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OECD Small and Medium Enterprise Outlook
OECD Observer

Big businesses go out with a bang, but small businesses come and go like winter snow. Yet, small and medium-sized enterprises (SMEs) represent 95% of all businesses in most OECD countries, and are often seen as the dynamic drivers of the economy, including for innovation. They are the laboratories of “creative destruction”.

Even in 1962, as the OECD Observer reported at the time, a company like General Motors utilised 26,000 suppliers in the United States, 16,000 of them employing fewer than a hundred workers. Now, as then, large businesses are increasingly taking advantage of the quality, flexibility and local expertise found in smaller enterprises by outsourcing their services, especially across borders.

Until seven years ago, manufacturing SMEs mainly profited from these alliances, but in 1996 small companies in services caught up and passed the manufacturing sector, to outnumber such alliances four times over in 2000. One reason for this recent growth is outsourcing, in particular in areas like R&D, computing and other technical services. Human resource services, business organisation and consulting have also seen fast growth–what can broadly be called “strategic business services”.

OECD Small and Medium Enterprise Outlook looks at SME policies in 28 OECD countries, and it includes a special focus on Romania, a non-OECD country. The SME Outlook indicates where improvements are needed in areas like encouraging entrepreneurship, promoting innovation, providing financial breaks, and supporting startups.

©OECD Observer No 235, December 2002

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