Large Companies Take the Lead on Capacity Building for Small and Medium Enterprises

Geneva, 28 April 2008 - Small and medium enterprises (SMEs) make up over 95% of private sector firms, making them the backbone of global economic activity. They have a key role to play in poverty alleviation by promoting economic growth that is inclusive and reaches the majority of people.

SMEs are also an important source of local supply and service provision for global companies. So how are some of the world's leading corporations building relationships with SMEs in the developing world? That's what a group of future leaders set out to explore.

Over the course of a year, the World Business Council for Sustainable Development's (WBCSD) engages high-potential future leaders in a long-term campaign to move sustainable development to the center of business thinking. The development workstream of the 2007 Future Leaders Team surveyed some 50 representatives from 12 WBCSD member companies and conducted informal interviews with SMEs in Brazil, China, Mexico and South Africa.

The team's informal study reveals a gap in perceptions about the relationship between companies and SMEs, as well as differing opinions about the success of the relationship.

Large companies and SMEs depend on each other in today's global economy. But this study found that while large corporations often believe they're doing a good job building relationships with SMEs, SMEs do not always see direct benefits from the relationship.

Key issues include a lack of trust between SMEs and large corporations; bureaucracy that makes it difficult for SMEs to do business with large corporations; and a lack of confidence in SMEs' ability to provide quality products while operating in a safe and sustainable manner.

The team concluded that large companies must take the first step in improving the relationship. Becky Brown of Caterpillar, a member of the team that conducted the study, supports the idea that business has a responsibility to lead improvements in capacity building for SMEs.�We need to take responsibility for the relationship,� Brown said, �otherwise governments may step in and establish policies and regulations that will be more difficult for us to work with.�

The development workstream was composed of representatives from Caterpillar, Cemex, CIMPOR, EDF, GrupoNueva, Mondi, Storebrand, Taiheiyo Cement and Tokyo Electric Power Company.

In just 25 days, the group explored whether companies have strategies and processes in place to encourage and enhance relationships with small and medium enterprises, specifically through supply chains in the developing world.

The project was action research focused and supported the work of the WBCSD's Development Focus Area with quantitative and qualitative data from individual companies, as well as good practice case studies.

The results of the study are now available on the WBCSD's website and will shortly be available in Spanish.

The Future Leaders Team is designed to engage high-potential future leaders in a long-term campaign to move sustainable development to the center of business thinking.

Today's future leaders not only want a rewarding and fulfilling career, they are also increasingly dedicated to making a difference in their companies and their communities. The program creates a network for dynamic business leaders to act as sustainable development ambassadors in their companies and in society.

Contact
Katherine Madden
WBCSD
Tel.: +41 (0)22 839 3113
E-mail: madden@wbcsd.org