The Impact of Creating Backward and Forward Linkages Between Lead Firms and SMEs in Conflict settings

Abstract

This rapid review synthesises the literature from academic, policy, and knowledge institution sources on the effects of lead firm-SME linkages in low- and middle-income countries (LMICs). The review focuses, where the literature is available, on evidence from countries in conflict settings. It focuses mainly on a Business-to-Business top-down approach and intermediary approach, because these initiatives focus particularly on the lead firms as the pro-active drivers for the creation of backward and forward linkages and/or partnerships with SMEs and/or smallholder farmers (for contract farming). An important conclusion from the literature is that there is abundance of research on SME development in LMICs, however, the literature on linkages between SMEs and large businesses is dominated by theoretical and conceptual papers outlining the benefits (and disadvantages) for SMEs of linking with large businesses. Only few empirical papers exist on the subject, mainly by gathering the data from the side of large firms. No empirical evidence could be found related to these linkages in conflict settings. The assumption is often that by linking with large businesses, SMEs can potentially gain access to technologies, markets, inputs, and knowledge that would not have been available had they operate on their own or only with fellow SMEs. The literature on SMEs mentions horizontal and vertical linkages that could link large firms (lead firms) - SMEs with each other, of which the first is less studied.