The Lisbon European Council of March 2000 set the European Union a new strategic objective for the coming years:to become the most competitive and dynamic knowledge-based economy in the world, capable of sustained economic growth with more and better jobs and greater social cohesion. It is considered that Europe’s competitiveness and economic progress is strong dependent on its small and medium-sized enterprises, which are the key-source for job creating as well as for searching for new business ideas and innovative solutions, its main driver for entrepreneurship. For this reason, the European Council endorsed the “think small first” principle as one way to progress towards the Lisbon objectives. The idea of the small business has captured the imagination of the public and politicians over past years. They agree in the point that to meet the challenge of new integrated Europe requires a better business environment within the Internal Market, including the lightest possible administrative and regulatory burdens for small businesses and a better access to finance resources as well as creating of simple and effective legislation. It also requires a revolution in attitudes to entrepreneurship and to risk-taking processes, which will allow viewing failure as a part of experience, as an “opportunity to learn” from mistakes. They also emphasise the fact that small enterprises are normally more sensitive to changes in the business environment than large firms. They are the first to suffer if weighed down with excessive bureaucracy and creating new administrative burdens. And they are the first to flourish from initiatives such as decrease in taxation rate and promotion. My essay aims to answer the question to what extent the EU’s main market integration initiatives address the needs of SME’s and what should be done on the way to developing strong, competitive SMEs which would use all benefits from the Single European Market. It is important to define what we mean by SMEs before proceeding to answer these questions. For the purpose of this essay, SMEs are defined as non-subsidiary, independent firms, which employ less than 250 employees. We have to take into account the fact that this number may vary across national statistical systems. [...]
Table of Contents
1. Introduction
2. The Role of SMEs in the European Economy
3. Challenges and Barriers for Small Businesses
4. The Impact of the Single European Market on SMEs
5. Internalisation and Globalisation Effects
6. Governmental Initiatives and Support Policies
7. The Influence of the EMU and Single Currency
8. Conclusion and Future Outlook
Objectives and Key Themes
The primary objective of this essay is to evaluate the role of small and medium-sized enterprises (SMEs) within the European economy and to determine whether key market integration initiatives, such as the Single European Market and the European Monetary Union, effectively address the specific needs and challenges faced by these firms.
- The economic significance and contribution of SMEs to European growth.
- Barriers to survival, such as lack of financing, regulatory burdens, and limited market access.
- The dual impact of the Single European Market: competitive opportunities versus increased pressure.
- The role of EU policy and government initiatives in fostering a supportive business environment.
- Strategies for SMEs to navigate the challenges of globalisation and internalisation.
Excerpt from the Book
The small firm provides diversity in the economy through supply of a wide range of goods and services, which would be uneconomic for large corporations to provide. They allow full reign to the owner’s desire for independence, which is perhaps the main driving force for the competition.
To proceed analysing the role of the SMEs for the European economy we have to point out the contribution they make to its sustainable growth. In order to do it, it is necessary to define what we mean by ‘economic success’ and how we can measure it. The economic success of the EU is reflected in terms of economic growth in % of GDP, employment rate as well as the level of competitiveness and balance of payment. It is necessary to take into account the fact that small businesses represent the vast majority of businesses in Europe. Over 99.8 % of all enterprises of OECD area are small and medium-sized enterprises, which account for 66% of total employment and for 55% of total turnover in the EU. They are often claimed to be the major source of new jobs, new innovations and new markets. They are seen as a symbol of ‘enterprise’, which is viewed by many economists as the key causal factor in the process of economic growth as well as of social cohesion and economic mobility. They employ in average more young people, women and part-timers than large firms and consequently offer opportunities for job sharing. Besides that, SMEs promote productivity and consequently economic growth through high job turnover rates, which is an important part of the competitive process and structural change within the EU. The government realises the increasing weight of SMEs in the European economy and the pressing need to “reform policies and framework conditions that have bearing on firm creation and expansion, with a view to optimising the contributions that these firms can make to growth”.
Summary of Chapters
1. Introduction: This chapter outlines the strategic objectives set by the Lisbon European Council and defines the scope of SMEs within the European context.
2. The Role of SMEs in the European Economy: It highlights the essential contribution of SMEs to employment, innovation, and sustainable economic growth across the EU member states.
3. Challenges and Barriers for Small Businesses: This section details the critical obstacles, such as lack of capital and regulatory burdens, that hinder the growth and survival of small firms.
4. The Impact of the Single European Market on SMEs: An analysis of how market integration forces firms to adapt to increased competition and new technical standards.
5. Internalisation and Globalisation Effects: This chapter discusses how global processes change the operating environment for SMEs and the importance of cross-border expansion.
6. Governmental Initiatives and Support Policies: It examines various EU programs designed to assist SMEs in overcoming competitive disadvantages and accessing new funding.
7. The Influence of the EMU and Single Currency: An assessment of how the Euro and monetary union impact business costs, trade, and financial stability for small enterprises.
8. Conclusion and Future Outlook: This final section synthesizes the findings and emphasizes the necessity for flexible, coherent policies to support SME competitiveness in the long term.
Keywords
SMEs, European Union, Single European Market, Economic Growth, Entrepreneurship, Market Integration, Globalisation, Internalisation, Employment, Regulatory Burdens, Funding, Competition, Economic Policy, Innovation, Business Environment.
Frequently Asked Questions
What is the primary focus of this paper?
The paper examines the economic role of small and medium-sized enterprises in Europe and evaluates if EU integration initiatives effectively support their development.
What are the central themes of the work?
Key themes include the economic contributions of SMEs, the impact of the Single European Market, regulatory and financial challenges, and the effectiveness of EU policy support.
What is the main research question?
The research asks how the Single Market and EMU address the needs of SMEs and what further actions are required to foster a competitive environment for these firms.
What methodology is used in the study?
The study utilizes a descriptive and analytical approach, synthesizing economic data and policy reports regarding the EU’s interaction with the small business sector.
What does the main body cover?
It covers the economic impact of SMEs, the consequences of regulatory changes, the influence of the single currency, and specific governmental initiatives for funding and support.
Which keywords define this research?
The core keywords include SMEs, European Union, Single European Market, competitiveness, entrepreneurship, and economic growth.
How does the introduction of the Single Market specifically affect SME competition?
It exposes SMEs to greater international competition and technical standards, which can be an opportunity for export, but also poses a threat to firms focused primarily on domestic markets.
What is the significance of the "think small first" principle mentioned by the author?
It reflects the European Council’s commitment to reducing administrative burdens and tailoring legislation to the unique needs of smaller enterprises.
- Citation du texte
- Dipl. Betriebswirtin Svetlana Shirobakina (Auteur), 2004, The role of small and medium-sized enterprises (SMEs) in Europe's economy, Munich, GRIN Verlag, https://www.grin.com/document/57861
