In a recent Leaders International poll of large enterprises (LEs) in Jordan, 71% said that they would be willing to localise their supply chain if cost and price and quality issues could be addressed.
The economic and social benefits that would arise if they made this transition are hard to overstate. As MSMEs make up 60 per cent of all jobs in the country, the effect on local economies could be transformative if these small and medium-sized businesses become preferred suppliers to larger organisations.
When larger companies lend their support to smaller, local ones they often do so as part of their CSR/corporate citizenship obligations. More specifically, however, this type of initiative falls under the banner of what is increasingly being known as Corporate Entrepreneurship Responsibility (CER), a development concept that we believe will soon have a significant impact on the development of MSMEs not just in Jordan, but in the whole region.
Integrating local businesses into supply chains
The Corporate Entrepreneurship Responsibility Alliance (CERA) is a four-year, Dutch-funded project overseen by Leaders International that aims to help integrate small businesses – especially those in underserved, non-central areas– into regional and international supply chains.
To make these MSMEs more attractive to larger firms and cement their value in the supply chain, we are helping in a variety of ways.
- Capital investment in machinery to aid with the development of production lines.
- Assistance with quality certifications.
- Organising a variety of regional and international events to boost long-term networking opportunities.
- Ongoing support and advice covering everything from international marketing to business development services.
These initiatives are designed to help MSMEs ‘level up’ so that they can meet the quality and consistency requirements that more established, larger businesses demand.
Large enterprises are also being encouraged to provide access to training and business support services, and to foster an ongoing, open dialogue with prospective local suppliers.
A win-win opportunity
Importantly, the benefits of these two sets of companies working together are not merely one way. Many of Jordan’s smaller enterprises already have much to offer.
They may, for example, have unique insights into local markets and customer needs, enabling them to develop tailored products and services to local markets or provide innovative ideas for customers further afield.
This could give LEs making use of this local resource a competitive advantage over other businesses in their sector.
Indeed, Jordan is no stranger to entrepreneurialism. The country ranked third in the MENA Global Innovation Index in 2021.
A more reliable source of goods and services in times of crisis
There are other benefits to LEs of working with local suppliers. One of the most significant is that partnering up with smaller businesses on their doorstep as part of a CER initiative helps to reduce their reliance on the kind of long-distance supply chains that proved so vulnerable during the recent Covid crisis.
Environmentally, meanwhile, reliance on a more localised supply chain can also dramatically reduce an organisation’s carbon footprint. Corporations are paying ever more attention to the impacts that their flow of raw materials has upon the planet, and by sourcing local supplies these can be minimised.
This aligns with our commitment to supporting green growth in the region. Leaders International are especially drawn to green businesses and carbon offsetting initiatives and are keen to help businesses of all kinds to transition to more environmentally friendly business practices.
Additionally, when a large enterprise does commit to CER, this often helps to support the creation of jobs and accelerate economic development in the communities where they operate.
When polled by Leaders International, large businesses in Jordan already endorsed CSR principles of this nature, with no less than 95% expressing the importance of supporting MSMEs – as well as providing training and education.
A boost to the UN's Sustainable Development Goals
When an organisation of any size commits to a CER programme such as the Corporate Entrepreneurship Responsibility Alliance, it not only demonstrates a willingness to support and develop the local community but to align with the UN’s Sustainable Development Goals (SDGs).
A total of 17 goals have been identified, and CER schemes help businesses to address many of these.
By working with local suppliers and entrepreneurs, business enterprises can:
- Develop sustainable production patterns.
- Reduce inequalities within countries.
- Reduce environmental impact.
- Support economic development in local communities.
Leaders International is committed to helping LEs operating in developing countries prioritise social and environmental responsibility, promote sustainability, and support local development.
Would you like to work with Leaders International on a CER project in your region? Contact us to find out more about our partnerships and programmes.