World Telecommunication Day 1999 |
Is there a place for small businesses in the digital economy, or will they be destroyed by the crippling costs of carving out a presence in cyberspace?
The question is of concern to society as a whole, because the importance of small, medium-sized and micro-enterprises (SMMEs) is disproportionate to their influence in many international organizations and industry groups.
First of all, consider sheer numbers. There are an estimated 120 million small to medium-sized enterprises (SMEs) in the world, the majority located in developing countries. India and China alone have some 50 million SMEs between them. Although the definition of a small to medium-sized business varies by country and by culture, they may be said to have no more than 500 employees and as few as 10 or 20.
The world's more than 500 million micro-enterprises range from a street vendor in Singapore to a rug weaver in Turkey, and include 15 million home-based businesses in the United States. Credit loans to micro-enterprises in developing countries are increasing as the World Bank and other institutions become more aware of the efficacy of such programs.
Second, in the world economy, SMEs are responsible for higher net employment growth than large companies. Studies by the Organization for Economic Cooperation and Development show that, in many cases, there is a negative relationship between net job creation rates and size of company. In other words, the smaller the business, the more jobs it creates relative to its size.
Third, SMEs play a significant role in global exports. According to the OECD, SMEs contributed between 15 percent and 50 percent of exports two years ago, and between 25 percent and 35 percent of the world's manufactured exports.
Finally, and of great importance in an era of rapid change, SMEs appear to be ''more innovative in areas of product differentiation and other market-based innovations,'' the study notes. A study done on behalf of the U.S. Small Business Administration found that small companies produce 2.38 times as many innovations per employee as large ones.
Acknowledging the economic weight of SMMEs, optimists see a great opportunity for them through integrated global networks. ''[These networks] will lower the hurdle for small companies to enter world markets,'' says Erwin Koenigs, chief executive officer and chairman of Software AG. ''In their market niches, they will be in a position to successfully compete against the big players on their own or by building networks with other small companies, thus becoming virtual companies.''
According to the International Telecommunication Union's 1999 report, ''Internet for Development,'' small businesses will have ''unprecedented possibilities to market their products globally, especially if they cover a well-defined niche and offer good quality products and services.''
The Transatlantic Business Dialogue (TABD) and the Global Business Dialogue, industry-driven groups that formulate positions on electronic commerce in cooperation with the OECD, the European Union and others, extol the ''extraordinary benefits of the Internet . . . especially for small and medium-sized enterprises'' and point out that ''through electronic commerce, small businesses can operate globally without the massive investment typically required to establish a distribution mechanism.''
The ITU notes, ''Small companies as well as large are encouraged to be part of the process [of formulating telecommunications policy], and we have tried to make it easier for them.'' The ITU has introduced an associate status for participation in given study groups and subgroups when participation is focused and limited to one or two items of interest. The idea is to draw on the knowledge and expertise of small entities.
Through a partnership with the World Trade Centre Geneva and WISeKey SA, the ITU Electronic Commerce for Developing Countries (EC-DC) project brings together resources and expertise from the private sector to build cost-effective solutions enabling SMEs from developing countries to overcome the technical and financial barriers to e-commerce.
Claudia Flisi