Academic journal article Review of Business & Finance Studies

Micro, Small and Medium-Sized Businesses in Jalisco: Their Evolution, and Strategic Challenges

Academic journal article Review of Business & Finance Studies

Micro, Small and Medium-Sized Businesses in Jalisco: Their Evolution, and Strategic Challenges

Article excerpt

ABSTRACT

The business structure in Jalisco, Mexico is primarily composed of micro, small and medium-sized enterprises (SMEs). Thus, it is fundamentally necessary to understand the dynamics, evolution and above all, the strategic challenges of this sector in order to understand the state 's economic performance and the possibilities for future development in Jalisco. As a result, this study analyzes the evolution of the SMEs (known as PyME, in Spanish) in Mexico and Jalisco by using data from the Economic Censuses of 1999, 2004 and 2009 as well as sources such as the Mexican System of Business Information (Sistema de Información Empresarial Mexicano, or SIEM, in Spanish). This analysis includes the distribution of companies by sectors and size. It also makes a comparison between the observed trends at both national and state levels, allowing the identification of significant differences in productivity and the challenges that these small and medium-sized companies face as they seek to modernize and consolidate. We also propose a strategy to boost the performance of SMEs. The following variables are included in this analysis: The number of establishments; Gross fixed capital formation; Gross total production; Gross value added census; Personnel employed; Salary levels; and Hours worked.

JEL: L11, L25, M13

KEYWORDS: SMEs, Performance, Development Strategy

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

In this paper, we study the relevance of the small and medium-sized business (SMEs) in Mexico. Interest in the study of the SMEs is a relatively recent phenomenon, despite the importance of them, for example, in Mexican economy, represent about 99.5% of economic units and generate 66.2% of jobs. Actually, the first scientific publication dedicated to this topic appeared in 1952. However, it was not until the 1970s that the subject began to be included into general economic theory with some autonomy because of experiences like those associated with the Bolton Commission (1971), referenced in Julien [1998]. There was a growing interest in this topic, which clearly manifested itself in the 1980s. This interest was driven by the realization that these businesses were essential to job creation, economic innovation, the development of entrepreneurs and the entrepreneurial spirit, and long-term economic growth [Storey, 1994; Bums, 1996; Julien, 1998]. Nonetheless, it has been widely observed that the success of the majority of these companies comes from their own survival.

In spite of the recognition of the limits and fragility of individual companies within the grouping of SMEs, there continues to be a consensus regarding this sector's economic and social importance. Actually, these types of businesses are the only employment and economic renovation source in many regions [Julien, 1998]. Furthermore, these businesses' vitality, adaptability and flexibility have played a fundamental role in the development of the knowledge and information economy [Lee, 2001]. Thus, understanding SMEs' dynamics in a determined time and space is the key to comprehending how they work, their performance and their development possibilities within a region.

This document includes an analysis of the distribution of companies by sectors and size. It also presents a comparison between the observed trends at both national and state levels, allowing the identification of significant differences in productivity and the challenges that these small and medium-sized companies face as they seek to modernize and consolidate. Additional, we construct economic and social performance indicators of companies by size, comparing data from three economic censuses.

In the following section, we present the theoretical frame of this work, which includes a brief description of the SMEs as an investigation object, including some statistical data. Later, in the empirical section, we will describe the methodology used and we will discuss the reached results. …

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