[8] 2002 e-business-strategies-for-virtual-organizations

6 Globalization and e-business strategies for
SMEs
6.1 Introduction
Utopia: ‘The ideal state is small and the inhabitants
few’
(Lao Zi)
SMEs (sometimes referred to in this chapter as small firms) are
defined in this chapter as firms with fewer than 500 employees.
In the literature, SMEs are variously classified based on a wide
range of criteria including number of employees, sales turnover,
size of capital assets, etc. The most popular criterion is the
number of employees (NOE) on a company’s payroll. Most
national accounting systems would define SMEs as those with
NOE within the range of 1–500. These may be further subclassified
as micro with NOE < 5; small-sized 5 � NOE < 20; and
medium-sized 20 � NOE < 500. The sub-classification may be
further modified on the basis of industry sector. For example, in
the manufacturing sector the NOE of a small-size firm may be in
the order of 200 as compared with about 20 for a similar
category in the services sector.
The SME sector is generally recognized as a window of
opportunity for rejuvenating mature industries, creating new
and innovative markets, and achieving rapid economic growth
through employment generation and wealth creation in all
economies. The availability of the Internet and web technologies
provides unique advantages for SMEs to build effective global
infrastructures in at least three ways:
� Internet-based infrastructures are relatively cheap; requiring
significantly reduced capital investments over proprietary
ones.