On the one hand, increased product market competition
may cause SMEs to reduce their price mark-ups. On the other hand, the “learning by competition” analogy suggests
that the pressure to survive may speed up the adoption of new technologies and thereby enhance the productivity of
SMEs. With regard to the labour market, higher wages paid by multinationals and exporters may have spill over
effects to other industries, resulting in an increase in the cost of production for SMEs (Asiedu and Freeman, 2007:
368).