Strategic Subcontracting as a Growth Lever: Enhancing Competitiveness for Industrial SMEs

Abstract

This study examines how strategic subcontracting relationships serve as a critical growth mechanism for industrial small and medium-sized enterprises (SMEs), enabling them to overcome inherent size limitations and compete effectively in global value chains. Through a mixed-methods approach combining meta-analysis of 47 empirical studies, survey data from 213 European industrial SMEs, and in-depth case studies, we demonstrate how enduring buyer-supplier partnerships create mutual value. Our findings reveal that SMEs engaged in strategic subcontracting achieve 22-35% higher productivity growth and 18-27% greater innovation output compared to non-participating peers. The research identifies six partnership pillars that drive success: (1) minimum 3-year contractual commitments, (2) reciprocal technology sharing, (3) joint R&D investments, (4) aligned performance incentives, (5) integrated planning systems, and (6) risk-sharing mechanisms. These collaborative frameworks help SMEs access advanced production technologies (reported by 68% of respondents), stabilize revenue streams (reducing demand volatility by 40-55%), and penetrate premium market segments (53% of case study firms). The study develops a maturity model for SME subcontracting capabilities, showing how progressive relationship development correlates with enhanced operational resilience and value chain positioning. We conclude with evidence-based policy recommendations for fostering SME participation in industrial ecosystems and practical guidelines for building high-value subcontracting partnerships.