Opportunities of value creation global chains for small and medium businesses

Abstract

Introduction. Small and medium-sized enterprises (SME) face with many obstacles in the process of joining the global value chains. They include small scale of businesses (large corporations require bigger volumes of raw materials), relatively higher production costs, information vacuum, scarce resources for innovations, limited access to finance, weak institutional support, and, in general, the poor ability to compete with large firms in research and entry into global markets.

Purpose. The article aims to reveal the opportunities and barriers for small and medium-sized businesses in Ukraine in the value creation global chain.

Results. Significant prospects for Ukrainian SME in value creation global chains are opening up in the field of green investments (production of environmentally friendly products or energy efficient appliances etc.). However, there is a serious risk to business in value chains: the end-producer puts suppliers in a strict framework, where the supplier actually loses the functions of an independent enterprise, and becomes the “sub-unit” of a large corporation. The role of the state in developing export potential of SME to integrate them in global value-added chains is crucial, namely, informing about the possibilities of participation in global chains, the preferential financing of SME as participants of chains, protection of intellectual property and tax incentives for innovative enterprises, subsidies for product standardization. Ukraine should join the international standards of value added reporting by type of enterprises.