Globalization Effect on Small and Medium Size Business


This section will introduce the paper based on the concept that globalization and development of SMEs may not be separated from each other. The two aforementioned variables will form the core conceptual frameworks that will be deliberated through the paper. However, other sub-variables such as those related to socio-economic and political elements will be used to support the major variables during literature review.

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Definition of and globalization

Similarly, since the terms globalization have attracted various definitions, Curry (2000) concept will be adopted in this paper.

Background to the study

Define SMES

This section will commence by providing a working definition of the term SMEs.

Role of SMES in the economy

Concurrently, the role and significance of SMEs in relation to GDP will be stated. Moreover, the overall impact of globalization in country’s GPD will be highlighted. The relationship between dependent variable (SMEs) and the independent variables (negative and positive factors of globalization) will also be explored.

Brief overview of the impact of globalization on SMES (Case studies in developing countries)

However, background information will not dwell so much on global perspective but will be restricted to cases examples in developing countries that addressed the topic under study. On this note, case studies by Awuah (2009) in Ghana, Alvarez and Vergara (2006) in Chile and Cheminade and Vang (2008) in Bangalore will provide insightful background information about the topic under study. It is against this background that the problem statement for this research study will be stated.

Problem statement

Research related to the topic under study, for instance, by Beamish and Lu (2004 as well as Human Development Report (2004) have indicated that developing countries are unable to reap significant benefits from globalization. Similarly, SMEs in developing countries operate under very challenging environment (Carasco & Singh, 2000). For this reason, it is important to investigate whether globalization has promoted or hindered the growth of entrepreneurship and SMEs in Nigeria.

Significance of the study

This research is very significant. Though extensive studies have been conducted under a similar topic, few have been directed at developing countries in Africa and more specifically in Nigeria. The findings of this study will contribute positively to literature specific to the topic under study

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Research objectives

Since the topic under study is wide and diverse in scope, the objectives stated in this section will assist the research to remain focused. In this section, the main and specific objectives should be separated.

Research questions

Against this background, this research will be guided by several research questions of which the entire research will attempt to provide answer. The main questions will be:

  • What are the positive indicators of globalization in Nigeria?
  • How does globalization affect performance and profitability of SMEs in Nigeria?
  • How does Nigerian SMEs deal with opportunities and challenges brought about by globalization?

Literature review

How globalization have impacted SMEs across the globe.

This chapter will review past and current literatures on the effect of globalization to entrepreneurship around the world.

Indicators of globalization in developing countries and their impact on SMEs.

The focus of this subtopic will be restricted to African countries and more and more emphasis will be directed to Nigeria.

On the same note, factors such as reduced trade barriers, technological advancement, improved communication systems, extensive and improved transport systems and logistics will be explored mostly by reviewing works by Carasco and Singh (2009); Harford (2007); Andersson and Wictor (2003) and Knight and Cavusgil (1996).

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Positive effects of globalization

This section will examine secondary data to expose positive impacts of globalization in an attempt to shed light on entrepreneurship and SMEs growth opportunities contributed by the same. Positive effects such as access to modern technology, access to wide markets, availability of raw materials and so on as explained by Lee (2005).

Negative effects of globalization

Needless to say, SMEs growth and profitability both in the global arena and more specifically in developing countries like Nigeria is hindered by various challenges (Lee, 2005). On the other hand, globalization has attracted its fair of challenges in a country’s economy and more importantly in developing countries (Lee, 2005). This subsection will review global literature as well as literature specific to Nigeria to disclose the challenges brought about by globalization. Research by Awuah (2009; Carasco and Singh (2009); Peters and Pierre (2006) as well as Human Development Report (2004) will be used to offer comparisons on various elements of SMEs and globalization such as competition, security issues, liberalization of markets and non-tariff trade barriers

How the globalization challenges impact on SMEs profitability and Growth in Nigeria

Furthermore, negative impacts of globalization that hinder growth and profitability of SMEs in Nigeria will be explored and a preview on how it impacts economic growth of Nigeria will be explored.

Limitations to the study

This section will highlight some of the challenges that the researcher encountered at the jurisdiction of carrying out the study. Limitations such as limited literature that is specific to developing countries and Nigeria in particular and the credibility of case studies under review should be stated in this section.


The methodology that will be employed in the study will be clearly stated and explained. For instance, this study will adopt secondary data analysis which will be conducted to shed more light on the subject area. Justification for the choice and relevance of the methodology is necessary and as explained by Malhotra (2001). In addition, this section will explain how this methodology will assist the researcher to interpret and combine existing literature as he/she attempts to make some sense out of it after which the recommendations will be developed (Gummesson, 2002).

Discussion and data analysis

Since this research does not involve actual data collection from the field, a theoretical framework instead of the normal results and findings analysis will be used to present findings and also discuss both theoretical and empirical literature related to the topic. It will be organized into the following sub-sections:

Impact of globalization and how globalization has created interdependence among world economies

Under this section, several empirical and theoretical researches will be reviewed and the findings of these literatures will be compared via graphical representation to investigate whether there are considerable disparities

Indicators of globalization in developing countries and their impact on SMEs

The above will be presented in charts with an aim of exposing whether these indicators are uniform across the board. Besides, factors behind these disparities will be discussed.

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Analysis of positive effects of globalization

Furthermore, findings from different researches will be analyzed to examine whether they concur or differ from one country to another.

Analysis of negative effects of globalization

This variable will be analyzed the same way explained above.

SMEs set up in developing countries, is it is curse or blessing?

This section will discuss whether the above variables achieve the intended purposes and the information obtained herein will be linked to the recommendations.

Opportunities and challenges of globalization to SMEs in Nigeria

This subtopic will be discussed in details and research specific to Nigeria will be compared to establish some point of intersection.


Recommendations will be derived from theoretical framework above. Most importantly, recommendations provided by researchers whose topic under investigation can be generalized to suit Nigerian case study on SMEs and globalization. Furthermore, this section will state whether there is need to carry out further research owing to the fact that it is a conceptual research framework.


Alvarez, R. & Vergara, S. 2006. Globalization, Survival, and Growth of Small and Medium-sized Firms. [Online]. Web.

Andersson, S. & Wictor, I. 2003. Innovative internationalisation in new firms – born globals the Swedish case. Journal of International Entrepreneurship, 1(3), 249- 276.

Audretsch, D.B. 2003. “Globalization, innovation and the strategic management”, in Bröcker, J., Dohse, D., Soltwede, R. (Eds), Innovation Clusters and Interregional Competition, Berlin: Springer, pp.11-27.

Awuah, G. 2009. The impact of globalization and trade liberalization on competitiveness of firms in less developed countries: a longitudinal study. International Journal of Business Research, 9(3), 7-19.

Beamish, P.W. & Lu, J.W. 2004. Network development and firm performance: a field study of internationalizing Japanese firms. The Multinational Business Review, 12(3), 41-61.

Carasco, E.F., & Singh, J.B. 2009. The evolution of global business ethics conventions. Lund: Studentlitteratur

Cheminade, C. & Vang, J. 2008. Globalisation of knowledge production and regional innovation policy: supporting specialized hubs in the Bangalore software industry. Research Policy, 37, 1684-1696.

Curry, J.E. 2000. Internationales Marketing. Lorenz: Von Jürgen Ulrich.

Gummesson, E. 2002. Total Relationship Marketing: Marketing Management, Relationship Strategy and CRM Approaches for the Network Economy (2nd ed.)Oxford: Butterworth-Heinemann.

Harford, T. 2007. The Under Cover Economist. London: Abacus.

Human Development Report (2004). Cultural liberty in today’s diverse world, paper presented at the United Nations Development Programme. New York, NY: UN Plaza.

Knight, G. & Cavusgil, S. 1996. The born global firm: a challenge to traditional internationalization theory. Advances in International Marketing, 8, 11-26.

Lee, K. 2005. Global Marketing Management: Changes, Challenges, and New Strategies. Oxford: Oxford University Press.

Malhotra, N.K. 2001. Pesquisa de marketing: uma orientação aplicada (3rd ed.) Porto Alegre : Bookman.

Peters, B.G. & Pierre, J. 2006. Handbook of Public Policy. London: Sage.

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