Abstract
This chapter describes the main features of small and medium-sized transnational corporations (TNCs) in terms of such variables as the markets and industries in which they operate, ownership, forms of investment, performance and competitive advantages. It also deals with strategies that small and medium-sized enterprises (SMEs) tend to take in their foreign operations. This information is essential in designing any policy framework for SMEs’ transnationalization, especially in developing countries. While the previous chapter discussed issues related to foreign direct investment (FDI) by SMEs in various countries with, in most parts, aggregate data, this chapter contains a micro-level or firm-level analysis, using firm-specific information obtained from the author’s survey.
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Notes
Based on 95 affiliates of small and medium-sized TNCs and 144 affiliates of large TNCs in developing countries.
“Competitive” is here defined as an industry with numerous firms and in which a few firms do not dominate.
Based on 128 small and medium-sized TNCs.
Based on 26 small and medium-sized TNCs.
Based on 94 affiliates of small and medium-sized TNCs and 146 affiliates of large TNCs in developing countries.
Indeed, among 14 small and medium-sized TNCs that supplied detailed information on non-equity foreign arrangements there are no international subcontracting and turnkey contracts involved.
The labour-capital ratio for large firms in Japan was, for example, 10 (number of employees per million of capital) in 1989. Ministry of Finance, 1990.
The exports-to-sales ratio for SMEs in general and large firms are based on table 1.5.
The profit ratios of SMEs and large firms are only for Japanese firms due to unavailability of such data in other countries.
Based on 210 foreign affiliates of 94 small and medium-sized TNCs.
Based on 35 small and medium-sized manufacturing TNCs.
Statistics Bureau, Management and Coordination Agency, Report on the Survey of Research and Development (Tokyo, Ministry of Finance Printing Bureau, various issues).
Based on 704 manufacturing SMEs and 366 manufacturing large firms. Most of the companies’ data are for 1989.
The differences in these shares is more evident that many SMEs engage in R&D in an unstructured way throughout the organization.
This is also confirmed by a survey on Japanese TNCs by the Ministry of International Trade and Industry (MITI). Small and medium-sized TNCs accounted for only 0.3 per cent of all R&D expenditures by TNCs in fiscal year 1992. The ratio of R&D expenditures to sales was 2.1 per cent, compared to 3.4 per cent for large TNCs. The data are based on 735 large TNCs and 124 small and medium-sized TNCs. MITI, 1994, tables 1-39 and 1-40, p. 83.
For the United States data, see United States Department of Commerce, 1992, tables ILK 1 and ULI 3, p. 735. For Japan, MITI, 1994, tables 1–39 and 2-67, pp. 83 and 353.
The number of patents granted to local residents in 1990 in the major five countries was as follows: 8,923 for France; 16,625 for Germany; 50,370 for Japan; 4,361 for the United Kingdom and 47,393 for the United States. Data from World Intellectual Property Organization, 1992, table 1, pp. 1-8.
Research-and-development expenditures by business enterprises in the major five countries were $98,400 million for the United States (1988), followed by $56,000 million for Japan (1988), $20,300 million for Germany (1977), $13,000 million for France (1988) and $17,800 million for the United Kingdom (1988). Data based on OECD, 1991.
Data on patents of Japanese SMEs are from Small and Medium Enterprise Agency, 1991, table 2-1-43, p. 193. The results of the author’s survey are based on 39 Japanese manufacturing small and medium-sized TNCs.
Or indeed, other types of international operation.
Some 42 per cent of affiliates of small and medium-sized TNCs in the primary sector were established with this motive.
This motive is the third most important for small and medium-sized TNCs in high-technology industries, after expectation of growth in local markets and access to and growth in third-country markets, among 22 motives (see table 11.2 for the list of motivations).
Some companies may well be persuaded to enter through non-equity international investment because they use fewer resources and the return can be used to bolster their position in the home market.
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© 1998 Springer Science+Business Media Dordrecht
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Fujita, M. (1998). Salient Features of Small and Medium-Sized Transnational Corporations. In: The Transnational Activities of Small and Medium-Sized Enterprises. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-5663-3_7
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DOI: https://doi.org/10.1007/978-1-4615-5663-3_7
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