Category Archives: Sustainable Economic Development

Small-and-Medium-Sized Enterprises and Sustainable Economic Development: Fast Facts

LeadershipOn Friday, 16 July, the Business Innovation Research Center (BIRC) of the Charlton College of Business, University of Massachusetts at Dartmouth hosted a one day seminar entitled “Sharpening the Competitive Edge of Small-and-Medium-Sized Enterprises (SMEs) in the South Coast of Massachusetts”. The purpose of the seminar was to introduce owners of local SMEs to the BIRC services available to them pro-bono to support their growth and financial well-being.

In general SMEs are defined as businesses with less than 500 employees. There is no official guideline or consensus for how to distinguish between the levels of SMEs (micro-enterprises, small and medium) but in general micro-enterprises employ between 1 and 9 people, small enterprises employ between 10 and 99 people and medium enterprises employ between 100 and 500 people. A subset of micro-enterprises, called non-employer SMEs, consisting of owner-operator single person enterprises makes up the majority of businesses classified as SMEs. In 1993, consultants from McKinsey & Company coined the term “Born Global” to describe opportunistic internationally oriented SMEs, mostly involved in hi-tech industries, who operate globally from inception. This categorization applies to a majority of the SMEs launched within the past decade.

Fast Facts regarding the importance of SMEs to the U.S. economy:

– There are an estimated 29.6 million SMEs in the U.S.

– 79.73 percent of all SMEs in the U.S. are one person owner-operator enterprises

– 76.67 percent of the 6 million SMEs with employees beyond the owner-operator are micro-enterprises with 9 employees or less.

– SMEs represent 99.7 percent of all employer firms in the U.S.

– SMEs employ just over half of all private sector employees

– SMEs pay 44 percent of total U.S. private payroll

– SMEs have generated 60 to 80 percent of net new jobs over the past decade

– SMEs employ of 41 percent of all high tech workers

– 53 percent of SMEs are home-based businesses and three percent are franchises

– SMEs create more than half of non-farm private gross domestic product (GDP)

– SMEs make up 97.3 percent of all identified exporters

– SMEs produce 30.2 percent of all known export value

– SMEs produce 13 to 14 more times patents per employees than do large firms

– SMEs serve as the engine of economic growth in most countries, including the U.S.

– SMEs tend to be more flexible and responsive to business opportunities, in general, and global business opportunities in particular

– Less than 1 percent of total U.S. SMEs export (estimated at 240,000 of 29.6 million U.S. SMEs)

– Of the exporting SMEs, 59 percent export to one market (1st Canada, 2nd Mexico)

– In 2007, U.S. SME exports totaled $306.6 billion

– Services account for 79 percent of SME employment

If you own or work for a SME, thank you. Fostering the development and economic well-being of our SMEs and the entrepreneurs who launch them needs to become a priority for universities and business schools. Establishing and supporting micro-enterprise incubators to encourage entrepreneurial endeavors is one highly visible and tangible way that universities can promote sustainable economic development in their communities. We can’t afford to wait passively for better economic times – the need to foster growth in SMEs is now.

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Sustainable Economic Development and Green Business: The Case of Cultural Arts

Sustainable_developmentDoes adopting a green business philosophy serve as an impediment for sustainable economic development? Are the two concepts mutually exclusive or is there an overlap that promotes the implementation of green business sustainable economic development projects? According to the United Nations, common ground exists: “The green economy approach seeks, in principle, to unite under a single banner the entire suite of economic policies and modes of economic analyses of relevance to sustainable development”. Thus, opportunities exist to foster sustainable economic development with the goal of alleviating poverty while pursuing green business practices. As illustrated here, these opportunities exist when social, economic and environmental concerns converge.

Detractors claim that green business practices inhibit sustainable economic development by introducing “unnecessary” cost barriers into the equation. But this argument is not necessarily accurate. Sustainable economic development is focused on the creation of micro-enterprises. The premise is that inhabitants of depressed economic areas can’t afford to wait for the jobs to come to them, they need to create jobs. At its core, green sustainable economic development is nothing more than entrepreneurship with a social and environmental conscious. Minimizing negative environmental impacts and sourcing eco-friendly and/or natural materials need not cost entrepreneurs more than do alternative options. Managing the process to ensure minimal adverse environmental impact is the key to success and can serve as a layer of competitive advantage.

Cultural Arts as Economic DevelopmentTerra Prometida Fairloom

My colleagues and I have experience in fostering the development of female owned and operated cultural art cooperatives in developing countries. Our efforts with Fairloom in Fortaleza, Brazil are featured in an article entitled The Dimensions of Peace published by the Association to Advance Collegiate Schools of Business (AACSB), the premier accrediting agency globally for business schools. The women of Terra Prometida produce Brazilian bobbin lace (renda de bilos) using natural fibers. They work together to preserve a cultural art, provide economic opportunity, alleviate poverty and to reinvest in the community. This summer, we’re attempting to do this locally with members of an immigrant community who will be working together to preserve a Central American cultural art (Mayan backstrap loom weaving) and to provide economic opportunity to members of their community. The goal of both endeavors is to produce green fair-trade goods that can be marketed locally, regionally, nationally and internationally through channels such as ebay’s worldofgood.com.

Mayan backstrap loom weavingCritical Success Factors

These green micro-enterprises only succeed if the requisite infrastructure exists to support their growth. We’ve identified basic critical success factors that are known to increase the odds of survival when fostering sustainable economic development. They are:

-Access to education/training in entrepreneurship and commerce

-Access to information and communication technologies (ICTs)

-Access to inexpensive capital (micro-lending without prohibitive or punitive fees)

-Access to business support services (including legal) and training

-Pro-business local, regional and national government regulations (open markets)

-Secure (safe) business environments, and

-Access to banks and financial institutions

Other important critical success factors include the drive, determination and dedication of the micro-entrepreneurs involved in the project as well as the commitment of the community partners who are providing the support infrastructure. These collaborators serve as change agents and have the potential to provide the spark that ignites others in the community to launch their own micro-enterprises.

How Can You Help?

You play an important role in the process. This model only works if you, the consumer, are willing to purchase the fair-trade goods and services produced by green enterprises and developed to provide sustainable economic development opportunities to otherwise economically disadvantaged communities. Thus, you are the most important change agent involved in the process: you serve as the source of revenue. Support cultural arts and artisans, entrepreneurs and micro-enterprises by purchasing their products. Contribute to a world of good.

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Knowledge Process Outsourcing: Get Smart Now!

On 12 June, the transition from a service-based economy to a knowledge-based economy was the focus of this blog. This is the second in a series of articles regarding our competitiveness in the knowledge-based economy and the marketing opportunities associated with this competitiveness. Today’s topic is Knowledge Process Outsourcing (KPO). It is the one area of outsourcing in which the USA remains competitive (having ceded Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO) to India, China and other developing nations).

KPO consists of activities such as investment research services, marketing research, analytics and intelligence, engineering research and development, pharma/bio-tech research and development, legal research services, animation, content/publishing and education/e-learning. It is the fastest growing segment of outsourcing with a compound annual growth rate of 58 percent for the period 2005-2010. Steady growth in KPO services is projected to continue well into the next decade.

In a paper published on 1 March 2010, Gereffi and Fernandez-Stark identify the top ten KPO firms as of 2009 based on total revenues. Below is a listing of the headquarters of record for each firm identified in their article. Industry consolidation is making the determination of country-of-origin almost impossible.

Top 10 Knowledge Process Outsourcing Firms (2009):

  1. Gartner, Stamford, Connecticut, USA
  2. Genpact, Gurgaon, Haryana, India
  3. WNS, Mumbai, Maharashtra, India
  4. Forrester Research, Cambridge, Massachusetts, USA
  5. Evalueserve, New Delhi, India
  6. Integreon Managed Solutions, Los Angeles, California, USA
  7. CPA Global, St. Helier, Jersey, UK
  8. Pangea3, New York, New York, USA
  9. Fractal Analytics, Jersey City, New Jersey, USA
  10. Boston Analytics, Cambridge, Massachusetts, USA

To remain competitive in KPO services and in the knowledge-based economy requires more education, not less. In marketing, the future for students with demonstrable skills in marketing research, marketing analytics and metrics, digital marketing, inbound marketing, content-based marketing and database marketing looks promising. Most of these jobs require strong mathematical and analytical skills as well as an understanding of basic HTML, JavaScript, CSS and XHTML/XML coding.

Regionally, the outlook for jobs in the knowledge-based economy is positive. Five of the top ten KPO firms have headquarters located in the north-eastern corridor and two are located the Boston area. Somewhat optimistically, a recent posting on HubSpot identifies Boston as the future “Hub” or center of all things marketing.

The economic well-being of our region is dependent upon the success of our KPO and service firms. The success of these firms is predicated, in part, on the availability of highly educated marketing talent. Your future and their future demand that you get smart now.

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