The determinants of location specific choice: small and medium-sized enterprises in developing countries

Adeleke Oladapo Banwo,Jianguo Du,Uchechi Onokala

doi:10.1186/s40497-017-0074-2

Adeleke Oladapo Banwo, Jianguo Du + Show 1 more

Open Access

https://doi.org/10.1186/s40497-017-0074-2

Copy DOI

Abstract

This study adopts a resource-based view to model how location specific-factors among small and medium-sized enterprises (SMEs) in coastal environments in developing economies enable them to sustain clusters and contribute to economic growth. Locations of small and medium enterprises (SMEs) play a crucial role in determining their survival. SMEs agglomerations are often due to natural resource endowments and types of business climate in their environment. The amoebic nature and economic roles they play have made them the bedrock of the micro economy in most economies. This study contributes to the literature on cross-country comparison of small and medium enterprises (SMEs) in Zhenjiang (China) and in Lagos State (Nigeria).The methodology used was mainly literature review and secondary research data from World Bank and data sets from China and Nigeria. The findings highlight an upsurge in research on SMEs in developing countries and how these enterprises have used location-specific endowments to mitigate their resource limitation predicament. The learning points are envisaged to contribute to strategic growth in international business and foreign investments, knowledge for policy makers and to generate further comparative location studies in developing countries.

Highlights

Developing economies are prone to weak institutions, fragile business environments, complex economic and social problems such as poverty, unemployment, low per-capita income and unstable economic growth and development
The literature on China small and medium enterprises (SMEs) seem to have increased sharply from 2010 to 2016 compared to the preceding 29 year period (1980–2009), this may be attributable to subprime crises
SMEs were used to jumpstart most economies after the subprime crises, resulting in attentions shifting to emerging economies in Asia and Africa

Summary

Introduction

Developing economies are prone to weak institutions, fragile business environments, complex economic and social problems such as poverty, unemployment, low per-capita income and unstable economic growth and development. SMEs are common in developing countries and are described as nucleus of economic activities, a major source of employment, key contributors to economic growth and are engaged in poverty eradication initiatives globally (Aga, Francis, & RodríguezMeza, 2015; Bauchet & Morduch, 2013). They are confronted with diverse problems like financing, low capabilities, fragile structures, lack of technological knowhow, capital issues, institutional deficiencies that hinder their survival and business climate when compared with developed economies (Sorasalmi & Tuovinen, 2016).

Methods

Results

Conclusion