Recent studies are showing that MNCs are increasing their innovation while SMEs are falling behind on this particular category, do you think that has anything to do with the political power of giant organizations? Given the following fact:
Apple, Walmart, State Grid of China Corporation, China National Petroleum, Sinopec Group, Royal Ducth Shell, Exxon Mobil, Volkswagen, Toyota, and BP all had annual revenues greater than the governments of Russia, Switzerland, and Norway in 2015 (Luigi Zingales, 2017).
SMEs falling behind on innovation, in terms product launches? Patents? Process innovations. MNCs, by their very definition can use considerable horizontal and vertical integrative strategies, combined knowledge, reduce input costs (through access to cheaper materials and labor) to invest significantly into innovation to maintain or attain competitive advantage. It's hardly surprising as a phenomenon. It's more to do with their economic power (above points) rather than "political power" in terms of directly influencing policies.
also consider globalization and the speed of competition/ markets. in many cases, MNC is a more apt structure for the current environment. and MNCs evolve on their own - they are learning and developing their own knowledge base.
a possible conclusion is that SMEs need to focus on international trade if they wish to remain relevant.
I totally agree with you Brian. The structure, dynamic capabilities, and the slack resources may be contributing to this rise. However, don't you think that such rise is also being made easier for example by the political power of giant organizations as compared to small and medium size organizations? The new world order seems to be getting tougher makes it harder for SMEs to afford what it takes perhaps...just a thought!
Thank you Sanwar for your insightful comments. don't you think that such rise is also being made easier for example by the political power of giant organizations as compared to small and medium size organizations? The new world order seems to be getting tougher makes it harder for SMEs to afford what it takes perhaps...just a thought!
although i am not a great proponent of SWOT, a better approach may be to consider SWOT on SMEs and MNC, respectively.
i think there are still areas where SMEs have advantages over MNCs, so it is more an issue of being strategic about it. also, SMEs may consider supplying MNCs - more symbotic relationships with MNCs. even MNCs have evolved and specialized into various facets, e.g. OEM manufacturers.
Thanks Brian. I think that is an interesting insight. Another question that worth investigating from management scholars is: Are the changes in the political landscape, international political economy, and international relations playing any role in favoring either MNCs or SMEs, how so,?
Strictly speaking, it's not correct to counterpose MNCs and SMEs. Of course, most of MNCs are also large-scale enterprises (LSEs), but some SMEs are multinational as well (i.e. micro-multinationals).
Thus, it would be more precise to compare LSEs and SMEs in their impact on innovation so that firms' size is an independent variable here. Otherwise, comparing local and international companies is another avenue here, or taking both variables at once.
I think the issue with MNCs is that they are powerful enough to rather influence sovereigns etc. in many cases MNCs are more powerful than sovereigns. and MNC are more flexible to adapt to sovereigns, because they span multiple sovereigns. they easily cherry pick and circumvent sovereigns. thus, also the trend of public governance at the level above sovereigns. look at new public governance literature.
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