Big corporations have been establishing outlets across various countries and regions to increase their market footprint. They prefer small towns to big towns during expansion because of the unexplored market and unexploited. Encroachment of big corporations into small towns has positive and negative implications on the growth of local businesses. However, big corporations foster the development of local businesses in small towns.
So, what is the influence of big corporations on the development of local businesses in small towns?
Although big corporations can drive few local firms out of the market, they can accelerate the development of several local businesses. Big corporations’ entry into the local market is perceived as a threat to small businesses due to increased competition. Nevertheless, big corporations create favorable entrepreneurial ecosystems that facilitate the development of local businesses in small towns (Roundy, 2017). Big corporations optimize their supply chain networks by partnering with local companies to acquire, distribute, and sell raw materials, finished goods, and services. They usually use local vendors to supply their products to the local consumers. Such interactions also facilitate technology transfer since local businesses learn new methods and technologies for conducting business. Sometimes, domestic firms are trained and equipped with production techniques and scalable techniques by the big corporations during the partnership (Thompson, 2019). Therefore, this creates enabling environment that allows local firms in small towns to develop.
Notably, mega-corporations trigger the growth of several local businesses regardless of the few ones that collapse due to failure to embrace change or embrace strategic partnership. The interaction between big corporations and domestic firms facilitates the transfer of essential knowledge and technology, enabling local businesses to thrive well even in competitive markets. Thus, local enterprises should form strategic partnerships with big corporations in small towns to build their competitive advantage and brand image.
Roundy, P. T. (2017). “Small town” entrepreneurial ecosystems. Journal of Entrepreneurship in
Emerging Economies, 9(3), 238-262.
Thompson, J. (2019). How Do Multinational Companies Affect Local Businesses?. Small
Business – Chron.com. Retrieved 27 May 2021, from https://smallbusiness.chron.com/multinational-companies-affect-local-businesses-70396.html.