Ottawa, July 21, 2009 — Once seen as adversaries, multinational corporations (MNCs) and small and medium enterprises (SMEs) are becoming allies, according to Big Gains With Small Partners: What MNCs Look For in Their SME Suppliers , published by the Conference Board's International Trade and Investment Centre in partnership with the Business Development Bank of Canada.
“The ‘churn and burn' approach to supplier relationships favoured at one time by many large multinational corporations is outdated. As the economy is transformed by global value chains, large multinational corporations depend on their smaller suppliers for everything from product development to customer service,” said Tim Krywulak, Senior Research Associate. “Working with SME suppliers offers big gains for large MNCs in areas of improved productivity, increased innovation and access to new markets.”
“The MNC-SME supplier relationship not only represents a win/win situation for Canadian business but is critical for Canada's competitiveness in a global economy. This research helps us understand what BDC, as a development bank, can do to help its clients qualify and remain strong partners in the value chain”, says Jérôme Nycz, Vice-President, Strategy and Planning at BDC.
The report, part of a research project on forging effective connections between MNCs and SMEs, offers recommendations to improve partnerships.
Large MNCs— defined as companies that employ more than 500 people and operate in more than one country—should consider increasing their awareness of smaller suppliers and make a sustained effort to connect with them, the report says. MNCs should also consider investing resources in supplier development programs, introducing supplier diversity programs targeting minority-owned businesses, and collaborating more with SMEs on product development and long-term partnerships.
A couple of ways for SMEs—defined as companies that employ fewer than 500 people—to become better partners for MNCs are to focus on developing their greatest strengths and marketing these specific benefits to customers.
Governments could provide research on the benefits of MNC-SME linkages, promote connections between MNCs and SMEs by organizing forums, conferences, trade shows, and other activities, and assist SMEs in navigating the complexities of the MNC procurement process.
The Conference Board of Canada's International Trade and Investment Centre helps Canadian leaders better understand what global economic dynamics—such as global and regional supply chains, the U.S. and global downturn, trade barriers or tighter border security—could mean for public policies and business strategies.
BDC is Canada's business development bank. From 100 offices across the country, BDC promotes entrepreneurship by providing highly tailored financing, venture capital and consulting services to entrepreneurs. BDC's Entrepreneurial Insight publication includes research about the SME sector, available at /en/about/SMEResearch/default.htm or /fr/about/SMEResearch/default.htm
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