01 importance of sme
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SMEs play an important role in wealth creation and distribution through job creation, innovation, and participation in value chains. However, SMEs face problems including lack of access to financing, markets, skills and technology. To improve SME competitiveness and impact on economic development, policies need to address challenges at the macro, meso and micro levels in an integrated manner with SMEs as the central focus. This includes improving skills and technology diffusion, enhancing networking and clusters, and developing more comprehensive measures of national competitiveness that account for SME contributions.
01 importance of sme
- 1. http//www.experts-visions.com Lansana.sakho@experts-visions.com The company to -go for providing added value to your business Role of SMEs in wealth creation and wealth distribution; problems and prospects By Mr. Lansana Sakho / March 2012
- 2. 2 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n Impact in Labor, Job creation and Specialization of labor force n Social Capital improvement, Strategic bridge between micro and large enterprises n Importance in productive value chains by creating networks or clusters n Potential of innovation and entrepreneurial creativity n Facilitate technology dissemination n Facilitate transition and adjustment processes n Helps to reduce poverty n Regional integrator n Improves Wealth Distribution in a Country IMPORTANCE OF SMEIMPORTANCE OF SME’’ss
- 3. 3 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n Definitions ¨ Almost every country has its own definition based on: mixing: assets, sales, number of employees, paid capital and sector. ¨ There are several definitions some of them are clearly made to help (or not) SMEs development in accordance to the country policies. n What is important in SMEs´ classification is to determine their common characteristics and needs to improve their competitiveness n This classification must help in the definition of policies having the SMEs as the central focus WHAT IS A SMEsWHAT IS A SMEs
- 4. 4 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n Small participation in GDP n Lack of access to knowledge n Scale and terms of trade when to markets n Low productivity (Use of resources effectively and efficiently and capabilities) n Number of SMEs in a country n Contact with market to define needs from demand n Lack of selectivity programs n Lack of access to financing PROBLEMS FACED BY SMEsPROBLEMS FACED BY SMEs
- 5. 5 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution FOUR LEVELS TO IMPROVE COMPETITIVENESS OF SMES WITH IMPACT IN THE ECONOMY
- 6. 6 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution COMPETITIVENESS HAVING SMES AS THE CENTER OF THE MODEL (SYSTEMIC AND MEASURABLE APPROACH)
- 7. 7 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n Literature and research works are mostly (exclusively) oriented to: Governance and Corruption. n Studies and results in general are based on qualitative data n Some common methods to measure governance have been developed by the World Bank. n Empirical results show a positive relation between Governance and Competitiveness META LEVEL : FINDINGS & APPROACHES
- 8. 8 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n Most of the multilateral organizations have financed studies of sectors’ competitiveness, value chains and their relation with training programs. n We have not found evidence of studies linking all macroeconomic policies and their impact in competitiveness policy. n Neither the macroeconomic nor the competitiveness studies have targeted SMEs and their development in number and growth. n SMEs are looked at this level only as bumpers for economic shocks to absorb unemployment effect. MACRO LEVEL : FINDINGS & APPROACHES
- 9. 9 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n To measure competitiveness as a whole it is important for SMEs to have the resources Ø Human Ø Information and K-H Ø Physical assets and infrastructure Ø Financial Ø Network and strategic alliances MACRO LEVEL : FINDINGS & APPROACHES
- 10. 10 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution The challenge with those resources is toThe challenge with those resources is to ““JumpJump”” to superior stages of developmentto superior stages of development
- 11. 11 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution u Almost all authors agree that SMEs have a major role in diffusion of technology as: ¨ Technology introducers and diffusers. ¨ SMEs are more flexible in adapting and adopting new technologies than bigger companies u In spite of SMEs technology adoption, their effort in R&D are not important. u If the integration of the economy and the links among SMEs is strong, the diffusion of the technology is faster in the economy MEZO LEVEL : DIFFUSION & METHODOLOGY
- 12. 12 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n Technology diffusion and training: ¨ Manager’s business education is important to improve technology diffusion ¨ The informal learning paths in SMEs are important to transfer technology to them ¨ Implementing and learning a technology must be treated as a socio-technical practice ¨ Responsiveness to training is a function of organizational absorptive capacity ¨ Technology adoption by SMEs depends on professional training policies MEZO LEVEL : DIFFUSION OF TECHNOLOGY
- 13. 13 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n HR and organizational knowledge are the main sources of sustainable competitive advantage (for enterprises) n Training helps to: ¨ Develop Innovation ¨ Develop sustainable competitive advantage ¨ Training transferred in job-related skills improves rapidly business results. n Cost vs. investment vision ¨ In SMEs the investment in training is important but still low. ¨ In developing countries training is cost oriented. ¨ The level of investment in training is low because of the difficulty to determine a ROI and their impact in goals achievements. MEZO LEVEL : TRAINING
- 14. 14 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution uTo have an expected result of training in SMEs is important to: ¨Develop capabilities in external knowledge ¨Disseminate Intrafirm Knowledge uManagement advice is more impor- tant than technical skill to improve the growth of SMEs MEZO LEVEL : TRAINING
- 15. 15 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n SMEs Characteristics: ¨ Family Business origin and control ¨ Individual interests and Personal relations are shown as the entrepreneurial objectives. ¨ Social capital and inter-firms relations determines the forms of the economic exchanges ¨ Exchanges are highly dependant of the socio- cultural context. ¨ Empirical evidence shows that in industrial districts trust inter-firms is developed (Could create clusters) n All the factors must converge into a level of trust to organize Clusters and/or Networks MICRO LEVEL: NETWORKING AND VALUE CHAINS
- 16. 16 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n Some of the Economic results of clusters are: ¨ Clusters generate external economies ¨ Clusters present an exchange of knowledge. ¨ Clusters create the collective efficiency concept that enhances SMEs upgrading n Clusters and networks behaviors ¨ Upgrading are mostly supported by the leaders of a global value chain that dominates the cluster ¨ Clusters take time to develop due to the need of cooperative attitudes. ¨ While developing, the linkages with the outside world are important ¨ Information and information systems help the consolidation of exchanges MICRO LEVEL: NETWORKING AND VALUE CHAINS
- 17. 17 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n Management ¨ Is the main level studied ¨ Several models are presented in the literature ¨ The basic results and evolution of those models are to see the enterprises as a system in which their needs are analyzed with all enterprise subsystems. ¨ The literature found is developed in almost all the important aspects of the BMS model n Other topics related ¨ Succession and Performance of SMEs. ¨ Innovation, Environmental results. MICRO LEVEL: INSIDE THE ENTERPRISE
- 18. 18 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n SMEs are important for the improvement of the entrepreneurial environment of a country n In our literature review we found number of papers that ¨ Studied some aspects of our four level ¨ No evidence was found of studies of the Meta, Macro and Mezzo levels oriented to lower levels n For SMEs ¨ Most of the works stay at the micro level defining problems related to good managerial practices ¨ “Poor assisted units” ¨ Growth and upgrading is not the rule but only an isolated case ¨ Policies are oriented to Donors or Financiers goals ¨ Job creators without a relation with wealth creation and competitiveness enhancement ¨ Bumpers for shocks in the Meta, Macro and Mezzo levels CONCLUSIONS
- 19. 19 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n Perspectives ¨ To enhance competitiveness all policies (in the 4 levels) must have SMEs as their central actor. ¨ Generate Policies with a model that integrates the four levels. n Measure of impact and effects of current policies in each of the four levels n Determination of linkages among four levels and effects on SMEs n Select value chains and SMEs in those chains to work with n Policies must work in Value Adding, Job creation, Education Enhancement and Trade Competitiveness CHALLENGES & PERSPECTIVES
- 20. 20 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n The competitiveness index and ranking measures: ¨ Institutions ¨ Infrastructure ¨ Macroeconomics ¨ Health and Primary education ¨ Higher education and training ¨ Market efficiency ¨ Technological readiness ¨ Business sophistication ¨ Innovation COMPETITIVENESS INDEX
- 21. 21 Lansana Sakho March 2013 Role of SMEs in wealth creation and wealth distribution n Distribution is not an issue for a Country n A Country can not distribute wealth without creating it n Wealth creation can be done in a country by international competitive enterprises n SMEs is the major percentage of enterprises and the major labor generator n International competitive SMEs will contribute to a sustainable wealth distribution in a Country IMPORTANCE OF SMES