Assessing trade supply chain vulnerability and trade participation of SMEs in India: insights from a comprehensive analysis

Tapas Sudan, Rashi Taggar
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Abstract

Purpose

This study presents the impact of Economic Policy Uncertainty (EPU)-induced Trade Supply Chain Vulnerability (TSCV) on the Small and Medium-Sized Enterprises (SMEs) in India by leveraging the World Bank Enterprise Survey data for 2014 and 2022. Applying econometric techniques, it examines firm size’ influence on productivity and trade participation, providing insights for enhancing SME resilience and trade participation amid uncertainty.

Design/methodology/approach

The econometric techniques focus on export participation, along with variables such as total exports, firm size, productivity, and capital intensity. It addresses crucial factors such as the direct import of intermediate goods and foreign ownership. Utilizing the Cobb-Douglas production function, the study estimates Total Factor Productivity, mitigating endogeneity and multicollinearity through a two-stage process. Besides, the study uses a case study of North Indian SMEs engaged in manufacturing activities and their adoption of mitigation strategies to combat unprecedented EPU.

Findings

Results reveal that EPU-induced TSCV reduces exports, impacting employment and firm size. Increased productivity, driven by technological adoption, correlates with improved export performance. The study highlights the negative impact of TSCV on trade participation, particularly for smaller Indian firms. Moreover, SMEs implement cost-based, supplier-based, and inventory-based strategies more than technology-based and risk-based strategies.

Practical implications

Policy recommendations include promoting increased imports and inward foreign direct investment to enhance small firms’ trade integration during economic uncertainty. Tailored support for smaller firms, considering their limited capacity, is crucial. Encouraging small firms to engage in international trade and adopting diverse SC mitigation strategies associated with policy uncertainty are vital considerations.

Originality/value

This study explores the impact of EPU-induced TSCV on Indian SMEs’ trade dynamics, offering nuanced insights for policymakers to enhance SME resilience amid uncertainty. The econometric analysis unveils patterns in export behavior, productivity, and factors influencing trade participation during economic uncertainty.

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评估印度中小型企业的贸易供应链脆弱性和贸易参与情况:综合分析的启示
目的 本研究利用世界银行 2014 年和 2022 年的企业调查数据,介绍了经济政策不确定性(EPU)引发的贸易供应链脆弱性(TSCV)对印度中小型企业(SMEs)的影响。本报告运用计量经济学技术,研究了企业规模对生产率和贸易参与度的影响,为在不确定性中提高中小企业的应变能力和贸易参与度提供了见解。它涉及中间产品直接进口和外资所有权等关键因素。利用柯布-道格拉斯生产函数,研究估算了全要素生产率,通过两阶段过程减轻了内生性和多重共线性。此外,研究还以北印度从事制造业活动的中小企业为案例,研究了这些企业为应对前所未有的 EPU 而采取的缓解策略。研究结果表明,EPU 引发的 TSCV 减少了出口,影响了就业和企业规模。在采用技术的推动下,生产率的提高与出口业绩的改善相关。研究强调了TSCV对贸易参与的负面影响,尤其是对印度小型企业的影响。此外,与基于技术和风险的战略相比,中小型企业更多地实施基于成本、基于供应商和基于库存的战略。考虑到小型企业的能力有限,为其提供有针对性的支持至关重要。鼓励小企业参与国际贸易,并采取与政策不确定性相关的多样化SC缓解战略,是至关重要的考虑因素。 本研究探讨了EPU引发的TSCV对印度中小企业贸易动态的影响,为政策制定者提供了细微的见解,以增强中小企业在不确定性中的应变能力。计量经济学分析揭示了经济不确定性期间出口行为的模式、生产率以及影响贸易参与的因素。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
CiteScore
7.90
自引率
9.70%
发文量
87
期刊介绍: ■Organisational design and methods ■Performance management ■Performance measurement tools and techniques ■Process analysis, engineering and re-engineering ■Quality and business excellence management Articles can address these topics theoretically or empirically through either a descriptive or critical approach. The co-Editors support articles that significantly bring new knowledge to the area both for academics and practitioners. The material for publication in IJPPM should be written in a manner which makes it accessible to its entire wide-ranging readership. Submissions of highly technical or mathematically-oriented papers are discouraged.
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