This essay provides basic information on the way the EU tries to promote small and medium-sized enterprises (SMEs). This policy field is very complex as SMEs are affected by Community legislation on a host of issues. As a result, over the years, the institutions of the EU introduced a kaleidoscope of programmes targeted at SMEs to enhance their situation on the market.
To examine the most important ones of these programmes, first and foremost, the promotion of SMEs will be integrated into the industrial policy of the EU: I will shed some light on the rationale for an industrial policy and the three different approaches to it. Furthermore, I will elaborate on the evolution of the industrial policy within the EU.
In the second part, I will have a closer look at SMEs in Europe, how they are defined and what their role is in the European economy.
After having given this background information, I will examine how the EU promotes SMEs. First of all, I will dwell on the European Charter for Small Enterprises followed by some information on the Multiannual Programme for Enterprise and Entrepreneurship. In addition, I will give some details on programmes to promote conditions conducive for entrepreneurial activity; The Entrepreneurship Action Plan and the eEurope 2005 Action Plan respectively Go Digital.
Finally, I will establish a connection between the EU industrial policy and the Lisbon Strategy.
Table of Contents
Part 1 The Promotion of SMEs as a Part of the Industrial Policy
Chapter 1 Rationale for Industrial Policy
Market-based Industrial Policy
Interventionist Industrial Policy
Strategic Industrial Policy
Chapter 2 The Evolution of EU Industrial Policy
Part 2 The Nature of SMEs
Chapter 3 The Definition of SMEs
Chapter 4 Statistics on SMEs
Chapter 5 Conclusion
Part 3 The Promotion of SMEs in the EU
Chapter 6 The European Charter for Small Enterprises
Adoption of the Charter
Contents of the Charter
Implementation of the Charter
Chapter 7 The Multiannual Programme for Enterprises and Entrepreneurship
Contents of the Programme
The Euro Info Centres Network
The Financial Instruments
Policy Development
Evaluation of the Programme
Chapter 8 Programmes to Promote Conditions Conducive to Entrepreneurial Activity
The Entrepreneurship Action Plan
eEurope 2005 Action Plan and Go Digital
Part 4 EU Industrial Policy and the Lisbon Strategy
Research Objectives and Themes
The primary objective of this work is to provide a comprehensive analysis of how the European Union promotes small and medium-sized enterprises (SMEs) within the broader framework of its industrial policy. The research examines the rationale for industrial intervention, the historical evolution of EU industrial strategy, and the specific instruments, such as the European Charter for Small Enterprises and various action plans, designed to foster a competitive environment for SMEs.
- Conceptual approaches to industrial policy (market-based, interventionist, and strategic).
- The definition, economic role, and statistical profile of SMEs in Europe.
- Implementation mechanisms of the European Charter for Small Enterprises.
- Evaluation of EU support programmes, including the Multiannual Programme for Enterprise and Entrepreneurship and GoDigital.
- The alignment of SME promotion with the strategic goals of the Lisbon Strategy.
Excerpt from the Book
Strategic Industrial Policy
This approach takes a more strategic view on industrial policy. The core role for industrial policy is to support the growth of emerging industries to replace those that are weakening. The need for such an approach arises form the imperfect nature of the competitive environment. Therefore, selective help by use of state aids can provide competitive advantages to companies. These state aids can also be utilised to help companies to catch up on foreign competitors that are established in the market (see Figure 1.3).
If a company sets up a plant in country A with average cost given AC1, and it was the first company to produce this product, it would have a first mover advantage. The company will operate on P1:Q1 (assuming that the company sets price equal to average cost). As a result, although the company in country B has lower costs than the company in country A (AC2 rather than AC1), it will not be able to enter the market as the company in country A has a fist mover advantage. At the price P1 the company in country B cannot sell output at less than, or equal to, its average cost unless it enters the market with an output level of Q2 or above. To be able to realise such an outcome the company in country B would have to take market share from the first mover and it would make losses until it reached an output level of Q2. Furthermore, as the company in country B entered the market it would put downward pressure on the market price and would therefore worsen its position with regard to the difference between price and its average cost.
However, the government in country B could help the company to enter into the market by strategic industrial policy. Thus, subsidies could be given or other types of help to allow company B to offset the first mover advantage of the company in country A. If such help was given, the company in country B would eventually replace the company in country A with price and output given by P2:Q3. This policy would be beneficial as it would allow the most efficient producer to supply the market and increase output.
Summary of Chapters
Rationale for Industrial Policy: Defines industrial policy in the EU context and explores the three main theoretical approaches: market-based, interventionist, and strategic.
The Evolution of EU Industrial Policy: Traces the historical development of EU industrial policy from the Treaty of Paris and the Treaties of Rome through the Single European Act to the Treaty of Nice.
The Definition of SMEs: Outlines the official European Commission criteria used to classify micro, small, and medium-sized enterprises based on headcount, turnover, and balance sheet.
Statistics on SMEs: Provides a data-driven overview of the significance of SMEs in the European economy, noting their prevalence and their impact on employment and economic activity.
Conclusion: Synthesizes the importance of SMEs and underscores the necessity of EU policies to overcome market imperfections and foster a supportive environment for innovation.
The European Charter for Small Enterprises: Details the adoption, key action lines, and implementation status of the Charter as a cornerstone of EU SME policy.
The Multiannual Programme for Enterprises and Entrepreneurship: Examines the main policy instrument for stimulating entrepreneurship, including its objectives, the EIC Network, and financial instruments.
Programmes to Promote Conditions Conducive to Entrepreneurial Activity: Discusses specific initiatives such as the Entrepreneurship Action Plan and the eEurope 2005 Action Plan aimed at fostering SME competitiveness and digital integration.
EU Industrial Policy and the Lisbon Strategy: Connects the evolution of SME support with the broader strategic objectives of the Lisbon Strategy to create a competitive knowledge-based economy.
Keywords
Small and medium-sized enterprises, SMEs, EU industrial policy, Entrepreneurship, European Charter for Small Enterprises, Lisbon Strategy, Multiannual Programme, GoDigital, Market failure, State aid, Innovation, Economic competitiveness, SME Guarantee Facility, Euro Info Centres, Industrial structure.
Frequently Asked Questions
What is the primary focus of this paper?
The paper explores the various initiatives and programmes launched by the European Union to promote and support small and medium-sized enterprises (SMEs) within the context of European industrial policy.
What are the three main approaches to industrial policy discussed?
The author identifies three primary approaches: the market-based industrial policy, the interventionist industrial policy, and the strategic industrial policy.
What is the main objective of EU SME policy?
The core objective is to create a business environment conducive to entrepreneurship, innovation, and growth, thereby enhancing the overall competitiveness of the European economy and maximizing employment.
Which scientific methodology does the paper follow?
The work employs a descriptive and analytical methodology, using historical institutional analysis of EU treaties and documents, combined with economic statistics to evaluate policy effectiveness.
What topics are covered in the main section of the paper?
The main sections cover the rationales for industrial policy, the historical evolution of EU strategies, the classification and economic impact of SMEs, and specific support programmes like the European Charter and the Multiannual Programme.
Which keywords best characterize the research?
Key terms include SMEs, Industrial Policy, Entrepreneurship, European Charter, Lisbon Strategy, and Innovation.
How does the author define the 'first mover advantage' in the context of strategic industrial policy?
The author explains it as the initial competitive advantage gained by the first company to produce a product, which can create high barriers to entry for subsequent competitors, potentially requiring government intervention to balance the market.
What role does the 'Think Small First Principle' play in the discussed policy framework?
It is proposed as a guideline to be integrated into all national and EU policies, ensuring that the needs and limitations of SMEs are considered at every stage of the decision-making process to ensure a truly SME-friendly environment.
- Quote paper
- Elisabeth Herrle (Author), 2006, The promotion of small and medium-sized enterprises in the EU, Munich, GRIN Verlag, https://www.grin.com/document/77284
