Abstract

In today’s increasingly interconnected global economy, small and medium-sized enterprises (SMEs) face both significant challenges and unique opportunities for growth. One of the most strategic avenues for upgrading SMEs lies in their integration into global value chains (GVCs), enabling access to international markets, technology, and knowledge networks. However, successful integration is not solely dependent on operational efficiency or competitive pricing—it is also shaped by the ability of SMEs to navigate complex cross-cultural negotiations that often precede or accompany such entry into global networks.
This paper examines how cultural dimensions influence international business negotiations and, consequently, the capacity of SMEs to upgrade through GVC participation. Drawing upon Hofstede’s cultural dimensions theory, Hall’s context communication model, and Gelfand’s tightness-looseness framework, the study explores how differences in power distance, individualism vs. collectivism, time orientation, and communication styles affect negotiation outcomes between SMEs and foreign stakeholders. Particular emphasis is placed on the role of cultural intelligence (CQ) in enabling SME managers to adapt and thrive in diverse negotiation environments.
Through a multidisciplinary approach combining international business, cultural studies, and supply chain theory, this paper argues that SME upgrading requires not only internal capability development but also external cultural adaptability. Case studies from Asia, Europe, and Latin America are used to illustrate how culturally sensitive negotiation strategies have led to successful value chain integration and long-term partnerships.
The findings suggest that fostering cross-cultural competencies in SME leadership is just as critical as investing in production or digital capacity. Ultimately, global competitiveness depends not only on being part of the value chain, but also on understanding the values that drive it..