smeWe’ve been exploring the Eurozone crisis in-depth on Debating Europe, including a recent interview with a member of the Executive Board of the European Central Bank (ECB). Regular commenter Peter Schellinck has also contributed a lot to this debate, suggesting several times (here and here, for example) that Small and Medium Enterprises (SMEs) could be the key to getting Europe’s economy back on track.

Here’s Peter call for clearer leadership from European politicians:

My plea would be to show leadership courage, take up responsibility and make smart decisions. Europe has been given the tools and the parliament the platform to implement. Don’t waste more time inventing excuses for the decision to address the public needs. Give the means for SME’s to develop NOW, free up money to invest in education and listen to the unemployed youth.

The problem is, of course, how do we pay for increased investment in SMEs? Especially now, in the midst of a crisis when banks and other creditors aren’t exactly keen to extend loans to small businesses? Debating Europe recently interviewed Duncan Niederauer, the CEO of NYSE Euronext – the company that oversees the New York Stock Exchange. We asked him, amongst other things, how European leaders might provide financing to SMEs.

Duncan Niederauer’s response was, essentially, that there are tens of millions of “micro businesses” in Europe that might benefit from unconventional financing approaches – including, for example, a microfinance approach. These are the businesses that, according to Mr Niederauer, Europe’s leaders should really be focusing on. Both Peter and Duncan Niederauer, then, argue that a combination of clear leadership and a refocusing of efforts to prioritise SMEs and “micro-businesses” could help drag Europe out of the current mess it’s in.

What do YOU think? Do you agree that providing financing for small businesses is the key to economic recovery? Or do you think that the crisis is now so severe that only large industries and businesses, able to harness economies of scale and work on a pan-European level, are big enough to really make an impact? Let us know your thoughts in the form below and we’ll take your comments to policy-makers and experts for their reactions.

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8 comments Post a commentcomment

  1. avatar
    Rui Costa

    i think that it is important to have both. it is important to know that large industries are more able to increse productivity that smes.
    either way, we will fall apart if we don’t protect our industries from the competition of markets were labour force are treated almost like slaves.

  2. avatar
    Medardo Galindo Mayorga

    Both groups must be integrating the value added chain from production to export; an equilibrium for accesing to investment fund for both must be ruled as well

  3. avatar
    Christos Mouzeviris

    Yes, why not..?? In Greece it was always been like that.. Every neighborhood had its own butcher, mini market, shoe repairer, vegetable and fruit market, fish market, baker, shoe shop, boutiques, newspaper shops…It encouraged the community feeling and the money did not concentrate in a few super multinational chain markets…Money was being recycled in a local level, it did not escape to concentrate in the huge bank accounts of the multinationals…In fact one of the greatest casualties of this crisis was exactly those local shops..One by one they are closing, giving way to larger supermarket chains and multinational boutiques like Zara, H&M, etc..As if they want to uniform all Europeans by buying their clothes from 5-6 large stores..In Greece we used to have a unique fashion dressing code, shoe shops all gathered in one street, lots of them, importing shoes from Italy and France but also from local Greek manufacturers.. When I moved to Ireland i haven’t found so much variety in my clothing or shoes, simply because they have only 5-6 chains of boutiques that sell shoes as well..And everybody is buying from there..!!
    So not only small companies benefit the community feeling, are supporting the local economy and give you more variety of goods, fresh goods like freshly baked bread not from a supermarket for example, but it can also be good for the environment…Local fishermen catching fish and selling it to the local market, not huge multinational companies that over-fish and deplete quickly our stocks… So why you insist on destroying completely the small merchants and their businesses?

  4. avatar
    Stefan Florin Tony

    Large companies tend to “swallow” small businesses and develop more. There are companies like Microsoft that have a time based on the development of small business ideas that have been purchased after. In some way, large companies need small ones or to provide their services to all levels of the market, and small companies need to be able to develop from the main point of business to another level and to improve it. . Win/Win or Win/Can become a winner or maybe a leader :)

  5. avatar
    Peter Schellinck

    We clearly do need a balance of big and small. Just look at the labor distribution; over 90% of the labor force is within the SME’s. And indeed large companies can be a threat, however also a benefit. Look at the car assembly plants; 60% of the economic activity around the plant is run by SME’s and account for 80% of employment in the same area. Hence, a balance or Win/Win it is. What can be reflected upon is how the financing is done as banks are not there to help at the moment and multinationals are imposing heavy financial burdens on SME suppliers, making them loose out twice. The problem with multinationals is that they are exposed to rapid reporting of financial results and need to secure their share price. Here management is too afraid to attend to social governance in a social way, on paper yes but not in practice. Hence, our economic model ought to be adjusted. Rather then quarterly reporting, more long-term attention should go to social and environmental impact on the society. In crisis the SME’s are forced to immediate adjustment and some manage the flexibility to adopt. Others are tempted to fall into the grey market, if not the black market to survive. What’s best, offer them legitimate financing or grow in the dark…

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