Abstract
The concepts of cluster and networking emerged in 1960s in Small and Medium Scale Enterprises (SMEs) literature but the formation of SME clusters and networking is a very new strategy for Sri Lanka started in 2001 and Pakistan started in 2003. But it shows some positive sign of growth by increasing competitiveness of SMEs by opening-up new opportunities due to good innovative networking, common facility usage and collective efficiency of economies of scale, scopes and synergies, etc. The problem of many SMEs in both countries is not their size, but being isolated and working in enclave nature, therefore SMEs individually have little capacity to respond to competitive pressure and to generate factors for expansion and innovation. Especially, SME Apex bodies and Authorities see the formation of clusters and networking as the way to reduce transaction cost of facility provision by creating new form of co-operation for sharing resources, information, technical expertise and knowledge, etc. But in turn, this can strengthen the competitiveness as well as facilitating learning and technical innovation and ultimately it helps SMEs to mobilize human, financial and other resources to one place by opening avenue for long lasting networking. Many successful empirical stories available regarding the effectiveness of SME cluster and networking formation around the world but Sri Lankan and Pakistan cases may be too early to judge the exact relationship between SME’s success and cluster and networking formation as they recently started these concepts. But available evidences in some clusters and networking in both countries show that due to this SMEs growth and competitiveness have been increasing during the last few years in terms of various indicators. Therefore, this paper ascertains the implications of cluster and networking formation on growth and competitiveness of Sri Lankan and Pakistan’s SMEs. This paper concludes by emphasizing that formation of clusters and promotion of networking is a very good start to develop and increase competitiveness of SMEs but at the same time many other right policy initiatives, incentives, business development services and infrastructure facilities must be in place to better perform these clusters and networking relations to address SMEs complex and diverse problems. Especially, clusters and networking alone cannot be solved the complex problems and constraints encountered by SMEs in Sri Lanka and Pakistan to break the vicious cycle of SMEs.
Highlights
Research into small and medium sized enterprises (SMEs) has grown strikingly during the last decade
The results show that products and services played an important role in ensuring the SMEs business success in Bangladesh
To ensure Bangladeshi SMEs can continue to be successful they need to ensure good products and services delivered to customer continuously
Summary
Research into small and medium sized enterprises (SMEs) has grown strikingly during the last decade. This intense attention in the backdrop of the failure of various structural and trade policy reforms to stimulate any significant response from the private sector is remarkable, and seems to suggest that liberalization measures must be supplemented by proactive policies to attain the desired goal (Bhattacharya, 2002). A huge majority of firms worldwide are SMEs, and they play a significant role in the economy. SMEs play an important role in economic structure and performance (Berry, 1997). One of the reasons is that they cannot compete in technology with medium or large scale business (Rana et al, 2003)
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