Densil A. Williams

Attracting FDI to developing countries

This study examines the efforts of many developing countries to promote their economies as sites for foreign direct investment. It develops a model of determinants of foreign direct investment flows to test the extent to which countries are able to differentially attract foreign direct investment through promotional activities. The statistical study lends support to the concept that the convergence of policy and promotional activities around the developing world is leading to a movement toward the maturity phase of the life cycle of the differential effectiveness of special attraction efforts. While this trend does not support a discontinuation of these special attraction efforts, we do suggest that it does make it critical that promotional organizations in developing countries emphasize “functional” rather than “selective” policy reforms and promotional activities that are non‐discriminatory in relation to local investors.

Motivation for Service Sector Foreign Direct Investments in Emerging Economies: Insights from the Tourism Industry in Jamaica

Abstract The level of foreign direct investment (FDI) in the hotel sector of the tourism industry in Jamaica is unprecedented. This study seeks to understand the motivation for such investments using the extant theories of FDI as the conceptual framework. To achieve this aim, the study draws on the qualitative analysis of data gathered through face-to-face interviews with hotel managers, government policy makers and ambassadors from the investing countries to shed light on the issue. The conclusions reveal that intense competition in the home market has forced the multinational enterprise to seek markets abroad. Jamaica was chosen as a location because of its proximity to the US market and also the level of infrastructure development in the economy. However, because of the service-oriented nature of these multinational enterprises, the investors opted for FDI instead of other entry modes. These FDIs have changed the structure of the tourism industry in Jamaica and have led to increased levels of competition in the industry which, this study argues; is healthy for improved competitiveness in the industry.

Competitiveness of small enterprises: Insights from a developing economy

Abstract The rapid liberalization of the worlds trading system has obliged all firms (micro, small, medium and large) to participate in the international trading system. The competitiveness of these enterprises is very important if developing economies are to secure their economic survival in this era of rapid market liberalization and erosion of trade preferences. This paper seeks to provide some insights into the competitiveness of a group of firms that have received very little attention in the debate on competitiveness and economic development. It draws on the case study method to analyse export-marketing strategies of eight small firms from Jamaica to help us analyse their ability to compete internationally and, by extension, to draw out lessons for other similar enterprises in the economy. The results reveal that the export-marketing strategies used by Jamaican small enterprises to expand exports are unsophisticated and unsustainable. The strategies pursued leave these enterprises hostage to foreign buyers, thus making their export capacity quite fickle. This therefore threatens their long-term survival and by extension the Jamaican economy. Taking greater control of the export-marketing mix is the only way these enterprises can develop sophisticated strategies that will ensure their survival in an increasingly inhospitable international trading environment.

RESOURCES AND FAILURE OF SMEs: ANOTHER LOOK

Failure among SMEs has been attributed to size, age, location and being part of particular industries and not part of a network. These determinants, if used as surrogates for resources, suggest firms that lack such resources are more susceptible to failure. Using the resource-based view of the firm, this paper aims to do a post-mortem examination on the attributes of failed SMEs by analyzing data of more than 13,000 failed firms in the UK between 1999 and 2009. The findings reveal that failure is not merely a function of lack of resources. Although these findings shed new light on attributes of failed SMEs, there are still some limitations to the work that must be taken into consideration when applying the results.

Export Initiation in Small Locally-Owned Firms from Emerging Economies: The Role of Personal Factors

This paper examines the impact of personal factors in the decision of small, locally-owned firms from an emerging economy to enter into exporting. It drew on the logistic regression model to analyze the probability of a firm entering into exporting given its founder/owner possesses certain personal attributes. The results reveal personal attributes such as international job experience and foreign travel experience are the most critical in determining whether or not the firm exports. These results demonstrate demographic factors such as age and education level of the owner are less important and behavioral factors are more significant. Public policymakers interested in getting more firms to export can use these results as a guide to develop training centers that will encourage specific entrepreneurial behaviors germane to export initiation in small firms.

CAN NEURAL NETWORKS PREDICT BUSINESS FAILURE? EVIDENCE FROM SMALL HIGH TECH FIRMS IN THE UK

This paper, using a flexible and more robust analytical tool, neural networks models, analyzes the most important factors in determining business failure among small, high-technology firms. Using the resource-based view and organizational ecology as the theoretical lenses through which to view the problem, the paper modeled a number of variables that stood as proxies for resources. The results suggest profit, in the form of retained earnings, is the most significant factor that determines failure among these firms. Other factors of importance are governance structure, location and firm size. Importantly, the issue of governance structure as a resource has received very little attention in existing works on business failure, and as such, this paper makes a contribution to the literature by adding governance as an important resource.

Editorial: Competitiveness and Caribbean Economies: Emerging Issues and Future Directions

Although competitiveness may be viewed as a dangerous obsession (Krugman, 1994) it is an obsession that the Caribbean cannot ignore. Because of the small size of the markets in this region, for economic sectors and firms to grow and survive, they have to engage with the rest of the world. In essence, they have to become involved in international business. This is the only way they can generate sufficient demand to allow firms to operate at their minimum efficient scale, a prerequisite for achieving economies of scale in production. To operate effectively in international business, firms and economic sectors will have to improve productivity and be innovative which, incidentally narrows down to being competitive (Porter, 2004). Competitiveness is critical for it will help countries to raise their income levels and opportunities for their population. Indeed, this is an important goal for Caribbean economies, given their current crisis of development in this increasingly globalized world economy. However, it appears that the region continues to ignore this critical issue of international competitiveness. In a comprehensive competitiveness audit of the region, Payne and Sutton (2007) argue that the competitiveness evaluation of the region makes for uncomfortable reading. If the Caribbean is to achieve any significant growth in its income levels and improve the standard of living of its citizens then, it has to improve its competitiveness in the global economy. This special issue of The Round Table focusing on competitiveness in Caribbean economies aims to provide the intellectual driving force from within the region to develop competitiveness policy frameworks that can strengthen the private sector, which is needed for the export-oriented growth that will raise income levels and opportunities in the region. The issue follows a call for papers on Competitiveness of Caribbean economies in which a number of interesting articles were received. These articles went through the normal blind review process and seven made it to publication. These papers represent a variety of insights on competitiveness in Caribbean economies and contribute to the discourse on competitiveness in the region. They also provide recommendations on how policy makers can formulate competitiveness policy for the Caribbean. The Round Table Vol. 97, No. 396, 335 – 340, June 2008

Exploring the Characteristics of Prosperous SMEs in the Caribbean

ABSTRACT Despite the extensive literature on small business growth and performance, relatively little is known on the features of firms that have been prosperous for a long period of time. Adopting Storey’s determinants of growth framework, this study explores the characteristics of the entrepreneur, the firm, and the firm’s strategy contributing to the prosperity of small firms in the Caribbean. Using multiple case studies from across the region, this study reveals that SME prosperity in the Caribbean seems to depend on combining certain characteristics namely, the entrepreneur’s strategic leadership, networks, and intimate knowledge of products and business operations, and the firm’s strategy of branding and market diversification. The findings show that unlike the results from previous studies in large and developed countries, it is a mix of these characteristics that determines SME prosperity. Research and policy implications of these findings are discussed.

Spur Tree Spices

The case of Spur Tree Spices provides a detailed description of how a small firm that manufactures sauces and spices in Jamaica is able to survive and prosper alongside larger and multinational firms that offer a similar product in the marketplace. The case traces the early beginnings of the firm, its expansion over time and also takes a look at its future. In addition, it focuses on the firm’s products, production processes, supply chain issues and quality control processes as well. Similarly, the case also looks at the governance of the business and the business environment within which the firm operates and extrapolates how this environment will impact on its future.

Conclusions and Lessons Learnt

The Conclusions and Lessons Learnt chapter provides a synthesis of the material covered in the text and highlights the common lessons that lead to the survival and prosperity of all the small firms that participated in the study. The chapter puts forward the following as common lessons that have resulted in small firms that compete against multinationals in the manufacturing sector from emerging economies, surviving and prospering as: networking with larger enterprises, brand building, intimate knowledge of products and line of business, diversification of markets and meeting customer needs, and forward thinking and strategic leadership. These important attributes can be replicated across all firms and should be encouraged if smaller firms are to survive in an inhospitable sector.