01 importance of sme

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01 importance of sme

  1. 1. Role of SMEs in wealth creation and wealth distribution; problems and prospects By Mr. Lansana Sakho / March 2012http//www.experts-visions.comLansana.sakho@experts-visions.com The company to -go for providing added value to your business
  2. 2. IMPORTANCE OF SME’s SME’n Impact in Labor, Job creation and Specialization of labor forcen Social Capital improvement, Strategic bridge between micro and large enterprisesn Importance in productive value chains by creating networks or clustersn Potential of innovation and entrepreneurial creativityn Facilitate technology disseminationn Facilitate transition and adjustment processesn Helps to reduce povertyn Regional integratorn Improves Wealth Distribution in a Country Role of SMEs in wealth creation Lansana Sakho 2 and wealth distribution March 2013
  3. 3. WHAT IS A SMEsn 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 competitivenessn This classification must help in the definition of policies having the SMEs as the central focus Role of SMEs in wealth creation Lansana Sakho 3 and wealth distribution March 2013
  4. 4. PROBLEMS FACED BY SMEsn Small participation in GDPn Lack of access to knowledgen Scale and terms of trade when to marketsn Low productivity (Use of resources effectively and efficiently and capabilities)n Number of SMEs in a countryn Contact with market to define needs from demandn Lack of selectivity programsn Lack of access to financing Role of SMEs in wealth creation Lansana Sakho 4 and wealth distribution March 2013
  5. 5. FOUR LEVELS TO IMPROVE COMPETITIVENESS OF SMES WITH IMPACT IN THE ECONOMYRole of SMEs in wealth creation Lansana Sakho 5and wealth distribution March 2013
  6. 6. COMPETITIVENESS HAVING SMES AS THE CENTER OF THE MODEL (SYSTEMIC AND MEASURABLE APPROACH)Role of SMEs in wealth creation Lansana Sakho 6and wealth distribution March 2013
  7. 7. META LEVEL : FINDINGS & APPROACHESn Literature and research works are mostly (exclusively) oriented to: Governance and Corruption.n Studies and results in general are based on qualitative datan Some common methods to measure governance have been developed by the World Bank.n Empirical results show a positive relation between Governance and Competitiveness Role of SMEs in wealth creation Lansana Sakho 7 and wealth distribution March 2013
  8. 8. MACRO LEVEL : FINDINGS & APPROACHESn 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. Role of SMEs in wealth creation Lansana Sakho 8 and wealth distribution March 2013
  9. 9. MACRO LEVEL : FINDINGS & APPROACHESn 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 Role of SMEs in wealth creation Lansana Sakho 9 and wealth distribution March 2013
  10. 10. The challenge with those resources is to “Jump” to superior stages of development Jump”Role of SMEs in wealth creation Lansana Sakho 10and wealth distribution March 2013
  11. 11. MEZO LEVEL : DIFFUSION & METHODOLOGYu 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 companiesu In spite of SMEs technology adoption, their effort in R&D are not important.u Ifthe integration of the economy and the links among SMEs is strong, the diffusion of the technology is faster in the economy Role of SMEs in wealth creation Lansana Sakho 11 and wealth distribution March 2013
  12. 12. MEZO LEVEL : DIFFUSION OF TECHNOLOGYn 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 Role of SMEs in wealth creation Lansana Sakho 12 and wealth distribution March 2013
  13. 13. MEZO LEVEL : TRAININGn 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. Role of SMEs in wealth creation Lansana Sakho 13 and wealth distribution March 2013
  14. 14. MEZO LEVEL : TRAININGu To have an expected result of training in SMEs is important to: ¨ Develop capabilities in external knowledge ¨ Disseminate Intrafirm KnowledgeuManagement advice is more impor- tant than technical skill to improve the growth of SMEs Role of SMEs in wealth creation Lansana Sakho 14 and wealth distribution March 2013
  15. 15. MICRO LEVEL: NETWORKING AND VALUE CHAINSn 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 Role of SMEs in wealth creation Lansana Sakho 15 and wealth distribution March 2013
  16. 16. MICRO LEVEL: NETWORKING AND VALUE CHAINSn 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 upgradingn 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 Role of SMEs in wealth creation Lansana Sakho 16 and wealth distribution March 2013
  17. 17. MICRO LEVEL: INSIDE THE ENTERPRISEn 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 modeln Other topics related ¨ Succession and Performance of SMEs. ¨ Innovation, Environmental results. Role of SMEs in wealth creation Lansana Sakho 17 and wealth distribution March 2013
  18. 18. CONCLUSIONSn SMEs are important for the improvement of the entrepreneurial environment of a countryn 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 levelsn 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 Role of SMEs in wealth creation Lansana Sakho 18 and wealth distribution March 2013
  19. 19. CHALLENGES & PERSPECTIVESn 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 Role of SMEs in wealth creation Lansana Sakho 19 and wealth distribution March 2013
  20. 20. COMPETITIVENESS INDEXn The competitiveness index and ranking measures: ¨ Institutions ¨ Infrastructure ¨ Macroeconomics ¨ Health and Primary education ¨ Higher education and training ¨ Market efficiency ¨ Technological readiness ¨ Business sophistication ¨ Innovation Role of SMEs in wealth creation Lansana Sakho 20 and wealth distribution March 2013
  21. 21. IMPORTANCE OF SMESn Distribution is not an issue for a Countryn A Country can not distribute wealth without creating itn Wealth creation can be done in a country by international competitive enterprisesn SMEs is the major percentage of enterprises and the major labor generatorn International competitive SMEs will contribute to a sustainable wealth distribution in a Country Role of SMEs in wealth creation Lansana Sakho 21 and wealth distribution March 2013

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