Time to Think Big (and Global) American Small Businesses!

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US micro-, small, and medium-size enterprises, like their global counterparts, struggle with productivity. But a win–win economic fabric connecting all businesses can maximize their potential.

At a glance: 

• Micro-, small, and medium-size enterprises (MSMEs) are the bedrock of the US economy. 
• MSMEs in the United States are only half as productive as large companies, compared with 60 percent in other advanced economies. 
• MSME performance varies across US states and metro areas. 
• Interactions between small and large businesses are key to boosting collective productivity. 

Read the entire report by McKinsey Global Institute, October, 2024.

Small Business Productivity Issues Differ From Country to Country

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The McKinsey Global Institute aggregated a richly granular data set of micro-, small-, and medium-size enterprises (MSMEs) and large companies across 12 broad sectors, 68 level-two sub-sectors, and more than 200 level-three sub-sectors for 16 countries that account for more than half of global GDP.

In these countries, MSMEs on average have only half the productivity of large companies, and less than that in emerging economies. Raising MSMEs to top-quartile levels relative to large companies represents value equivalent to 5 percent of GDP in advanced economies and 10 percent in emerging economies.

The visual presentations here summarize the findings for the 16 countries in McKinsey's research representing different income levels. 

The Dynamics of Global Value Chains

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As McKinsey's Global Institute indicates, globalization is in the midst of a transformation.  In its recent 132-page report, "Globalization in Transition:  The future of trade and value chains," the authors say:

Yet the public debate about trade is often about recapturing the past rather than looking toward the future. The mix of countries, companies, and workers that stand to gain in the next era is changing. Understanding how the landscape is shifting will help policy makers and business leaders prepare for globalization’s next chapter and the opportunities and challenges it will present.

Read on to learn more.

Note a key finding in the report:  Larger companies may need to help their small and medium-size suppliers upgrade and add digital capabilities to realize the full value.

The Age of Intelligence

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“By 2020, most human beings will have access to the internet. When you have everyone harnessed with this information, the world gets more inter-connected. It gets stronger. There’s more knowledge sharing. There’s more freedom and there’s more openness.”  That my reader, is according to Eric Schmidt, executive chairman of Alphabet Inc. (Google's parent company).

He goes on to say, “We’re entering what I call the age of abundance.  And during the age of abundance, we’re going to see a new age … the age of intelligence.

A report released by McKinsey Global Institute, highlighted the global growth of the artificial intelligence (AI) sector.  Companies are in for a big change.

Read more ...

Today in Global Small Business: Essie Spice Owner Takes Her Business Global

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What's affecting me, my clients, my colleagues and other global small business owners:

• Challenged by cyber security?  Listen in on webinar 10/5 (n/c but you must register to attend ... I'll be moderating the webinar).
• A study by McKinsey Global Institute reveals that the productivity of an organization with connected employees can improve by 20 to 25 percent.
• As reliable internet access improves and more entrepreneurs take the plunge into the digital world, globalization is growing.
• For a company of any size looking to grow outside its borders, a global strategy is important to get right.
• Essie Spice owner takes her business global.
• Making sense out of taking a business global; join the 2nd Annual Global Small Business Forum in Chicago 10/21.

Global Flows Are Robust

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Global flows are creating new degrees of connectedness and to be unconnected is to fall behind.  As the McKinsey Global Institute noted in Global flows in a digital age, with the exception of cross-border finance, global flows are just as robust now as they were before the crisis.

One key to this rebound was that, in contrast to the 1930s, the global economy maintained existing conditions: trade barriers remained low, as did restrictions on foreign direct investment, and cross-border exchange continued to spread with the internet.

Read the entire article:  Why the global economy is stronger than you think

Globalization Reconsidered: What Global Flows Mean in a Digital Age

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According to McKinsey & Company, global flows are creating new degrees of connectedness among economies—and playing an ever-larger role in determining the fate of nations, companies, and individuals; to be unconnected is to fall behind.

A new McKinsey Global Institute (MGI) report, Global flows in a digital age: How trade, finance, people, and data connect the world economy, examines the inflows and outflows of goods, services, finance, and people, as well as the data and communication flows that underlie them all, for 195 countries around the world.

Learn more:  Global flows in a digital age | McKinsey & Company

The U.S. Has Entered a New Era of Global Competitiveness

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According to the McKinsey Global Institute report, "Growth and Competitiveness in the United States: The role of its multinational companies:"

• The global context in which U.S. MNCs compete and invest is shifting. The United States retains many strengths that make it one of the most attractive markets for multinational companies’ participation and investments. But numerous fast-growing emerging markets and some advanced economies are making huge strides in increasing their attractiveness. The United States has entered a new era of global competition for multinational activity.

This fact is merely one of numerous economic impacts U.S. multinationals are facing in the new world marketplace.

To learn more:

Read the executive summary (PDF - 1.93 MB)
Read the report (PDF - 3.18 MB)

In addition, if you've got the time, here are two interesting commentaries related to the report that are worth a read:

-> The Global Jobs Competition Heats Up

-> Time to Go Global with Great Economic Freedom

By the way, Happy Birthday No. 234 America!

Posted by: The Global Small Business Blog