Adopting and innovating technology are critical to the success of SMEs in the process of internationalization. SMEs needs to be use the latest technologies to generate efficient and high-quality production, and compete in the global market. The new concepts such as cloud computing, Footnote 1 which enable cooperative sharing of resources, will help smaller firms to leverage on the advanced technologies.
Such arrangements free up critical resources of MSMEs, and lead to more focusing on the core activities.
Lack of access and investment in technology hinders the ability of MSMEs to compete in global markets. Technology is a key differentiator for the MSME sector to remain globally competitive.
With the ongoing global trend, Indian MSMEs has their own set of challenges related to technology adoption and scale of operations. However, MSMEs may fail to take the complete advantages of globalization if some additional barriers exist such as lack of digital access, insufficient resources or knowledge to innovate the product quality, inability to lower the export prices, higher unit cost of production, informational bottlenecks, inadequate strategy for marketing and advertising. Globalization normally results in free movement of goods and services across the borders.
High tariff walls i. Import tax, quotas or voluntary export restraints imposed by the importing nations, may prevent the MSMEs to compete in the global market. Again, there may be situations where MSMEs producing textile goods face a tough competition with their rivals producing synthetic products.
The rival may capture a higher market share with the use of higher level of technology and skilled man-power. Trade with those partners are free from all form of major restrictions in the form of tariffs and non-tariff barriers. The study mainly focuses on how the Indian MSMEs can improve their position in the global market through technological improvement and the measures which can be adapted to solve the problems of the Indian MSMEs. The paper is sub-divided into a number of sections. There has been a number of studies which talk about the role of MSMEs in a competitive environment.
Some of them are briefly discussed below. Mesut Savrul et al. However, for Small and Micro Enterprises SMEs to compete in global platform, e-commerce can help them to overcome the several obstacles and barriers that limit or prevent them from getting into e-commerce. Globalization brings risks and hence SMEs are unlikely to survive in their current form.
They need to improve their standards and quality, cost competitiveness and other management practices Hwang It is up to the SMEs to implement competitive business operational practices and strategies. However, the choices available to SMEs are associated with the quality of institutions, markets and organizations. And it is the productivity and efficiency of the institutions, markets and establishments that boost or dampen SMEs to take their signs for learning novel ways of doing business, compare their own competitive features with their rivals, including launch of new innovations into their business plans.
OECD The other studies include study by Mukherjee who presented an outline of the role of SMEs, challenges posed by the several global forces, changes in the policy environment of SMEs, selected World Trade Organization WTO agreements in the context of SMEs, possibilities of legitimate cover of protection under WTO rules and policy recommendations. Naik analyzed the post-liberalization business environment for the Small Scale Industries SSI and mentioned that the present global scenario has become harsh for the SSI sector because of the increased internal and external competition.
Subrahmanya a , b highlighted the impact of globalization and domestic reforms on the small-scale industries sector. The study advised that the focus must be turned to technology development and strengthening of the financial infrastructure in order to make Indian small industry internationally competitive in the global market. The study concluded that all the policies which were opted by the Government of Indian were the efforts made to form a dynamic MSE sector.
The study recommended that there was a need for simplified legal and regulatory framework, good governance, sufficient access to credit and finance, need of sufficient infrastructure and a competitive environment. Mali observed that SMEs and micro enterprises have to face increasing competition in the present scenario of globalization.
To cope with the current scenario, they have to improve themselves in the fields of management, marketing, product diversification, infrastructural development, technological upgradation. Lastly, new small and medium enterprises moving from slow growth area to the high growth area have to form strategic alliance with the entrepreneurs of the adjoining countries. Subrahmanya a investigated the impact of economic reforms on small scale industries. And recommended that small scale industries in India should progress on the technological front and also improve the financial infrastructure to compete at the international level.
Shastri et al. They concluded with policy recommendations to ensure the sustenance and competitive growth of small scale industries in India. Grant Thornton and FICCI stressed that it has become necessary for the MSME sector to demonstrate greater competitiveness and position themselves strategically along the value chain in the context of present challenges. IBEF report on MSME a , b has reported that MSME landscape has matured over time and moved up the value chain and have evolved from the manufacturing of traditional products to much more hybrid products to the value-added services segment.
Chandraiah focused on economic policy introduced by government of India in and gave a thrust towards the globalization process. He further stated that the policy shift at the command of IMF and World Bank has led to unequal competition between the Multinational companies and small Indian enterprises and there is a need to promote the MSME sector. Lahiri analyzed the definitional aspect of MSMEs and explored the opportunities enjoyed and the constraints faced in the era of globalization.
Further, he highlighted that MSMEs in India faced a tough situation due to extreme completion from large industries. Sonia and Kansai studied the effects of globalization on MSMEs during pre and post liberalization from to 74 to —09 and concluded that MSME failed to put up an impressive performance in the post reform era. Ghatak argued that the key restrictions affecting MSMEs are access to credit, technology and red tapism and concluded that the key matters should be removed to make the MSMEs perform better.
He also argues that governments should promote the development of local parts and supplier industries. This is likely to be an effective strategy to expand the domestic content of Multinational Company operating in a country. The development of networks of domestic suppliers, along with access to and availability of finance, together with increased linkages between SMEs and large firms, are critical.
Asian Development Bank highlighted a few constraints such as limited access to finance, scarce medium and long-term finance, restricted connectivity to markets, insufficient physical infrastructure, underprivileged women entrepreneurs, and absence of credit rating information system for SME borrowers in context of MSMEs.
Lastly, Das and Joseph , discussed that India is a home to a number of natural industrial clusters mainly dominated by SMEs and subcontracting has been promoted through a number of measures such as learning, innovation and competitive building systems. However, the real outcome is yet to come. Coir is a coarse fibre extracted from husk outer shell of coconut.
sandcaloppa.tk It is mainly a traditional export oriented industry and labor intensive one. It has great potential to enhance its exports through value addition mainly through technological interventions and upgradations. Tamil Nadu is the leading brown fibre producer in India. Lastly, India is the major coir exporter in the world. However, modernization of the Coir Industry with State of the art production, techniques, machinery and implements are the need of the hour. There is a stiff competition for coir in the area of floor covering material products such as Coir Pith, Coir Geo-Textile and Coir Wood offers a plethora of opportunities in the developing world.
Even though it enjoys supremacy in the world markets, the products of this industry are facing tough competition from the other synthetic products especially synthetic products which are not environmental friendly and originate from countries such as China. The only feasible solution is to spread awareness about its product and modernize its product through new technological applications, so that it benefits the coir industry in the long run. From Fig.
The export earnings have been more or less stable.
The reason attributed behind this is due to the stiff competition from synthetic exporters especially China. To improve the export earning further, need of up-to-date technology is a must.
To diversify its product further, it needs to invest in updated technology and also adequate market promotion through selling, distribution and advertising. Technology is increasingly seen as business enabler and is a vital tool for bringing in process efficiencies and higher degree of standardization. In order for MSMEs to develop a competitive advantage to venture into the international market and operate there, the Indian MSME needs to establish themselves in the domestic market.
There should be a strong focus on implementing the new age technology, developing indigenous technology as well as technological collaboration with global partners to play a crucial role. The Technology plays a pivotal role for MSMEs to help them stand up to the stiff competition from large enterprises and imports.
A strong technology-enabled sector levels the playing field to a great extent between MSMEs and their established counterparts globally. Business are becoming more and more agile and technologies such as social media mobility, analytics and cloud computing are coming together to unleash the great value and opportunity.
The Indian MSMEs entering the international market have to incur a specific cost known as sunk costs. Apart from this, they also need to know the taste and preference of the consumers demanding their product in the international market.
The Quality Business: Quality Issues in the Smaller Firm (Routledge Studies in Small Business) [Robert Blackburn, James Curran, Julian North] on browsoundnegedse.ml This book is the first to seriously consider quality issues in smaller firms, based upon well-conducted research and careful theorizing. the relevance of formal quality standards such as BS to small firms* definitions and Routledge.
MSMEs producing a substandard product of inferior quality using obsolete technology will not be able to compete in the global market. Customers are normally well aware of the products available in the market. The demand for the product will be minimal if there is lesser amount of marketing, advertising and awareness. With the help of superior technology, significant amount of selling and advertising expenditure, and marketing, the Indian MSME can offer a superior quality of product and sustain itself in the competitive global market.
For the Indian Coir Industry, such strategies including market promotion strategies can help it to sustain in the long run. The functional form of usage of technology by an Indian MSME and helping it getting differentiated from the other countries take the following form.
After discussing the significance and role of technology for MSME exports, this section discusses the several channels through which technology can be transferred. The immediate solution for technological advancement may be achieved through technology transfer, through either horizontal or vertical transfer.
It is also difficult to acquire an advance level of manufacturing technology due to their high costs Government of India There are numerous channels for technology to be transferred both internationally and domestically. The main international technology transfer channels are through foreign direct investment FDI done through mergers and acquisitions, technical licensing contracts between overseas and native firms, imports of intermediate and capital goods, project contracts, technical consultancies by overseas companies and consultancy firms.
All these technology transfer mechanisms tend to impact only the urban-based and bigger to medium sized enterprises. The main transfer technology mechanisms include i Technology Licensing Footnote 2 through which the parties that give and take the execution and usage rights enter into a licensing contract, and on the premise of the specified conditions including payment of technical fees for a specified period etc.
Absence of appropriate technology will reduce the potential of MSMEs and they will lag behind the other rivals in the global market. The other disadvantages will be lower demand for the product, substitution to other superior quality products produced by rival firms and lower profit margin sometimes losses leading to shutdown. The Government of India GOI , and other MSME leaders have recognized the problems associated with technology and other related challenges lack of infrastructure, human resources and access to capital, etc.
These challenges need to be eliminated to sustain a healthy growth of Indian MSMEs and further enhance their contribution in the global market.