Basic concepts of small and medium sized enter-prises (SMEs)

1. Message 13Basic concepts of small and medium sized enter-
prises (SMEs)
Small and medium sized enterprises (shortly called SMEs), that is,
companies up to 250 employees, constitute the engine of most of
the world’s economies. In the enlarged Europe, some 23 million SMEs
represent 99 per cent out of the total of enterprises and provide
about 75 million jobs (EC, 2008).
SMEs are a major source of entrepreneurial skills, innovation and
employment, but they could be the most affected by the globalisa-
tion process and often are confronted with market imperfections:
for example, SMEs frequently have difficulties in obtaining capital or
credit, particularly in the early start-up phase.
Therefore, support for SMEs is one of the policy priorities at national
and European level. Policies for SMEs could concern:
• education and training
• research and technological development
• information diffusion and accessibility for firms (databases, web-
sites, information centres, all of them of general, non-
customised nature)
• policies providing customised services to firms (for example, en-
vironmental services, labelling, certification and testing, partici-
pation in exhibitions, transportation intelligence, logistics, de-
sign or new production techniques).
• policies supporting labour recruitment
• policy backing the internationalisation process
• policy for improving quality development in firms
• policies for setting up incubators of small firms
• policies improving venture or risk capital availability
In order to avoid distortions in the Single Market, the European Com-
mission has provided a legally secure and user-friendly definition of
SMEs in the Recommendation 2003/361/EC. Its recommendation
concerns all Community policies applied within the European Eco-
nomic Area favouring SMEs and it is addressed to the Member States,
the European Investment Bank and the European Investment Fund.
‘The category of micro, small and medium-sized enterprises (SMEs)
is made up of enterprises which employ fewer than 250 persons and
which have an annual turnover not exceeding 50 million euro,
and/or an annual balance sheet total not exceeding 43 million
Recommendation
2003/361/EC provides
a definition
SMEs in Europe
19.12.2008, 12:59:21

2. 2/2
euro.’ Extract of Article 2 of the Annex of Recommendation
2003/361/EC
(Graph and table taken from: EC, The new SME definition. User guide and model declaration,
Enterprise and Industry Publication)
The Recommendation also formally identifies sub-categories of SMEs:
medium-sized, small and micro.
Enterprise
category
Headcount Turnover or Balance sheet
total
medium-sized < 250 ≤ € 50 million ≤ € 43 million
small < 50 ≤ € 10 million ≤ € 10 million
micro < 10 ≤ € 2 million ≤ € 2 million
At regional level, one of the transversal strategies put in place by
relevant local stakeholders, such as Chambers of Commerce, local
development agencies etc., for supporting SMEs consists in encourag-
ing co-operation and networking. Co-operation and networking could
concern a wide range of items: training, R&D, quality, internation-
alisation, actually nearly all the policy areas enumerated above. In
this, Action Learning and facilitating techniques have proved to be
among the most effective and powerful methods for initiating and
sustaining the SME empowerment process and making co-operation
in and outside the single company easier.
See Message 14:
Basic concept of net-
works and clusters