Learning Communities and Global SMEs

Manufacturing SMEs moving abroad in APEC face a challenge today of craft versus standard. Investment abroad in production facilities deprives globalizing SMEs of home country advantages, without assurance of similar contextual advantages abroad. Contextspecific advantages include networks of specialized producers, adept in local knowledgesharing networks regarding technologies of machinery and organization, as well as regarding local labor and state resources. A case study of Korean and Japanese manufacturing SMEs in China and Thailand respectively, reveals strong home country links but relatively weak ties to local host country networks. I find these global SMEs adept in adjusting to international market standards, but less skilled in forging ties with local sector networks. Exporting back to home country markets, SMEs in this initial stage of DFI have been marked by globalization but not localization. Creation of a “learning environment” among SMEs in the region provides one solution, driving a continual process of integrating local craft with global standards. At the level of firms, I cite Sabel’s “pragmatist alternative” of drawing local craft into global markets. Solutions offer hope of technology transfer for the host country, and of innovation advantages abroad for the global SMEs in the region.