Impact of Global Value Chain on the Performance of Small and Medium-sized Enterprises

Global Value Chain (GVC) refers to the full range of cross-border, value-added business activities that are required to bring a product or service from the conception, design, sourcing raw materials, and intermediate input stages to production, marketing, distribution, and supply of the final consumer. At present, around 70% of international trade involves a variety of transactions where services, raw material, parts and components are exchanged in GVC across countries, before being incorporated into final products that are distributed to consumers all over the world. However SMEs have been identified as an important strategic sector in the overall policy objectives of many countries specially is important for developing countries. SMEs are seen as a driver of change for inclusive economic growth, regional development, employment generation and poverty reduction. The participation of SMEs in GVC should be sought in the broader context of the globalization of SMEs. The reorganization of production at the international level and the development of GVC are having significant effects on SMEs, in particular by expanding their business opportunities and will be a strong reinforcement for development of the economy of the country. However factors such as capital assets, number of workers, sales revenue of firms, human capital, trainings, and types of SMEs are affecting the performance of SMEs. Impact of the GVC on the performance of Small and Medium-sized Enterprises in Indonesian, Thailand, Sri Lanka and Vietnam economies were discussed in this study by using descriptive analysis method. Findings of the studies strongly indicate that government, nongovernment organizations, and policy makers should encourage SMEs to participate in GVCs by allowing them to grow as internationally competitive entrepreneurs