Academic journal article Journal of Small Business Management

The Information Revolution and Its Impact on SME Strategy: The Asia Pacific Economic Cooperative Forum as Model

Academic journal article Journal of Small Business Management

The Information Revolution and Its Impact on SME Strategy: The Asia Pacific Economic Cooperative Forum as Model

Article excerpt

The Role of the Information Revolution in the Globalization of Business

Despite protectionist and other trade-limiting measures and political constraints in some countries, the globalization of business is increasing rapidly, and the information revolution is playing an important part in that process. As Peter Drucker (1994, 100) states, "Few things so stimulate economic growth as the rapid development of information, whether telecommunications, computer data, computer networks, or entertainment media." For example, instant fax and computer communications across borders, second-day package express, cellular phones, and local wireless loop systems have considerable impact on the efficiency of business operations.

In today's global economy, even the larger high-technology companies are finding that technical leadership, by itself, is not enough to meet global competition. Most important is the ability to deliver a quality product, on time, at a competitive price, anywhere in the world. Today's trend toward quality assurance in manufacturing has evolved from producing "zero defects" products to achieving total customer satisfaction. As Peter Drucker (1994) once cautioned, nothing is as wasteful as producing perfect products that nobody wants. Thus, today's progressive companies begin with research of customer needs and wants, taking ease of use and serviceability into account as well as design preferences.

To accomplish on-time delivery of a quality product at world competitive prices, a company needs a supplier and subcontractor base dedicated to the support of quality product development, product distribution, and after-sale service. All these activities are made much easier today with the worldwide availability of computer links, radio and fax communication, next-day express delivery, and retrieval of information from many databases.

In this electronic arena, small and large companies alike can combine appropriate resources from anywhere in the world to reach target markets anywhere. These shared resources may include products, marketing, sales and distribution, research, engineering, technology transfer, finance, and various mutual support services. This ability to share resources is especially important to small- and medium-sized enterprises (SMEs) that previously lacked the complementary resources to participate in global markets.

Growth of Strategic Alliances

Perhaps the most important trend in integrating the world economy is the rapid growth of cross-border alliances between companies or in networks of cooperating organizations. Alliances can be long-term with strategic goals or shorter-term relationships formed for tactical purposes. Toshiba (the electronics giant) and Corning Glass (the world's leading maker of high-engineered glass) may each have more than 100 alliances around the world. Also, integration in the European Union is proceeding far more through alliances than through mergers and acquisitions, especially among the middle-sized companies that dominate most European economies. Networks of strategic and other alliances often span different countries but are tied together by common goals and are perceived as being local wherever they operate.

One of the best examples of networking and cooperation between small- and medium-sized companies can be found in northern Italy, where industry clusters are beehives of activity in which ideas flow back and forth between manufacturers with complementary skills and resources. Thus, innovation is enhanced. Porter (1990) writes about these clusters, pointing out that they are often most successful in traditional sectors (such as shoes, apparel, and furniture) to which Italian firms have rapidly adapted new technology and marketing techniques. Porter added that Italy benefitted from a world shift from standardized, mass-produced products toward more customized, higher-styled goods. Italian firms also moved toward flexible production technology adaptable to smaller production runs. …

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