The future of globalization and its impact on SMEs

Author: Kangxin R

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ABSTRACT:

The global economy is undergoing a period of significant change, leaving behind a seemingly stable model of global integration to give way to a period filled with uncertainty and new adjustments in international relations. This article analyzes how this transition is occurring, paying special attention to how it affects and will affect Spanish Small and Medium-sized Enterprises (SMEs). It examines the current market situation, which shows a slowdown in global growth and a resurgence of policies that protect countries, such as increased tariffs, which remind us of times when international trade was less open.

Amid these changes, it delves into how recent political and military events—such as the trade war, the conflict in Ukraine, and other tensions between countries, in addition to the consequences of the pandemic crisis—are accelerating this process of moving away from globalization or, at least, away from a certain economic interdependence between countries. These factors not only generate uncertainty and abrupt changes in markets, but also affect supply chains worldwide, forcing SMEs to rethink how they source their materials and distribute their products.

The paper also analyzes how regionalization is emerging as a strategy to address the fragility of international connections, promoting the development of closer and more resilient business clusters. Furthermore, it highlights the importance of sustainability, in line with the objectives of the 2030 development plan, not only as an ethical obligation but also as a way to differentiate themselves and become more competitive in this new global scenario. It argues that, despite the challenges this transformation brings, Spanish SMEs have the opportunity to innovate, open up to new markets, and leverage emerging technologies to create value and remain relevant in an increasingly fragmented and constantly changing world, where speed and the ability to adapt will be essential for success.

1. INTRODUCTION:

In recent years, globalization has really changed the global economy making alliances or market liberalization. It created a world where trade borders are fuzzy and markets are linked on a larger scale. The rise of multinational companies, more international trade, and tech advances all are responsible for shaping the economy and business around the world. In Spain, especially, small and medium-sized companies (SMEs) constitute a large part of the business scene, and while globalization offers some great opportunities and advantages, it also brings challenges that we need to face.

These days, companies have to deal with a ton of competition in diverse markets, which means they have to adapt to stuff like going digital, reaching international customers, and managing workers on a global scale in order to make a difference. On top of that, they face issues like tighter profit margins, the need to constantly innovate, and keeping up with international rules to stay afloat.

Observing this economic situation, there’s a lot of talk about what the future holds. Some experts think that even though a few countries are moving toward protectionism, globalization isn’t going anywhere—it’s just changing. This phenomenon is also an opportunity for new ways of working together and the rise of digital economies, which keep things connected even when there’s political tension. Other experts warn that recent crises, like COVID-19, commercial war and trade disputes, have shown weaknesses in the global system that could influence the supply chains and a comeback of more isolationist policies. So, while globalization probably won’t disappear at all, it might focus more on sustainability and resilience.

2. GLOBALIZATION IN TRANSITION

2.1 THE RISE OF DIGITALIZATION

Today, globalization has taken a fresher and more dynamic direction, moving away from the traditional free trade model we once knew. This is largely due to digitalization and new technologies, which are creating completely different ways of connecting between people, companies, and countries. The way we interact and do business is no longer the same, and this is opening up a host of opportunities and also posing new challenges. Even with rising geopolitical issues, these trends show that globalization is evolving to fit the times.

Digitalization is a huge driver of this new chapter in globalization. With cross-border e-commerce, businesses can reach customers around the world without needing a physical presence. Today, platforms like Alibaba and Amazon have opened many doors for small and medium-sized businesses to access international markets much more easily. In the past, crossing trade borders could be complicated and fraught with obstacles, but now those barriers have been considerably reduced. Furthermore, digital payment services like PayPal and Revolut have greatly facilitated international transactions, making everything faster and more secure. Thanks to this, more and more people and businesses can participate in global trade without so many complications (Opertti, F. 2019)

In addition to online commerce, digital platforms are becoming ideal places for people to share culture and professional ideas. For example, LinkedIn facilitates connections between professionals and companies around the world, allowing them to exchange knowledge and collaborate regardless of their location. These channels also support global education by providing virtual courses and multilingual content, making knowledge more accessible to everyone.

Meanwhile, emerging technologies like artificial intelligence and blockchain are shaking up traditional global systems. These innovations improve how supply chains are managed, make international transactions more transparent, and speed up access to global data. Although different regions are advancing at different rates in adopting these technologies, it’s clear that their capacity to strengthen global connections is enormous, and we are still discovering what that means for the future (MCFI, 2019).

Despite the obstacles posed by geopolitical issues and protectionist policies, digitalization and new technologies continue to demonstrate that they can adapt and succeed in different environments. For example, in Spain, embracing digital innovation is key to its innovation, and in 2024 it achieved a score of 145.4%, well above the EU-27 average. This shows how the country is leveraging digital growth to enhance its international presence and stay in the mix.

The graphs showing the increase in internet usage from 2000 to 2022 also support this. Greater connectivity has been critical for businesses to reach customers around the world through e-commerce and digital platforms. Furthermore, Europe’s digital infrastructure and skills goals also reflect progress in areas such as 5G, cloud services, and digital training. All of this makes it clear that digitalization is a central part of how globalization is changing and growing.

2.2 REGIONALIZATION VS. GLOBALIZATION

The way regionalization and globalization interact is significantly changing the economic landscape, especially for small and medium-sized businesses. Increasingly, we see local communities and governments gaining influence, taking on a more important role than the global focus we had before.

This change is largely due to trade agreements such as the USMCA, which unites Mexico, the United States, and Canada, as well as Mercosur in South America and the European Union. These pacts seek to strengthen trade and cooperation among member countries. Furthermore, tensions between major powers have led to the emergence of trade barriers and an increase in protectionist policies, which has accelerated the regionalization process (Ravelo, A., 2023) (Prasad, 2018).

For small and medium-sized businesses, this situation can become an opportunity to grow more steadily in their local environment, taking advantage of supportive policies and facing fewer obstacles. However, they also face difficulties accessing markets outside their region, which can limit their expansion and growth globally.

Many SMEs depend on innovation to compete, but with possible restrictions set by regional groups, they might struggle to expand beyond their local areas. Plus, increased competition within the same region could push these businesses to find new ways to grow quickly.

That said, small and medium-sized businesses still have resources to move forward, such as digital technology and online commerce platforms, which allow them to overcome physical obstacles and reach customers worldwide. The key may lie in combining regionally focused strategies with global efforts so they can grow in a balanced and sustainable way.

2.3 SUSTAINABILITY

Today, being sustainable is no longer just a good intention or an act of goodwill; it has become an essential part of how businesses and countries operate.This shift is driven by social pressure and the need to address issues such as climate change and biodiversity loss. Many companies are adopting green practices not only to comply with laws, but because they truly believe in building a better future that is more consistent with what our world needs today.

Businesses of all sizes are changing how they work by bringing environmental and social responsibility into their everyday actions. One important area they’re focusing on is their supply chains, which are central to their operations. More companies are trying to cut their carbon emissions, use recycled materials, and save energy at every step, from getting raw materials to delivering products to customers. Technology is helping companies monitor their environmental impact and make more responsible decisions to protect the planet (Soziable, 2024).

Recently, new international laws, such as the European Union’s human rights and sustainability regulations, are prompting organizations to review and reduce the negative effects they may have on communities and the environment. Although large companies tend to lead the way, small and medium-sized businesses are also making significant progress. They certainly face challenges, such as a lack of resources or technological expertise, but many of them are seeking partnerships with larger companies or participating in government programs to get ahead. By implementing practices such as reducing waste and using renewable energy, they not only improve their image but also become more resilient and competitive in a market that increasingly values sustainability (Soziable, 2024).

The accompanying graph shows data on how Spanish companies are committed to the Sustainable Development Goals of the 2030 Agenda, highlighting this trend. For example, 70.55% of businesses have introduced flexible work options (SDG 8), which helps create fair working conditions. Similarly, 63.30% have equality plans (SDG 5), showing a dedication to social fairness. Digitalization has improved in 50.72% of companies (SDG 9), helping them track and manage their environmental impact, pushing towards a more circular and efficient economy. Furthermore, 43.83% have adopted circular economy practices (SDG 12), and nearly half (46.67%) are using renewable energy (SDGs 7 and 13), meeting market demands and global goals (Soziable, 2024).

In Spain, a recent survey by the UN Global Compact found that seven out of ten Spanish companies have their own plans to become more sustainable. In fact, 84% of these organizations believe that sustainability gives them an advantage over the competition. Small and medium-sized businesses, which are crucial to the Spanish economy, are also working to become more environmentally responsible. It’s good news to see that 88% of companies in Spain are aware of the 2030 Agenda, which shows that more and more companies are investing in green skills and even creating specific positions focused on sustainability (Soziable, 2024).

2.3.1 SOM Care

SOM CARE is an example of a Spanish SME in the telecommunications and information technology sector that has decided to take a step forward in its commitment to a more sustainable future.

In fact, when we think of the Sustainable Development Goals (SDGs), the first thing that comes to mind is large corporations or governments. However, examples like SOM Care remind us that SMEs are also an essential driver of this transformation.

Its care management platform for seniors and dependents reflects this deep connection with several of the SDGs. This is not just a matter of corporate responsibility; its very mission contributes to social well-being. For example, in its commitment to health and well-being, which is its core objective, SOM Care works to improve the quality of life of seniors and vulnerable people, using technology such as the Temi social robot or the Maia device to reduce loneliness, a problem that seriously affects mental and emotional health. Also, these solutions make health monitoring easier, allowing professionals and caregivers to make more informed decisions and respond quickly to risk situations, which means, resulting in closer and more effective care.

As an innovative company in such a dynamic sector, SOM Care also embodies the importance of technology in creating more resilient and inclusive social infrastructures. Its robotic telecare solutions are a clear example. It optimizes the resources of the social and healthcare system and makes it more accessible to those most in need, helping to reduce inequalities. Because, precisely, one of the values it promotes is the autonomy and safety of older adults, allowing them to age in their own environment with dignity, in more cohesive and sustainable communities.

For an SME like SOM Care, aligning with the 2030 Agenda is not just a declaration of good intentions, but a real challenge and a unique opportunity for growth. Implementing metrics to measure impact, maintaining that alignment in each innovation or collaboration, and ensuring that its expansion is sustainable are challenges it faces with determination. The advantage of being a small,

local company is that they can adapt quickly, listen to their users, and adjust their solutions in real time, making their contribution to sustainability authentic and effective.

2.4 ¿WHAT IS HAPPENING WITH SUPPLY CHAINS?

We’ve experienced some very intense times recently, such as the COVID-19 pandemic and various conflicts around the world that have disrupted supply chains everywhere. All of this has forced companies to deeply reflect on how they conduct their work. Now, there’s a greater focus on being more flexible and having backup plans in place to address any unexpected issues that may arise. It’s not just the big players feeling the heat; small and medium-sized businesses are facing both challenges and new chances as well (Finegan, N. 2019).

Being resilient—basically, the ability to bounce back from setbacks—has become super important for managing supply chains. Companies are exploring ways to strengthen their operations, like moving some processes closer to home, keeping extra stock, and using tech that can predict issues. These steps help minimize the setbacks from disruptions and let companies keep running and growing, even when things get shaky (Finegan, N. 2019).

Another key strategy is to diversify suppliers and regions to cut down on risks. Many businesses are stepping away from depending on just one supplier or market. Instead of putting all their eggs in one basket in Asia, some companies are looking to Latin America, Europe, or Africa to create a more balanced supply chain that can better withstand crises.

In this fast-paced, globalized world, supply chains face constant changes in costs and demands. Continuing with old methods no longer works. To stay ahead, companies are investing in technology that gives them greater control and insight into their logistics. The most modern platforms allow real-time monitoring of the entire process, helping to detect potential problems before they affect customer satisfaction. Tools such as artificial intelligence and predictive analytics help anticipate demand and assess risks much faster, saving hours of analysis. Additionally, IoT sensors monitor important conditions, such as the temperature of delicate products, to ensure everything arrives in perfect condition (Finegan, N. 2019).

Automation has also changed the game. Whether through robots in warehouses or smart delivery routes, it helps companies become more efficient without having to hire many extra people. But not

all companies have the option of implementing these technologies on their own, so many are looking for digital partners who will allow them to access these systems without overloading their operations.

The shopping habits of consumers have shifted too. People are now looking for more than just low prices and fast deliveries. They want reliable shipping times, clear info on costs, and traceability of products—like where they come from and how they were made. These factors are playing a big role in what people decide to buy.

In a world where disruptions are just a part of life, being proactive, communicating well, and staying flexible are the keys. Companies need to diversify their supply sources, keep visibility along the supply chain, prepare for emergencies, and build strong relationships with their logistics partners.Sustainability and responsibility in the way we source our products are increasingly important, because customers want to know where what they buy comes from and how it is obtained.

International trade isn’t going away, but what really makes the difference is how we manage it. Companies that create flexible supply chains, with good partners, and using integrated technology will be able to better adapt to changes and gain the trust of their customers in an increasingly competitive market.

Taking a more innovative and forward-thinking path not only helps reduce risks but also opens up opportunities to add value, improve the customer experience, and ensure lasting growth. Small and medium-sized businesses in particular can leverage these technologies to become faster and more competitive. Using things like real-time tracking, artificial intelligence, IoT sensors, and automation, they can make their logistics more efficient, save money, and offer more reliable service to their customers.(Finegan, N. 2019).

3. CHALLENGES FOR SPAIN’S SMEs IN RELATION TO THE GLOBALIZATION IN THE NEW DIGITAL ERA

The future of Spanish SMEs in globalization is dependent on their digital transformation which also incorporates how these companies will operate, interact with customers and also manage their internal processes. Digitalization is key in today’s society to survive due to the fact that it gives the companies opportunities to increase efficiency, improved productivity and access to new market opportunities to expand their business and also to make Spain a country where you can invest by facilitating deeper data analysis, better decision-making and streamlined operations.

To improve the Spanish situation where there is insufficient financing for digital transformation and not to mention a lack of digital skills among employees and students, the government has initiated a strategic plan as observed in: “The SME Digitisation Plan 2021-2025 on Spain’s broader Digital Spain 2025 Agenda” in order to mobilize significant public and private investment.

The SME Digitisation Plan is done by several key action areas in below (Gobierno de España, 2025):

• Basic Digitalization for SMEs → An example that was mentioned in the plan was the Kit Digital Program which provides subsidies to small businesses, micro enterprises and also self-employed individuals in order to implement digital solutions in different areas like electronic sales, customer management, internet presence, etc.
• Support for Change Management → The goal is to train and mentor management teams and employees within SMEs to teach them with the necessary skills in the digital competencies. “Digital Generation SMEs” is an example that offers training to improve productivity and opportunities for growth and internationalization.
• Disruptive Innovation and Digital Entrepreneurship → The main purpose is to get involved and get used to advanced technologies such as Artificial Intelligence, the Internet of Things and Big Data.

It is a good thing that the government is able to give digital skills training to overcome new era’s challenges and enhance the competitiveness on a global scale (Mochón, F. 2006).

4. CURRENT MARKET SITUATION

In the way of future perspectives, there is a percentage that globalization might end and there will be a renaissance of the protectionism and nationalism that redefine international trade and the global division of labor.

Contextualizing world history, for the past eight decades there was a constantly evolving phenomenon of globalization which was characterized by increasingly free international trade and the unrestricted flow of capital (Nieves, V. 2025)

However, we are entering a new economic era with different challenges to face due to the fact that the “slow globalization” of these recent years has reached an irreversible turning point with the intensification of tariff measures by potential countries such as the United States.

The consequences and variances which the globalization has to face are depending on several factors:

• Increasing Tariffs → In the new commercial war, the United States’s effective tariff rate on imports has surpassed the levels reached during the Great Depression. In consequence, the global tariffs have been boosted by the response of the major trading partners creating political uncertainty.
• Impact on Growth and Investment → The tariffs are a negativa act to the supply shock reducing aggregate productivity, slows economic activity and increases costs and prices. By reducing competition, tariffs erode incentives for innovation and encourage rent-seeking which makes companies face uncertain access to key inputs that will paralyze operations, reduce investments, and cut costs.
• Disruption in Global Supply Chains → The reason why the tariffs are more disruptive is because of the density of current trade (intermediate inputs cross borders several times before becoming the final product).
• Financial and Geopolitical Uncertainty → This unpredictability can tighten financial conditions and hinder economic activity. The IMF has cut global growth forecasts for 2025 confirming that “tariffs hurt all countries”.
• Dollar Fluctuation → There are also changes in the monetary sphere that have the tendency for the greenback to depreciate because of the political unpredictability, weaker growth prospects and a tightening in global demand for dollar-denominated assets.

Despite this phenomenon that is happening, the growth prospects can improve if the countries relax their current trade stance and forge new agreements such as addressing domestic imbalances and increasing productivity through infrastructure investment for Europe, strengthening support for domestic demand for China and advancing fiscal consolidation for the United States (Nieves, 2025).

We can observe in figure 5 the rise of tariffs again in recent years, marking a shift in the way the United States approaches international trade. Since 2017, trade policy has taken a more protectionist direction, as if seeking to better protect its own interests, following the path set by the Trump administration and, to a certain extent, continuing that trend.

This increase in tariffs also challenges the idea of borderless globalization. Before, it seemed that all countries were connected in a kind of global network, but now, by placing obstacles in the way, it seems we’re moving back toward a kind of regionalization. Companies are forced to consider changing their production locations or finding new ways of working to reduce their dependence on countries now facing these new taxes.

On the other hand, these tariff increases also affect us in our daily lives. The products we import become more expensive, and this is reflected in consumers’ wallets. Furthermore, companies that rely on components from other countries now face less competition, but at the same time, they face greater difficulties staying afloat in an increasingly complicated market.

And we mustn’t forget that all of this can trigger a chain of retaliation. When one country raises tariffs, others respond in kind, unleashing a kind of economic war that can slow growth and jeopardize the stability of global trade. In this situation, everyone seems to be walking a tightrope, seeking to protect their interests, but without knowing what will be best for everyone in the long term. (Real Instituto Alcano, 2025).

5. EXAMPLE OF SPANISH SUCCESSFUL BRAND

A successful case of globalization in Spain is Chupa Chups. The story of this company show how a company can grow globally and what this can be a model for the SMEs. Chupa Chups started as a small project to become recognized in the confectionery industry which highlights the importance of how innovation and a good strategy can help a brand differentiate itself and stay at the top. Un buen ejemplo de éxito en España es Chupa Chups.

Chupa Chups success and development is due to different factors related to globalization that are able to take advantage. The company itself was founded in 1958 by Enric Bernat who decided that the company should focus on only one product: candy on a stick in order to achieve greater efficiency and reduced costs (Calvo, J & Vicario, R, 2023).

The choice of just one product is a strategy that gave them a solid foundation in the local market that afterwards helped them expand worldwide. Also, they have invested 20% of their revenue in marketing and advertising because Chupa Chups believe that there are consumer with similar tastes in different places, which was a great move due to the fact that they adapted their way to communicate to consumers (advertising campaigns) to different cultures while maintaining the brand’s spirit, which reflects the idea of a “universal consumer” (Leal Martín, S, 2003).

The fact is that building a successful and recognized brand image is essential to overcoming cultural barriers in order to enter new markets. Moreover, the company opened factories in emerging countries such as Russia, China, Mexico, and Brazil which shows their efforts to move resources around the world. Not to mention that forming alliances with multinationals like PEPSICO and CADBURY gives them the opportunity to improve their distribution and marketing (Leal Martín, S, 2003).

This example illustrates the difference between internalization and globalization, a concept important for SMEs in the future.

Internationalization means expanding operations beyond the country of origin, whether through exports, alliances, or entering specific markets. For Chupa Chups, this started in 1963 with its arrival in France and then in other countries, focusing on promoting its product in developed markets while maintaining production in Spain (Leal Martín, S, 2003).

Globalization, on the other hand, as mentioned before involves integrating operations all over the world but in a focus on streamlining the value chain and standardizing products and processes. For Chupa Chups, this became a reality by opening factores in key countries since the 1990s, bringing production closer to their consumers (Leal Martín, S, 2003).

The Chupa Chups example can be a model for SMEs to become a major global player with the right strategies. For instance, SMEs might be focusing on a quality product and a specific niche that are able to conquer the international market. Also, the investment on branding and marketing is

important, where dedication a significant portion of time in global campaigns is key in a competitive market.

Not to mention the ability that a company can have to adapt their purpose to the different cultures and how they can manage to choose an innovative strategy to make a great impact on their consumers. Furthermore, in today’s digital environment, tools such as e-commerce and digital marketing make it easier for SMEs to expand internationally.

6. CONCLUSIONS

The path of globalization is not coming to an end quickly, but is changing profoundly and in a more complex way. As we have seen, the future could be very diverse: on the one hand, it could continue to advance with greater integration, thanks to strong agreements and ever-increasing digitalization; on the other, there could be a tendency for regions to become more independent, creating economic blocs or even, in the worst case, a fragmentation marked by tensions and conflicts.

For Spanish small and medium-sized businesses, these changes do not have to be an insurmountable threat; rather, they represent a real opportunity. Digitalization, with tools such as artificial intelligence, blockchain, and the Internet of Things, can be a huge boost, helping SMEs eliminate traditional barriers and compete in the global market with greater agility and efficiency. Furthermore, issues such as sustainability and the goals of the 2030 Agenda are no longer just nice ideas; they have become important pillars for opening new markets and making companies more resilient and with a better reputation. The trend toward regionalization and the reconfiguration of supply chains also offers our SMEs in Europe the opportunity to become key suppliers in shorter and more secure networks.

In my point of view, the most important thing for SMEs is their ability to adapt and reinvent themselves. They must invest in learning new technologies, using digital tools, diversifying their products, markets, and channels, and strengthening their supply chains with efficient management and strategic alliances. Although uncertainty will always be present and we cannot predict exactly what challenges trade wars or economic crises will bring, the important thing is to continue fighting so that our companies not only survive, but can make a difference in the world and continue to grow as a society. Governments also have a lot to do in this regard, helping to foster digitalization, facilitating access to new technologies, and promoting international agreements that support the integration and sustainable growth of SMEs in this constantly changing world. Globalization is transforming, and with it, new opportunities arise for SMEs to define their own path to the future.

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