01 importance of sme
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  • The importance of enterprises, particularly those labelled as SMEs, to the economies of countries is well documented and debated. Most importantly, SMEs, when they are competitive, are the most effective and efficient mechanisms to distribute wealth in a country when they are internationally competitive. Thus, the competitiveness of the SME sector is not only vital for economic reasons but also is a rational requirement for political stability and economic sustainability....
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  • 1. http//www.experts-visions.comLansana.sakho@experts-visions.comThe company to -go for providing added value to your businessRole of SMEs in wealth creationand wealth distribution;problems and prospectsByMr. Lansana Sakho / March 2012
  • 2. 2Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn Impact in Labor, Job creation and Specialization oflabor forcen Social Capital improvement, Strategic bridge betweenmicro and large enterprisesn Importance in productive value chains by creatingnetworks 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 CountryIMPORTANCE OF SMEIMPORTANCE OF SME’’ss
  • 3. 3Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn Definitions¨ Almost every country has its own definition basedon: mixing: assets, sales, number of employees,paid capital and sector.¨ There are several definitions some of them areclearly made to help (or not) SMEs development inaccordance to the country policies.n What is important in SMEs´ classification is todetermine their common characteristics and needsto improve their competitivenessn This classification must help in the definition ofpolicies having the SMEs as the central focusWHAT IS A SMEsWHAT IS A SMEs
  • 4. 4Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn Small participation in GDPn Lack of access to knowledgen Scale and terms of trade when to marketsn Low productivity (Use of resources effectively andefficiently 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 financingPROBLEMS FACED BY SMEsPROBLEMS FACED BY SMEs
  • 5. 5Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionFOUR LEVELS TO IMPROVE COMPETITIVENESSOF SMES WITH IMPACT IN THE ECONOMY
  • 6. 6Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionCOMPETITIVENESS HAVING SMES AS THE CENTER OFTHE MODEL (SYSTEMIC AND MEASURABLE APPROACH)
  • 7. 7Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn Literature and research works are mostly(exclusively) oriented to: Governance andCorruption.n Studies and results in general are based onqualitative datan Some common methods to measure governancehave been developed by the World Bank.n Empirical results show a positive relation betweenGovernance and CompetitivenessMETA LEVEL : FINDINGS & APPROACHES
  • 8. 8Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn Most of the multilateral organizations have financedstudies of sectors’ competitiveness, value chains andtheir relation with training programs.n We have not found evidence of studies linking allmacroeconomic policies and their impact incompetitiveness policy.n Neither the macroeconomic nor the competitivenessstudies have targeted SMEs and their development innumber and growth.n SMEs are looked at this level only as bumpers foreconomic shocks to absorb unemployment effect.MACRO LEVEL : FINDINGS & APPROACHES
  • 9. 9Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn To measure competitiveness as a whole itis important for SMEs to have the resourcesØ HumanØ Information and K-HØ Physical assets and infrastructureØ FinancialØ Network and strategic alliancesMACRO LEVEL : FINDINGS & APPROACHES
  • 10. 10Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionThe challenge with those resources is toThe challenge with those resources is to““JumpJump”” to superior stages of developmentto superior stages of development
  • 11. 11Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionu Almost all authors agree that SMEs have amajor role in diffusion of technology as:¨ Technology introducers and diffusers.¨ SMEs are more flexible in adapting and adoptingnew technologies than bigger companiesu In spite of SMEs technology adoption, theireffort in R&D are not important.u If the integration of the economy and the linksamong SMEs is strong, the diffusion of thetechnology is faster in the economyMEZO LEVEL : DIFFUSION & METHODOLOGY
  • 12. 12Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn Technology diffusion and training:¨ Manager’s business education is important toimprove technology diffusion¨ The informal learning paths in SMEs are importantto transfer technology to them¨ Implementing and learning a technology must betreated as a socio-technical practice¨ Responsiveness to training is a function oforganizational absorptive capacity¨ Technology adoption by SMEs depends onprofessional training policiesMEZO LEVEL : DIFFUSION OF TECHNOLOGY
  • 13. 13Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn HR and organizational knowledge are the main sourcesof sustainable competitive advantage (for enterprises)n Training helps to:¨ Develop Innovation¨ Develop sustainable competitive advantage¨ Training transferred in job-related skills improves rapidlybusiness results.n Cost vs. investment vision¨ In SMEs the investment in training is important but stilllow.¨ In developing countries training is cost oriented.¨ The level of investment in training is low because of thedifficulty to determine a ROI and their impact in goalsachievements.MEZO LEVEL : TRAINING
  • 14. 14Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionuTo have an expected result of training inSMEs is important to:¨Develop capabilities in external knowledge¨Disseminate Intrafirm KnowledgeuManagement advice is more impor-tant than technical skill to improve thegrowth of SMEsMEZO LEVEL : TRAINING
  • 15. 15Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn SMEs Characteristics:¨ Family Business origin and control¨ Individual interests and Personal relations areshown as the entrepreneurial objectives.¨ Social capital and inter-firms relations determinesthe forms of the economic exchanges¨ Exchanges are highly dependant of the socio-cultural context.¨ Empirical evidence shows that in industrial districtstrust inter-firms is developed (Could create clusters)n All the factors must converge into a level oftrust to organize Clusters and/or NetworksMICRO LEVEL: NETWORKING AND VALUE CHAINS
  • 16. 16Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn 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 enhancesSMEs upgradingn Clusters and networks behaviors¨ Upgrading are mostly supported by the leaders of a globalvalue chain that dominates the cluster¨ Clusters take time to develop due to the need of cooperativeattitudes.¨ While developing, the linkages with the outside world areimportant¨ Information and information systems help the consolidation ofexchangesMICRO LEVEL: NETWORKING AND VALUE CHAINS
  • 17. 17Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn Management¨ Is the main level studied¨ Several models are presented in the literature¨ The basic results and evolution of those models areto see the enterprises as a system in which theirneeds are analyzed with all enterprise subsystems.¨ The literature found is developed in almost all theimportant aspects of the BMS modeln Other topics related¨ Succession and Performance of SMEs.¨ Innovation, Environmental results.MICRO LEVEL: INSIDE THE ENTERPRISE
  • 18. 18Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn SMEs are important for the improvement of the entrepreneurialenvironment 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 Mezzolevels oriented to lower levelsn For SMEs¨ Most of the works stay at the micro level defining problemsrelated 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 andcompetitiveness enhancement¨ Bumpers for shocks in the Meta, Macro and Mezzo levelsCONCLUSIONS
  • 19. 19Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn 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 fourlevels.n Measure of impact and effects of current policies ineach of the four levelsn Determination of linkages among four levels andeffects on SMEsn Select value chains and SMEs in those chains to workwithn Policies must work in Value Adding, Job creation,Education Enhancement and Trade CompetitivenessCHALLENGES & PERSPECTIVES
  • 20. 20Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn The competitiveness index and rankingmeasures:¨ Institutions¨ Infrastructure¨ Macroeconomics¨ Health and Primary education¨ Higher education and training¨ Market efficiency¨ Technological readiness¨ Business sophistication¨ InnovationCOMPETITIVENESS INDEX
  • 21. 21Lansana SakhoMarch 2013Role of SMEs in wealth creationand wealth distributionn Distribution is not an issue for a Countryn A Country can not distribute wealth withoutcreating itn Wealth creation can be done in a country byinternational competitive enterprisesn SMEs is the major percentage of enterprises andthe major labor generatorn International competitive SMEs will contribute to asustainable wealth distribution in a CountryIMPORTANCE OF SMES