Effects of Globalization on Small Enterprises
The business world has witnessed a transformation in past years. Technological innovations, cultural progress, and connectivity have all influenced the habits and customs of businesses all across the world. Globalization has been behind this change, fuelling the revolution and shaping the businesses and society of today. Globalization is defined as “the process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology.” This process has had effects on culture, society, business, consumer habits, and more. Globalization has also had notable effects on small businesses and economists anticipate more effects to come.
Globalization is a phenomenon that has been present for many years and has a long history. It really began to take effect after World War 2; this is described as the resurgence of globalization. Certain agreements have driven globalization, notably the North American Free Trade Agreement (NAFTA) which was signed in 1994 creating a trilateral trade bloc. Since, globalization has become rampant and has greatly influenced trade, competition, and small businesses.
Globalization’s impact on small businesses has been both negative and positive. This impact can be seen on the macroeconomic level and affects gross domestic product greatly, as small businesses contribute largely to GDP. However, globalization has created multinational corporations with untold power – which has received a plethora of criticism and accusations of corruption and bribery leading to a significant disadvantage for small businesses. However, these days, globalization has made it possible for small enterprises to finally outsource certain tasks, thereby increasing productivity, lowering prices, and becoming more competitive against their contenders.
Ultimately, each country has unique issues when it comes