There are political decisions and diversification failures.

Small businesses do suffer from two things:

1) Efficiency improvement pressures from TIER-1 customers, TIER-1 customer are least bothered for the development of small& Tiny suppliers.Small suppliers keeps on sitting for hour together at customers receiption to meet the customer's officer. Customer need to support SMEs on technological, commercial and training aspects.

2) Government policy should cover SMEs for clusterised programs in SMEs vicinity for resolving the techno commercial issue and R&D support

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. This gives you a sense of what kind of organization we will be addressing in this international executive seminar.

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.

A large majority of SMEs are unable to gain from the adoption of sustainable practices and greening efforts. These initiatives prove to be counterproductive to their growth . An holistic approach demands that we include this too in what has been discussed so far. Sustainability initiatives introduced by government agencies locally or demanded by the overseas buyers favours large corporations.

Clifford,

Very well put

Governments must be very cognizant of these scale-based inhibitors and actively act to implement countervailing measures to level the paying field for SME

The attached paper share some other policy perspectives aimed in favour of unshackling SME's

In the context of labour marker a suitable mantra for SME's would be "flexibility with social protection". 

Flexibility covers a wide range of issues including:

a)     Labour force training should be flexible in its delivery and not be rigidly tied to historical sectors and industries.  Training content and packages should rather be dynamically adjustable morphed to suit emergence of new sectors and industries.  Responsive repackaging should be a key feature

b)    The picking of winners and locking in / redirecting training resources to those ends is to be discouraged.  The identification of areas of comparative advantage and repurposing  training resources to those ends is also to be discouraged.  Preference was for flexibility to be able to match market demands.  Where appropriate time-limited Tax Incentives could be dynamically deployed,  to encourage training in emergent new sectors.  There is a danger of having these incentives becoming institutionalised and remaining on the books way past their useful and value-enhancing period.  Constant policy and legislative re-calibration therefore required.

c)     Certification and training of the labour force should seek to produce an outcome where human talent is flexible and have the individual be imbued with the capacity and capability to respond to varying job opportunities that will emerge over their lifelong working lifetime

d)    Rigidity in Hire and Fire practices should be reviewed and adjusted to build in higher levels of flexibility in order to allow for easy and smooth movement of talent dynamically between firms and sectors, reducing stickiness and enhancing responsiveness

https://www.researchgate.net/publication/299747565_Towards_a_talent-driven_outward-oriented_globally-competitive_SME_framework_Discussion_Paper

Technical Report Towards a talent-driven outward-oriented globally-competitiv...

Clifford,

Some policies specific to SME development are in report below

https://www.researchgate.net/publication/305687139_Priority_policy_recommendations_for_transforming_individual_productivity_and_SME_competitiveness_in_Jamaica

Technical Report Priority policy recommendations for transforming individual ...

Thank you all for your answers, but I am still at a loss.  Despite almost a century in the U.S. of modest efforts to prevent restraint of trade, such as mergers and acquisitions that create excessive market power, few studies have examined the broader range of actions that give big business an unfair advantage over smaller competitors.  If a few companies come to dominate a market because of economies of scale, that concentration may be inevitable.  But since diseconomies of scale (problems of coordination) ordinarily offset economies of scale, there is no reason to assume that concentration should be the normal condition in any industry.   Yet many industrial classifications appear to have significant barriers to entry and/or survival.

I discovered that the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs of the European Commission monitors the effects of regulatory compliance and tax compliance on SMEs, but I could not find anything on their website about differential effects.  In the United States, the Office of Advocacy of the Small Business Administration also investigates compliance costs, but not on a differential basis.  The problem may simply be the lack of any methodology capable of answering the question.  I read somewhere that the European Union is committed to making the economic environment either neutral or favorable to small businesses.  But wishing to do so or claiming to do so are not the same as accomplishing a goal.   

Susan E. Dudley, former administrator of the Office of Information & Regulatory Affairs, Office of Management and Budget (United States) , in a co-authored book, Regulation: A Primer (https://regulatorystudies.columbian.gwu.edu/sites/regulatorystudies.columbian.gwu.edu/files/downloads/RegulatoryPrimer_DudleyBrito.pdf), points out that large companies routinely lobby for regulations that raise barriers to entry to potential competitors.  As an advocate of the “public choice” school of thought, she seems to believe that all regulation is introduced with this purpose in mind.  For example, she points out that the primary financial backers of campaigns to raise the minimum wage are large retailers who expect that legislation to put less heavily capitalized competitors out of business.  That seems plausible on its face, and it provides a good starting point for further research.  A minimum wage law is a perfect example of a seemingly neutral law that has differential effects.  The cost of compliance with the law does not show up in any normal study of regulatory compliance costs because the effect is indirect, as are all taxes that fall primarily on labor.  I suspect that the VAT and general sales tax have a differential effect on small business that is similar to the effect of minimum wage laws. 

Looking at the academic literature on small business, it seems that the most closely related question that has been studied extensively is Gibrat’s Law, which posits that the size and growth rate of a firm are not correlated.  The empirical evidence is not consistent, but it seems that generally the growth rate of small business is greater than for big business.  This has some relevance, but it does not address barriers to entry and the problems faced by potential firms.  In addition, most studies ignore external conditions, including government policies.  What concerns me most, however, is that the question of differential effects of policy may not be testable with econometric techniques, since policy is generally a constant, not a variable.  If a relationship is “unreal” or at least unproven unless it is statistically verified, there may be numerous important relationships that will remain forever invisible.  Meanwhile, society will suffer for lack of knowledge about what makes fair competition possible.