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Introduction
According to Asiedu & Freeman 12 globalization is the increase in international relationships in cultures, people and economic activity. This is also attributed to the reduction of restrictions on the movement of capital and investment. In short economic globalization refers to free market, economic liberalization and western dominance.
Discussion
The view that globalization, by increasing the size of the market, reduce market power of individual firms and the need to address strategic interactions, is wrong. Globalization has indeed open up the market for all the firms to compete (Fernando 181). It is worth noting that prior to economic globalization big organization imported and exported goods and services since they had the financial muscles.
But with globalization, Small and medium enterprises are up to the task due to the reduction of barriers in imports and exports. There is also the increase of customers who can contribute immensely in the growth of the small and medium size companies. There is also the possibility of alliances between the medium size companies and others. This therefore means that the small businesses can access expertise, technology and products which may essentially be required for their growth (Fernando 234).
Due to competition from the large firms, domestic firms will engage in technology adoption so that they can compete with the big firms. As necessity is always the cause of invention, small firms will want to invent new systems in order to make them competitive in the global market.
Since most of the small and medium size companies are service-based while large companies are engaged in manufacturing, the services needed for production by the multinational companies will be provided by the small and medium enterprises (Asiedu & Freeman 79). This makes small and medium enterprises relevant in the market.
There is the supernatural identification of intellectual property. This means that a patent granted will be recognized in another country. This ascertains that the multinational companies do not violate the law of intellectual property of a given firm be it as small as it may be.
As suggested by Fernando 151 it is also wrong that globalization make mergers more attractive hence enhancing worries about market power. It does not enhance mergers. In fact it makes it possible for invention and technological advancement as small and medium firms will always provide services for the multinational firms. There is growth for the smaller firms provided by the existence of the multinational companies (Fernando 32).
It is worth to note that globalization has led to flow of information from one part of the globe to another and even to the remote locations, through satellites, wireless communication or through internet. This means that one can get any information that can help in growth of his or her company. Information is power and wherever there is information then growth is always imminent (Asiedu & Freeman 143). Wherever there is growth and healthy competition, why should there be worries about market power?
Conclusion
It is evident that globalization has increased the size of the market as well as ensuring that small and medium enterprises are also competitive in the market. No power of a single firm is reduced. This can only happen in the event that a firm is lagging behind in innovation and technological advancement.
Works Cited
Asiedu, Elizabeth & Freeman, James. Effects of Globalization on Firm’s profits. New York: American Economic Review, 2007. Print.
Fernando, Salvetti. Global Working. Living and Working across the World with Cultural Intelligence. Milan: Franco Angeli, 2010. Print.
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