consequently and irrevocably, their strengths and limitations, as well as their opportunities and threats, were linked to their size and its natural pros and cons. The twenty-first century, however, combining significant technological and communications advancements with intense globalization and significant sociopolitical changes, has changed the identity and role of SMEs, substantially broadening their opportunities and the challenges they need to overcome. Roles traditionally held by larger companies are increasingly undertaken by SMEs; markets that used to be considered simply inaccessible to SMEs are now just one click of the mouse away; relative notions such as ‘adaptability’, ‘agility’, ‘flexibility’ and ‘reflexivity’ are recognized as key to survival and growth, and SMEs are, by nature, best at these; and consumers are becoming more demanding and more specific in their requirements, with SMEs being all the more capable of satisfying them effectively and efficiently. Simply, even simplistically put, the world is changing fast, and SMEs can make their oyster.
In an increasingly competitive global environment, SMEs exert a significant impact on the economies of countries (Genc et al. 2019). Especially in emerging countries, SMEs contribute significantly to economic growth (Ongori and Migiro 2009) and act as a catalyst for development to drive innovation, competitiveness, ground for employment and future growth (Ng and Kee 2017), so that they are considered as the backbone of economic growth in all countries (Ng and Kee 2017). Even though the size and market share of SMEs are relatively small, they obtain a competitive advantage depending upon their characteristics (Stefanovic et al. 2009). SMEs are far more dynamic through a fast decision-making process and risk-taking, flexible in responding to market opportunities (Stefanovic et al. 2009) and responsive to frequent changes that arise in the contemporary global environment (Bresciani et al. 2013) compared to the large firms. While large-scale enterprises and multinational businesses often hog the limelight (Ongori and Migiro 2009), researches acknowledge that SMEs are critical to rebuilding the national economy from an economic crisis (Ballestar et al. 2020). According to Pasricha (2005), the world has become a global marketplace where national boundaries are thrown open to everyone. As markets open up and become more integrated, technology narrows down the distances between markets (Christoforou and Melanthiou 2019) and lowers the scale advantages of large firms by making all markets accessible (Sadiku-Dushi et al. 2019), consequently creating new sources of competition (Thrassou and Vrontis 2008).
Together with globalization of markets, rapid technological advances (Ocloo et al. 2014) and the changing needs and demands of consumers (Shams 2018), SMEs face ever-increasing competition not only at the domestic level but also at the global level (Coviello and McAuley 1999). Such a change in the global environment has increased competitive pressures on SMEs (Belyaeva 2018) and forced them to compete at global standards of multinational enterprises (Chen and Liu 2019). The competitive environment that SMEs face today has forced them to look for different ways (Sadiku-Dushi et al. 2019) to improve their innovativeness and hence competitiveness (Thrassou et al. 2018). Therefore, in order to compete in local and international markets, innovation has become an essential requirement for SMEs (Zahra and George 2002; Genc et al. 2019). Given that innovation is critical to SMEs’ competitiveness in global markets, only one half of SMEs are adapted to some sort of innovation (Ozer and Dayan 2015; Genc et al. 2019).
In addition, the growing globalization of world markets has also influenced SMEs (Gurău and Ranchhod 2006; Genc et al. 2019) and driven the attention to opportunities offered by internationalization (Thrassou and Frey 2017). For SMEs, getting access to international markets (Thrassou and Vrontis 2008) has become a strategic resource for their competitiveness and further development (Bagheri et al. 2019). Internationalization can help SMEs to realize their potential for high growth, and is crucial for the strategic move in large investments (Bagheri et al. 2019). Moreover, gaining access to international markets can propose a number of business opportunities like possibilities to make use of technological advantages (Chen and Liu 2019) and upgrading of technological capabilities (Karagouni 2018), and expansion to larger and new niche markets (Coviello and Munro 1997; Young et al. 1989; Genc et al. 2019). Although their size can put SMEs at a disadvantage compared to large multinational enterprises (Ng and Kee 2017), this characteristic allows SMEs to be nimble and flexible (Paul et al. 2017); accordingly, they can develop new products rapidly and customize them to niche markets (Ormazabal et al. 2018). In addition to the market expansion benefits, performing international activities can lead firms to obtain several skills and competencies (Ng and Kee 2017), which may, in turn, make them more innovative and support their growth and development (Ormazabal et al. 2018).
In addition to opportunities globalization offers SMEs to act successfully (Ocloo et al. 2014) and be effectively involved in global markets (Baporikar 2014), it also poses challenges and threats for SMEs (Belyaeva 2018). Although globalization enriches SMEs’ market opportunities, it also increases the number of challenges and level of competition in a global market (Dana et al. 1999; Genc et al. 2019). Since choosing not to join in global markets is no longer an option (Belyaeva 2018), the basic competitive challenge for SMEs is to strategically decide on how to participate in global markets, which will lead to continuous profitability in the emerging global environment (Chimucheka and Mandipaka 2015). SMEs, therefore, must foresee, respond and get used to the competitive environment the world over (Belyaeva 2018). In response to competitive pressure, many SMEs adapt technology to strengthen their business strategy (Li et al. 2016; Cenamor et al. 2019). However, continuous technological changes pose a great challenge to SMEs (Chege and Wang 2020) and many small businesses are still unfamiliar with new technologies, particularly those in the less developed countries (Chege and Wang 2020).
With the advancement of technology, digital platforms enabled SMEs to homogenize, manage and spread data across the globe (Yoo et al. 2010; Cenamor et al. 2019). In fact, in implementing digital platforms SMEs may face unique challenges because they may lack the required skills, resources and commitment (Giotopoulos et al. 2017; Nasco et al. 2008; Cenamor et al. 2019). Digital platforms, thereby, can be challenging in transforming the way SMEs build a competitive advantage (Kazan et al. 2018; Cenamor et al. 2019). As more and more SMEs are now struggling to compete in highly dynamic environments (Chan et al. 2019; Cenamor et al. 2019) because of the enormous pressure created by both globalization (Kaufmann et al. 2019) and the competition from large multinational enterprises (Bagheri et al. 2019), it is important to be acquainted with the changing opportunities and challenges for SMEs in contemporary business in order to ensure long-term sustainability (Vrontis et al. 2006).
Concluding this theoretical contextualization of contemporary SMEs, we propose that while changes in the wider business environment have been constant, their intensity and pace over the last couple of decades have been profound by any historical standard. And though SMEs are hardly the only ones to have been affected, they do appear to be provided with opportunities and challenges that are disproportionately greater to those of other organizations across the typological spectrum. This book, therefore, brings together a collection of scholarly works that present these contemporary issues through different case studies, perspectives, industries and markets, and individually and collectively add to our knowledge and understanding of SMEs in today’s business and socio-economic context, along with the opportunities and challenge...