In a resource constrained economy like Uganda, the responsibilities for planning, resource mobilization and allocation, management immunization services, storage and distribution of
IN THE GLOBAL ECONOMY: STRATEGIES AND POLICIES Workshop 1 ENHANCING THE COMPETITIVENESS OF SMES THROUGH INNOVATION
SME INNOVATION IN A GLOBAL ECONOMY...3 Introduction...4 Globalisation Challenges...4 Globalisation...4 The Emergence of Knowledge as the Source of Comparative Advantage...
SME INNOVATION IN A GLOBAL ECONOMY â This paper serves as the background document for the Workshop on â€oeenhancing the Competitiveness of SMES
of scale economies which small firms face in all aspects of business --Flexible specialisation has proven to be a particularly successful model of industrial organisation:
This explains why economists have reopened the debate on whether some market and systemic failures disproportionately affect small firms,
3. Both scale economies and research and development have become more important instruments for competitiveness in the global economy.
Since SMES seem to be at a disadvantage for both these factors, many experts predicted the demise of SME competitiveness as globalisation increased.
what triggered the wave of globalisation reshaping the economy at the end of the 20th century.
machines and electronic communication superhighways, The Economist recently proclaimed â€oethe Death of Distance†on its front page. 2 While the telecommunications revolution has brought the cost of
â€oethe Death of Distance, †The Economist, 30,september 1995 3 â€oethe Downsizing of America, †New york times, 3 march, 1996, p. 1
By contrast, the rest of the economy experienced fairly steady growth at around 3%over this period. 5 Innovative activity of in the United states has jumped, as evidenced
competitiveness in a globalizing economy. This background paper discusses some of the strategies open to SMES as they try to become more productive and shift more knowledge-based activities
â€oethe Valley of Money†s Delights, †The Economist, 29,march 1997, special section, p. 1 5 Kortum and Lerner 1997, p. 1
the majority of SMES manage the transition to a global, knowledge based economy Competitiveness Strategies
given industry†s underlying technological conditions, scale economies, and demand. Where scale economies are important,
the revolving door model is more common. While start-ups and new entrants may not be deterred by the presence of high scale economies,
a process of firm selection ensures that only those firms that grow will be able to survive beyond more than a few years
mechanism-the extent of scale economies-may ultimately be forced to exit out of the industry.
untapped in the economy The Information technology Strategy 37. A second strategy SMES can use to improve their competitiveness in global markets involves the
and the microprocessor, help mitigate economies of scale and the gains traditionally associated with large-scale production.
reach scale economies. This notion has received considerable attention in the popular press. Management consultant Tom Peters claims that,
10 Tom Peters,"New Products, New Markets, New Competition, New Thinking,"The Economist, 4 march, 1989
â€oein the physical world, scale economy and standardisation plays a major role. The digital world enables individual product customization†The
local economy. The Mittelstand companies also espouse a strategy whereby they insist on the same high
In particular, SMES are disadvantaged clearly by scale economies and other size related ownership-specific advantages. Similarly, they may have more difficulty obtaining inputs on favoured
SMES who want to remain innovative in a global economy Policy implications: Broadening Government Support and Coping with the Diversity of Needs
Economy, 100,1126-1152 WK1 34 Gomes-Casseres, Benjamin, 1997, â€oealliance Strategies of Small Firms, †Small Business Economics, 9 (1
Jacobs, Jane, 1969, The Economy of Cities, New york: Random House Jaffe, A.,1989, â€oereal Effects of Academic Research, †American Economic Review, 79,957-970
-Economy Manufacturing Cluster Theresia Gunawan1, Jojo Jacob2 and Geert Duysters3 August 2013 Â The authors, 2013
capacity of professionals and organizations in and for emerging economies and developing countries with the objective to substantially contribute to the
Innovative Performance of SMES in an Emerging-Economy Manufacturing Cluster Theresia Gunawan a Jojo Jacob
as SMES in emerging economies do. Next to network ties entrepreneurial orientation (EO) is another significant resource for achieving competitive
highly competitive and turbulent environments in emerging economies (Covin and Slevin 1989 In line with RBV, EO,
They benefit from the economies of agglomeration and joint action giving them collective efficiency and therefore a competitive advantage over firms that are not
Studies in the context of emerging economies are far fewer, but they too suggest that clusters enhance the competitive advantage of SMES (Caniels & Romijn, 2003
economies, it is important to understand the interplay between EO and a firm†s network ties
specific context of an emerging-economy, low-tech manufacturing cluster. While proactiveness and risk-taking orientation both contribute to innovation and enhanced firm performance, we
in emerging economies there only exists limited information about footwear producers in this cluster; the official database of company addresses is at best incomplete.
manufacturing cluster in an emerging economy, Indonesia. Our analysis, based on primary data collected through interviews
economies should actively develop inter-organizational networks that go beyond the confines of the region in which they are located.
Collecting longitudinal data in the emerging economy context is particularly challenging, given the lack of governmental level initiatives to this end
consequences of partner heterogeneity in the context of emerging-economy SMES 21 References Aiken, L. S,
developing economy. International Small Business Journal, Advance online publication Caniels, M, . & Romijn, H. A. 2003).
Economies: Implications for SMES€ Access to Global Markets. Academy of Management Journal, 51 (2), 359-380
Global economy. Economic Development Quarterly, 14 (1), 15-34 Qian, H, . & Acs, Z. 2013). An absorptive capacity theory of knowledge spillover
Creative Innovation in Local economies. Economic Development Quarterly, 20 (2), 162-177 Schoonhoven, C b.,Eisenhardt, K. M,
Innovation and Clustering in the Globalised International Economy. Urban Studies, 41 (5/6), 1095-1112
economies Both entrepreneurship and innovation are 2 broad concepts without a unanimously accepted definition and are
and through innovation and creative destruction the economy evolved. The connections between entrepreneurship, innovation and small firms has been studied over time by various scholars
increase and the past year (2013) could represent a turning point for the EU economies if the positive upwards
contribution of SMES to job creation and value added constitute a large share of both EU and Romanian economy
of the economy and a decrease in unemployment (Koellinger & Thurik 2012) so a more analytic approach toward
and implicitly the Romanian economy was marked by the crisis In the last period signs for economic recovery start to appear at European level and some contributors for these trend
Entrepreneurs usually embrace innovation an this may have positive impact on a countries economy by generating new jobs, creation of wealth and improving quality of life.
economy, this report draws on a week-long study visit that took place in Seville and Malaga from 12
regional Ministry of Economy, Innovation and Science (MEIS; the General Secretariat for †Telecommunications and Information Society†of the MEIS;
The review team was informed initially about the main features of Andalusia†s economy and entrepreneurship support system by a diagnostic report prepared by Prof.
Dr Jonathan Potter, senior economist, OECD LEED Programme, jonathan. potter@oecd. org Mr. Marco Marchese, policy analyst, OECD LEED Programme, marco. marchese@oecd. org
depends on the Regional Ministry of Economy, Innovation and Science, and this has created greater pressure for industry-university collaboration.
prepared by the Ministry of Education, seeks to adapt vocational training to the new economy and new
within the Andalusian economy. It is important for universities and regional coordinating bodies to recognize that R&d activities, especially the commercialization and exploitation of intellectual
) The consequence of this level of public subsidy is that much of the regional economy is
The Andalusia economy is dominated by SMES with over 99%of firms having less than 500 employees.
proportion of the total activity in the regional economy over the decade 1995-2005, rising from 20.8
economies in a globally connected environment. Spatial variations within countries suggest that not all geographical parts of a country achieve similar levels of employment, skills development, business
economies round the world. Structural, spatial and temporal variations occur across regions because of differences in the human capital base, the industrial structure, relevant research and development
productive and entrepreneurial economy The local background Andalusia is populated the most Spanish region. Located in the South of Spain, it ranks in size
relatively backward economy was the outflow of human capital to Spanish growth poles, especially to
period, partly because of the impact of the volatility of the Spanish economy and of the global
the regional economy of Andalusia has faltered badly with sharp drops in both gross domestic product (GDP) and employment
2005 reinforces this notion of fragility as the collapse of those economies dependent on property price
It is against this background of the Andalusian economy that a review on Entrepreneurship SMES and Local Development has been carried by the OECD Local Economic and Employment
these components of the regional economy and the extent to which entrepreneurship and SMES contribute to innovation,
knowledge-based global economy with specific reference to human capital; its capacity for research and development; and soft infrastructure issues such as governance
make an effective contribution to the Andalusia economy Figure 1. A Schemata for Reviewing the Andalusia Economy
Human Capital and the Labour market It is recognised now well that the set of technical, cognitive, facilitative and operational skills
labour market and more generally in the development of an economy. This fact has acquired a particular poignancy in recent times in our so-called knowledge economy where †brain power†and the
ensuing set of †knowledge-based†skills have gained a higher profile than the offering of traditional
educational attainment acquires a premium in relation to the economy. Its importance has gained momentum with the advent of the knowledge economy.
The overall premium to higher education has increased sharply as the main drivers of these economies, the knowledge-based industries, demand
higher levels of skills in the workforce with which to manage technological change productively. It is
way of generating talent in the local economy. Attracting talent to a local economy is enabled by making an environment and the quality of local life conducive to entrepreneurial economic activity
The emphasis a region puts on any one of the two approaches is to some extent dependent on their
value creation for the economy and for society. Entrepreneurship is evident in both small and medium
as well as large ones, in the formal and informal economy; in legal and illegal activities, in innovative and traditional firms;
all sectors and sub-sectors of the economy (OECD, 2001. This spectrum of involvement can lead to
exercise, and additional literature and material about the Andalusia economy. The draft report was submitted for comments and approval to the local partner, the Andalusia Technology Network
Economy, n. 98, pp. 893-921 Florida R.,2002, The Rise of the Creative Class, Basic books, New york
knowledge-based economy Labour utilisation and labour productivity The recent economic crisis has struck Spain severely, and Andalusia has been no exception
the economy in the booming period, has also been one of those hit hardest by the recession,
Today, Andalusia†s economy has approximately 510 000 firms, corresponding to 15.9%of the national total against a population that is 17.8%of the total
Micro firms (less than 10 employees) dominate the economy, representing over 90%of the total. This
peripheral economies which generally find it difficult to penetrate international markets. Indeed only 1. 4%of regional firms are engaged in foreign trade,
1970s agriculture was still playing an important role in the Andalusian economy, but its contribution
Andalusia†s industry structure resembles much more closely that of any modern economy, though the
capital investments and lower internationalisation that are both typical of economies overly reliant on services Figure 4. Andalusia's GVA trends by sector, 2001-2009
The food industry has traditionally been one of the linchpins of the Andalusia economy. Over
In addition, the sectors that have driven the Andalusian economy over the last decades †mainly construction and tourism †are known not for being R&d-intensive and
this study being the Ministry of Economy, Innovation and Science (MEIS. This is the result of the
recent merger between the Ministry of Economy and the Ministry of Innovation, Science and Enterprise (MISE.
and the social economy sector. EMPRENDE also maintains a network of 37 Corporate Development Support Centres (CADES) providing a decentralised BDS support across the region
with the most competitive economies. It establishes the framework for the region†s research and innovation agenda and encourages universities to cooperate more intensively with the
are the modernisation and competitiveness of the regional economy. However, the emphasis is here on entrepreneurship,
global economy. Yet, one of the greatest challenges in regional economic development is developing a coherent set of policies and programmes that link a region†s complex educational and training
Role of human capital in the knowledge economy: Debates in the literature Higher levels of human capital create returns not only in terms of worker productivity but also of
With the advent of the knowledge economy, the overall premium to higher education has increased sharply (Carnoy, 1994.
One path to competing in the global knowledge economy is through using local universities to
California†s clean energy economy, in which the most innovative firms interact more with nonprofits
competitive knowledge-based economy in the world by 2010. Accordingly, INTERREG IV, the EU regional development programme for 2007-2013, was redesigned to bring the Lisbon Strategy onto the
innovation and the knowledge economy, on the one hand, and the environment and risk prevention on the other
rest of the Spanish economy, namely: the high level of unemployment, large reliance on temporary
sectors in the regional economy, it is not surprising that Andalusia has in recent decades switched
and the Ministry of Economy, Innovation and Science In the mid 1980s, after education policies were transferred to Andalusia, the Regional Ministry of
as innovation and economic development tools and facilitate a shift towards an economy based on knowledge
On March 22, 2010, the Regional Ministry of Economy merged with the Ministry of Innovation, Science and Enterprise
The newly created Ministry of Economy, Innovation and Science confirmed the commitment of the regional government to make technology transfer between the 10
Ministry of Economy, Innovation and Science. This has created greater pressure for industry -university collaboration Traditionally, student mobility was very weak in Spain and geographic proximity rather than
by the Ministry of Education, seeks to adapt vocational training to the new economy and new demand
abroad in strategic sectors for the Andalusia economy (aeronautics, biotechnology, ICT, culture industries, renewable energies;
the Regional Ministry of Economy, Innovation and Science. CTA recently began a new program to
Ministry of Economy, Innovation and Science, there is only one vocational training diploma in Andalusia included under the Energy and Water professional family.
Limited coordination amongst the Ministry of Economy, Innovation and Science and the Ministry of Employment
and the Ministry of Economy merging with Innovation and Science in 2010. The Ministry of Employment remains separate.
Education and the Economy, 2007 Limited synergies between cluster strategies and workforce strategies Finally, in part because of this agency balkanization, the region†s cluster strategy lacks strong
the Andalusian economy, as well as the rotation of agents between clients, it was not possible to give
Vocational training, which will link training better to the new economy, also presents an opportunity for RETA to provide input
regional green economy The East Bay Green Corridor Partnership in the San francisco bay Area provides an example of
coordination around one emerging sector †in this case, the clean energy economy Workforce development and economic development goals,
development more systematically, in part to create jobs in a stagnant economy. In the U s.,cities and
regional economy, and thus able to facilitate economic development In late 2007, the mayors of Oakland, Berkeley, Richmond,
and promote the green economy in the region. The so-called East Bay Green Corridor Partnership (EBGCP) has expanded
it provides an example of how to stimulate the economy during a downturn by creating a new
it targets green economy businesses, also a strength for Andalusia; it links workforce 11 This 52 million Euro program includes integral energy efficiency retrofit of existing residential units
Innovating the Green Economy in California Regions. Berkeley University of California-Berkeley Coronado, D.,Acosta, M. and Fernã¡
Innovation and the Internationalisation of the Local economies Andalusia. Spain. Unpublished paper Instituto Estadã stico de Andalucã a. 2010.
National Center on Education and the Economy, 2007, Under One Roof: New Governance Structures for Local Economic and Workforce Development
economies that rely upon growth-oriented entrepreneurship and business innovation. The funding infrastructure and commercialization activities of research organizations within these economies are
increasingly important as they make the transition to a knowledge-intensive form of production. In
regional economy. It documents the policy context for the regional economy and the role played by
both the Andalusia university system and RETA within that context. The role of RETA in supporting
to innovation in the Andalusian economy, it must do so on the basis of a more effective way to
augment knowledge flows between research organizations and firms in the regional economy The preceding discussion suggests that the task of transferring knowledge from universities to
in the local economy, as well as to the †thickness†of the local labour market (Gertler and Vinodrai, 2005
†communities†within the broader economy (Lundvall, 2006 These distinctions between the different types of knowledge bases and different modes of
enterprises in the regional economy, especially in terms of the concentration of the industrial structure of the region in small and medium-sized enterprises.
economies in the world by 2010, although it is recognized now widely that the EU has failed to
growing concern with the overall innovativeness and competitiveness of the European economy. The second is the accession to membership of ten new countries from Eastern europe, all of
knowledge economy; ii) entrepreneurial development and innovation. Total expenditures on these two objectives are authorized at EUR 2. 38 billion over the life of the program
Economy, further reinforcing the key role of technology transfer and collaboration between the public universities and private companies as the central element of the regional government†s economic
industrial structure of the regional economy. Public universities have thus been the primary source of
efforts in strategic directions related to areas of industrial strength in the regional economy acquiescing to pressure from their researchers to afford all areas of research endeavour equal treatment
economy. They assess the needs of companies and then try to match their needs with the existing skills
RETA has of firms on the ground in different parts of the Andalusia economy and RETA€ s ability to
characterize the regional economy. The staff limitations of the technology transfer offices make it difficult for universities to work with small firms and,
characteristics of the companies in the part of the regional economy where the universities are located This supports the idea that knowledge creation and application †and therefore innovation †are
major role in most of the firms that are designated as †innovative†within the regional economy.
economy and the other organizations which play an innovation support role; and 2) to facilitate the
A general feature of the Canadian economy, especially in the high technology sectors, is the predominance of small and medium-sized enterprises, especially when compared to other leading
of the University of Waterloo in the regional economy. First and foremost, it acts as a steady source of
program such as this can pay incredible dividends to the local economy over a long period of time. It
network of technology-based firms in the local economy, as well as serving to enhance the region†s
series of shifts in the global economy, as well as changing understanding of the nature of the innovation process.
Economies: Andalusia, Spain. Diagnostic Report Prepared for the OECD-LEED Study Mission to Andalusia. Malaga
The Paradox of Cluster Development in an Open Economy, eds David A Wolfe and Matthew Lucas. Montreal and Kingston:
in the formal and informal economy; in legal and illegal activities; in innovative and traditional firms;
pretty much all sectors and sub-sectors of the economy (OECD, 2001, p. 35. If Governments were
level of local, regional, national and supernational economies, the EC highlights the importance of entrepreneurship in terms of its contribution to job creation and growth, competitiveness, unlocking
knowledge-based economy in the world, capable of sustainable growth with more and better jobs and
employment, innovation, economy, social cohesion, and environment. However, by 2005 it was apparent that the goal was overly ambitious.
a 10-year strategy designed to revive the European economy through †smart sustainable and inclusive growth, †with greater coordination of national and European policy.
Knowledge economy (4. 6%of total expenditure: promote research, technological development, innovation and the information society
Andalusia committed to the growth and globalisation of the regional economy ï Priority 3: Environment, natural surroundings, water resources and risk prevention (29.7%of
resources, therefore, represent a unique window of opportunity to get the regional economy in shape
There are a number of aspects of the Andalusian economy that are relevant from the viewpoint of
to further diversify the regional economy; given the education levels and other limitations, there is a need for broader support to entrepreneurship and job creation
Ministry of Economy, Innovation and Science The regional Ministry of Innovation, Science and Enterprise merged in 2010 with the Regional
Ministry of Economy, to result in the Ministry of Economy, Innovation and Science (MEIS. The
Ministry of Economy, Innovation and Science) and implementation. While the main actor with regard to the implementation of entrepreneurship programmes is certainly
economy, including entrepreneurs and enterprises being supported, are protected to some degree from general competition Fourthly, although the local economy may be cushioned by EU and national subsidies,
it has certainly not been spared from the economic crisis. The construction and real estate sectors have been severely affected,
The regional economy in not strongly export-oriented, companies refrain from placing orders, and the general public is nervous
by the new Ministry of Economy, Innovation and Science and the Ministry of Education to develop
and diversify the economy The rising levels of unemployment, the need to diversify the economy (e g. away from
construction, real estate, etc. combined with the population†s latent interest to establish a business GEM, 2006) call for a greater focus on providing opportunities for people to establish their own
economy: here, knowledge and experience is combined into new products, services and process Measures to support corporate spinoffs could have important results:
of stimulating entrepreneurial activity and diversifying the regional economy. The regional government should therefore undertake a review of the current levels of corporate spin-offs in the
development in Andalusia as a result of the dominance of SMES in the regional economy. However the region is currently characterised by a small number of innovative and internationally competitive
Currently, the export performance of the Andalusia economy is dominated by a small number of firms
this relates to the firm size structure of the regional economy (see below) with an over-preponderance
economies, SMES are reluctant internationalists because they lack the capacities of larger firms including the financial means,
SMES in the Andalusia economy The Andalusia economy is dominated by SMES with over 99%of firms having less than 500
employees (see table below. This places it well below both the Spanish and the EU averages (Romero
The imbalances in the regional economy were exacerbated further in the boom period from the mid 1990s to the 2007 when there was a dramatic growth in small firms in the construction sector
the economy. The global economic downturn has worsened probably this situation: the most recent data available indicate that the larger firm sectors,
increased as a proportion of the total activity in the regional economy over the decade 1995-2005
and different potentials of these three different segments of the economy An analysis of the SME development policy environment
capacity in what are viewed as knowledge-economy sectors such as IT and biotechnology, Andalusia needs to reassess the competitive prospects of many of the firms in these sectors.
the growing economies of the nearby cities of Florence, Siena and Pisa resulted in an outflow of the
large-firm dominated economy. Denmark†s low tech clusters are comprised predominantly of small firms manufacturing in design driven markets with a low minimum efficient scale of production.
As a small open economy with 50 percent of its economic activity accounted for by international
unions, social economy organisations. Greater autonomy from the regional government in developing sector specific agendas would allow Andalusia SMES to generate their own strategies with regard to
manufacturing activity, it represents an important boost to Scotland†s knowledge economy and has risen in part due to a successful cluster strategy on the part of the regional development agency
operating in the global economy. Consequently the loss of Scottish graduates to other places need not
knowledge economy sectors and a series of cluster initiatives hold some important policy lessons for
Christensen, J. L. 2010 Low-tech, High Performing Clusters in Knowledge-based Economies. Paper presented at the DRUID Summer Conference, London, June
Maskell, P. 1997 Learning in the village economy of Denmark. In Braczyk, H. J. Cooke, P. and
Economies, London, Routledge Maskell, P. 1998 Successful low-tech industries in a high-cost environments: the case of the Danish
Storper, M. 1995 The resurgence of regional economies, ten years later: the region as a nexus of
EU Lisbon Agenda (i e. the prioritisation of the knowledge-based economy with a view to making
Europe the most competitive economy worldwide; hence, it emphasises the role of public and private
economy and for entrepreneurial development and business innovation. To achieve these objectives a number of strategies, programmes,
-based economy: i) human capital and labour market; ii) research organisations; iii) entrepreneurship and start-ups; iv) SME development.
knowledge-based economy put a premium on education; as a result, the regional government should
-based economy there are greater returns from higher education. College graduates make up 29%of the employed population in the region,
employment and the Ministry of Economy, Innovation and Science would be crucial in this domain This is all the more true
exacerbated by the weight of the construction industry in the regional economy. As of 2008, micro
The task of internationalising the regional economy is made complicated by the very different sectors that have an international potential in the region,
economy but as the OECD study reports, inappropriate class syllabi and the lack of awareness of
renewable energy is one of the main clusters defined by the Ministry of Economy, Innovation and
Overtext Web Module V3.0 Alpha
Copyright Semantic-Knowledge, 1994-2011