Small firms feel 'left out'

PUBLISHED: 11:32 17 February 2006 | UPDATED: 09:40 06 May 2010

Smaller companies could be victims of increased globalisation in industry

Smaller companies could be victims of increased globalisation in industry

RECRUITERS at mid-sized firms are struggling to find the right sort of skilled staff in order to expand their business, a new report is suggesting. According to the Economist Intelligence Unit (EIU) research, globalisation is putting fresh pressure on the

RECRUITERS at mid-sized firms are struggling to find the right sort of skilled staff in order to expand their business, a new report is suggesting.

According to the Economist Intelligence Unit (EIU) research, globalisation is putting fresh pressure on these organisations, with huge companies moving into their markets and ever-larger customers dictating prices.

Researchers also found that small firms provide a disproportionate amount of growth and jobs, but feel overlooked by the Government.

European bosses are also seen as less enthusiastic about information technology than Americans and Asians.

The EIU surveyed mid-sized firms with a turnover of between $20m and $500m, employing somewhere between 50 and 500 people on average.

It found that this kind of company feels neglected by government because they are too large to qualify for the grants and assistance that small enterprises can count on, but are too small to wield the kind of influence their larger competitors can.

Yet according to the EIU, mid-sized firms have a disproportionate impact on many economies.

In the USA, for example, just one per cent of companies fall into that category, but they generate 30 per cent of corporate revenue.

In the UK about two per cent of firms are classified as mid-size, but account for 14 per cent of all jobs and 16 per cent of turnover.

And Germany's fabled export strength has traditionally been driven by its Mittelstand, the term for the country's mid-size companies.

But it is these firms, the EIU said, who are turning out to be the unexpected victims of globalisation.

The key driver is the consolidation of industries, where mergers and acquisition sprees result in ever-larger global companies encroaching on once-niche markets.

Mid-size firms don't want to lose the soul of their company by becoming too big.

"There is a sense that they are being squeezed by both large competitors and larger, more powerful customers," said Denis McCauley, EIU's director of global technology research.

But despite the squeeze, most mid-size firms still believe that they can deliver steady growth, by playing to their traditional strength - being nimbler and more customer-focused than their large rivals.

Having large companies as customers is also not always a disadvantage.

The EIU interviewed 3,722 executives of mid-size companies with a turnover between $20m to $500m based in Europe, Asia Pacific and the Americas. The survey was conducted between October 2005 and January 2006.

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