Small and medium-sized enterprises (SMEs) are the essence of the economic landscape. While outsized multinational companies hold the center of the media’s attention, they only represent a tiny percentage of the entirety of companies operating within the larger marketplace.
Small and medium-sized enterprises (SMEs) are the chief motivator for innovation and technological development. SMEs hold distinctive characteristics that distinguish them from larger companies on more than one level. By definition, SMEs regard business and innovation in a different light than larger corporations—often bestowing fresh perspectives on scientific and technological research and development (R&D) throughout the nation.
SMEs—partly because of their limited size and resources—tend to assume a different set of philosophies than those of larger entities. For example, a lot of large corporations churn out the bulk of their revenue from tested products that still bring forth large sums of money. Successful SMEs, on the other hand, has to put forth a lot of work to be recognized in the market for their new products and ideas (Daly, 2007).
Level 1 -Policy Efficiency
For the small and medium-sized enterprises to progress and develop, they should maintain certain vital factors on multi-levels. The first level that any SME should take into consideration is the efficacy of the policies that it is operating within. (See Figure 1)
Figure 1: Framework for SMEs Development/ Policy Efficiency
On this level, “Policy efficiency”, two main factors are to be taken into consideration and should be maintained in equal percentages, which are the enterprise’s institutional structure and the statistics & research that would guide, ensure, and sustain the efficient R&D activities.
Level 2 - Business Environment
The second level is the business environment. At this level, four main factors are found: political stability, macroeconomic environment, infrastructure, and regulatory framework. As long as stability is maintained in the country, the enterprise can advance and take decisions for new investments. Likewise, the same goes for the stability of macroeconomic environment, infrastructure and the regulatory framework found in the country of the company. (See Figure 2)
Figure 2: Framework for SMEs Development/ Business Environment
Level 3 - Firm Competitveness
The other level is the firm competitiveness. This level is composed of five different major sectors that should not be neglected by SMEs in order to develop. The sectors are skilled human capital (the most important factor in this cycle), access to finance such as banks and others, access to markets, technology & innovation; and the existence of support programs and institutions. (See Figure 3)
Figure 3: Framework for SMEs Development/ Firm Competitiveness
Level 4 - Core
The last level is the core level, which is entirely driven by a single factor which is “entrepreneurship”. Being an entrepreneur is a vital aspect for any SME to guide the market and guarantee its existence among the sturdy companies in the long run. (See Figure 4)
Figure 4: Framework for SMEs Development/ Core
An eye should be kept on those four levels as they represent the main pillars for any small or medium-sized enterprise within different industries. As long as the performance of the enterprise is being measured on this scale, I believe it will always be ensured that things are moving on the right development track in the right direction.
I am closing my article with this following diagram that assemble all the levels and factors mentioned and explained previously.
