Entrepreneurship is typically defined as "Start up new business". There is reasonable argument that startup lead to improve GDP by providing employment and productivity. However, startup can be converted into SMEs with the passage of time, hence SMEs can be considered as end results of entrepreneurship. To put it into another way, Initially an entrepreneur starts his business, with the passage of time, he hire more people and expand the business i.e. become SME later. Thus, SMEs are persistently struggle for providing employment and contribute to economy and GDP growth. 

That's why Govt. shows interest in SMEs bcs  they play significant role in country growth. In addition, unlike large firms, SMEs can be easily tackled. They are more concern with change and strategic postures. If you look the ratio of SMEs across the world, almost more than 90% of businesses are SMEs in each country. Their contribution is expressed more than 30%. 

For more detail, you can visit World Bank Report "Doing Business" and the report of Business index.

Regards. 

Hi, 

Every surviving  business ... That's right. 

It is generally accepted to believe that entrepreneurship is the engine of modern economic development in a global, regional and national perspective, in view of the problems and tasks it solves.

The growing role of entrepreneurship in regional development, in inter-

business relations and the globalization of production and services

proves its attention to it from national and international institutions and organizations.

In Europe there is the European Charter for Small Enterprises, according to which SMEs are the backbone of the European economy. The Charter postulates that the best possible environment for the development of small businesses and entrepreneurship needs to be created.

See the book of Barringer. He said that approximately export and employment is based on the SME's.  

Thank you so much for this important information about the role of SMEs in economics Mr.Shah, Mr.Toshkov and Mr.Altaf.

Best Regards,

Zijad

Entrepreneurship and SMEs are major creaters of employment opportunities. Rather than job seekers, entrepreneurs become employment providers. But this has to be taken with a pinch of salt as all entrepreneurial ventures may not survive and thereby are associated with employment risk as well.

I am focussing on a sub-set of SMEs called the SMPs - the Small and Medium-sized Practices of the professional accounting firms.

Using a simple example of East Africa (Kenya, Uganda and Tanzania), there are about  1000 SMPs each employing on average 10 people in the firm. That brings employment to 10,000. However, each of the Big-4 (Deloitte, EY, KPMG and Pwc) has about 100 employees; which is equivalent to about 1,200 in the three countries. And whilst the Big-4 have obviously remained stagnant in terms numbers, the SMPs have kept growing and doubled in the last decade; implying that they have the greater potential to create employment opportunities, especially for the new graduates and less experienced upcoming professional accountants. I believe the same could be true for SMP law firms.

The SMEs play definitely an important role in the economic development of the European countries and of course in my country-Bulgaria. They have their contribution to the creation of new job positions. But at the same time the decrease of unemployment is not an easy task and it can not be solved only by the SMEs sector. There is a complex of factors impacting the unemployment curve but  one of the strongest drivers in the process of unemployment decrease are: 1. A fast growing economy which is a result of investments incl. foreign, and a high labour productivity.

and 2. The availability of high qualified work force/human resources which in many Eastern-European countries is decreasing due to  the emigration of big educated young people. But at the same time the low productiveness in Bulgaria and the lack of innovations in SMEs and other companies are a big obstacle for the economic development and the unemployment decrease.

The Importance of SMEs

There is no uniform and widely accepted definition of what constitutes an SME. The standards vary from country to country. Typically, SMEs are defined by an upper limit in the headcount and/or the sales revenues. An agreement is emerging, particularly within the United States, to classify a company as small if it has less than 50 employees and medium if the headcount is below 250.

Regardless of its definition, we know that the overall impact of SMEs is overwhelmingly large. Uniformly, 95–99% of the total companies in any country are SMEs; they employ between 40% and 60% of the workers; and they contribute between 40% and 50% of the GDP. In addition, they play a central role as a leading source of innovation and creativity. For these considerations, we feel the SMEs deserve special treatment.

Main Challenges Facing SMEs

The major issue regarding the strategic positioning that a firm needs to adopt is how an SME, which does not have access to major economies of scale, could compete with those who do. The answer resides in two very critical qualities that the cost infrastructure of a successful SME strategy should possess: modularity and scalability. Modularity means that we are able to operate extremely effectively with small quantities, which implies that we do not need large economies of scale to be productive. Scalability means that we can expand the volume of our operations by reproducing the same successful modular format, while maintaining our cost-effectiveness without constraining our possible growth.

About My Training Program for SMEs: Teaching the Most Advanced Business Strategy in the World - The Delta Model: Putting customers before Products:

Strategy has often been defined as a way to achieve sustainable competitive advantage. But that can be dangerous because it concentrates so much of your attention on competitors that you tend to emulate them. As professor Hax puts it “Imitation leads to sameness, and sameness never leads to greatness”.

In today’s changing business environment, new technologies have created a degree of interconnection that allows customers to be treated in a singularly individualized way. As a leader, your strategy has to evolve. You have to ask yourself:

• What new steps can we take to achieve superior economic performance?

• How do we create value using unique and differentiated value propositions to bond more closely with our customers?

• How do we capture new customers through the collective capabilities of our extended network of suppliers, customers, and complementors – companies that enhance our own product and service portfolio, and lead us to new sources of profitability?

• How do we use the core competencies we have as an organization to help our customers achieve a better market position?

Upon request, I will send you the Two-Day Delta Model Training Program and the price for your review. My email address is: [email protected]

Thank you so much for this information about the role of SMEs in economics for all of you.

Best Regards,

Zijad

In the US, SMEs create some 90% jobs. In China, the figure is equally high but not precise. I can say with confidence that it is more than 65%. Now, does SME development contributes to GDP, jobs and other economic indicators? Yes.

You can see easily by comparing countries with policies that support SMEs and those that lag. The former are developed countries and the later are laggards. Thus, your question should address the policies or institutional structure rather than asking whether they are positive or not.

Best