Globalization on Small and Medium 'Literature Review' chapter

  • Length: 8 pages
  • Sources: 5
  • Subject: Economics
  • Type: 'Literature Review' chapter
  • Paper: #14865

Excerpt from 'Literature Review' chapter :

The manner in which companies respond to the effects of globalization also depends on the strategies developed and implemented by countries' governments. Globalization influences the national workforce situation, which determines authorities to take action in this direction.

The following pages intend to review some of the literature that refers to the influence of globalization on the private environment, on small and medium companies, and on consumers. The review will provide a presentation of works that evaluate the advantages of globalization. Such advantages include reduced prices of products and services as a result of increased competition, which favors customers, economic development of certain countries, and business expansion of companies. Some of the disadvantages of globalization include the increased competition in certain fields that some companies cannot successfully address, the increase of the unemployment rate as a result of the outsourcing process, and the lack of sustainability in certain regions.

The work of Zahra, et al. (2008) entitled "Globalization of Social Entrepreneurship Opportunities" states that entrepreneurship "by new and established companies is a major source of wealth and job creation, economic and technological growth and social transformation. This transformation is made possible by the powerful forces entrepreneurship unleashes, where ordinary people conceive innovative ideas, organize production, assume risk, and engage customers to accumulate wealth or address pressing social causes, often across national borders." In a news report dated August 29, 2006, it was reported that globalization "…has made a real difference to the quality of life of working people in the UK and across the world…" (HRM Guide, 2006) However, it is reported that just as there are winners there are also losers because "too many British workers are losing their jobs when companies move abroad or fail to compete." (HRM Guide, 2006)

It is argued in the work of Audretsch and Sanders (2008) entitled "Globalization and the Rise of the Entrepreneurial Economy" that recent trends in the global economy have resulted in a "shift in developed countries' comparative advantage from mature industrial to early stage entrepreneurial production." (Audretsch and Sanders, 2008) it is held that since entrepreneurs "…also serve as the agents that move varieties between life cycle stages, their value added increases due to globalization and technical change. By contrast, the factors of production employed in the mature stage of the life cycle, e.g. low skilled northern labour, become less valuable. Thus, the model predicts the emergence of an entrepreneurial economy in the North as the South opens up to trade and industries." (Audretsch and Sanders, 2008) Additionally reported in the work of Audretsch and Sanders is the following:

"The polarization of labour demand and deindustrialization trend coincided with the reemergence of small and medium sized firms as the main generators of growth, employment and value added. When Birch (1981) first observed this reversal in a long trend of increasing scale and concentration in the developed economies, it was not taken seriously right away as the evidence was mixed and the initial methodology could be criticized for several reasons. But the phenomenon turned out to be a lasting one when Acs and Audretsch (1990, 1993) surveyed the evidence for the 1980s. More recent surveys (e.g. Parker (2004), Versloot and van Praag (2007)) clearly establish the importance of entrepreneurship and small firm activity in the modern innovation driven economy." (Audretsch and Sanders, 2008, p.8)

The work of Passaris (2006) entitled "The Business of Globalization and the Globalization of Business" published in the Journal of Comparative International Management reports that globalization is not a new concept. It has evolved and matured over the centuries to reflect the priorities and ambitions of different generations." According to Passaris (2006), it is assumed that off-shoring makes a requirement of additional entrepreneurial resources being committed. The process of globalization in Britain is stated to have been compounded further by the Single European Market initiative at the European Union level." This has resulted in a complete restructuring of the British industry as organizations "of all sizes and economic activity streamlined, refocused and sought to form alliances or joint ventures with firms operating in international markets. The globalization process in Britain is increasingly recognized as a major driving force behind the reshaping of the socioeconomic and political structure of the country." (Passaris, 2006)


There are many definitions of globalization which span across different fields of studies e.g. sociology, economics, cultural, political, and technological. Marshall Mcluhan (1999) coined the term 'global village' meaning a situation in which information traveling at electronic speeds would replace language with instant non-verbal communication, creating an all-at-oneness. According to Anthony Godden (1990), "the core of globalization is the experience of 'distanciation' as social relations gets stretched across time and space and thereby take on an increasingly reflexive quality." Kobrin (1998) define globalization as an increasing scale of economic activity; inter-firm alliances and information flows. Larry J. Ray (2007) defined Globalization as the

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