Impact of Global Value Chain on the Performance of Small and Medium-Sized Enterprises : A Review of Literature

The global value chain (GVC) can be identified as a concept that enhances the growth of global economies with globalization. Resource endowments, market access, and efficiency maximization, the main drivers of the global value chain, are transforming global economies. Small and medium enterprises (SMEs), a major driving force in the economy of every developed and developing country, play a crucial role in every economy through dimensions such as output growth, employment generation, poverty alleviation, economic empowerment, and export growth. Therefore, SMEs can participate in the GVC by exporting goods and services directly to foreign firms or by supplying raw materials to local firms that produce goods for export, and by importing goods and services and raw materials for domestic consumption and production from foreign suppliers. Thus, the GVC provides a new production platform to enhance the product quality, productivity, and output growth of SMEs. But, socio-economic factors such as lack of business networks, limited financial and human capital, production shortages, technology, limited infrastructure, legal barriers, lack of education and skills, and lack of new information limit the participation of SMEs in the GVC. However, it could increase the participation in the GVC of SMEs through strategies such as economic recovery, infrastructure development, increasing the competitiveness of SMEs, preparation of SMEs for productive and highly dynamic business opportunities. Since it is important to identify the existing international market opportunities for local SMEs and implement policies and strategies that will facilitate smooth entry into global value chains (GVCs)