An empirical study of supplier development practices in a developing economy - SMEs perspective

SME (Small and Medium Enterprises) sector forms as much as 99% of business entities around the world. While SMEs in developed economies are getting fair attention of policy makers, those in developing economies, particularly in South Asia, are yet to get such attention. Being the primary suppliers to most exporting firms, or being exporters themselves, the performance of SMEs can be fairly expected to contribute to industrial development and growth of an economy. With the recent emphasis by businesses around the world on "core-competence", more and more activities are being outsourced to SMEs in developing economies. However the performance and business practices of SMEs in developing economies remain much lower than those of SMEs from developed economies. Considering the lack of required policy support for SMEs, effective Supplier Development by large buyers presents a potent tool for developing the performance and business practices of SMEs in developing economies. Based on the literature base addressing current supplier development practices around the globe, particularly in developing economies, this paper presents the results of a survey of Supplier Development activities undertaken by manufacturing firms in Pakistan. The results offer an insight into the most and least used techniques with discussion on the reasons of adoption or otherwise. The results will be of interest to large firms that outsource their business activities to South Asia.