Table of Contents

  • Small and medium-sized enterprises (SMEs) and entrepreneurship are essential drivers of economic and social well-being. Representing 99% of all businesses, generating about 60% of employment and totalling between 50% and 60% of value added in the OECD area, SMEs are key for delivering sustainable and inclusive economic growth. They are instrumental to ensure that our economies and societies adapt to major transformations, such as digitalisation, globalisation, ageing and environmental pressures.

  • As we experience a series of significant changes in our economies and societies, small and medium-sized enterprises (SMEs) are important actors in the transition: they provide the main source of employment, constitute the industrial fabric of many regions and cities, contribute to the identity of local communities in both urban and rural areas, and are essential elements in domestic and global value chains. With the right conditions in place, SMEs and entrepreneurs can play a role in fostering income equality and ensuring that the benefits from technological change and globalisation are more broadly shared.

  • As the predominant form of business and employment, small and medium-sized enterprises (SMEs) are key actors for economic resilience, productivity and inclusiveness. Yet, smaller firms face particular size-related barriers in accessing finance, skills, technology and the knowledge-based capital that are required for innovating, driving competitiveness and growing, which, in the aftermath of the 2008-09 global financial crisis, may have compounded long-standing productivity and wage gaps with larger firms. These barriers are not only symptomatic of sub-optimal credit and labour markets; they also reflect disproportionate impacts of the regulatory environment, for example administrative burdens and inefficiencies in tax systems, inhibiting a level playing field for SMEs.

  • As the predominant form of business and employment, small and medium-sized enterprises (SMEs) are key actors for building more inclusive and sustainable growth, increasing economic resilience and improving social cohesion. In fact, across the OECD, SMEs account for about 60% of employment and between 50% and 60% of value added and are the main drivers of productivity in many regions and cities. Yet, smaller firms face long-standing size-related barriers in dealing with stringent business conditions or accessing strategic resources. In practice, SMEs are a major target of public policy, and they are central to the policy agenda of many governments seeking responses to the challenges raised by globalisation and digitalisation.

  • This chapter provides an overview of trends in the small and medium-sized enterprises (SME) sector and in business dynamism, and offers insights, where data allow, on cross-country and cross-sectoral differences. While the general structure of the SME population in OECD countries has remained stable in the past decade, this chapter shows that dynamic changes are occurring in activities highly exposed to digitalisation, or able to capitalise on it. The chapter highlights that in recent years the majority of new enterprise entries and the resulting job creation occurred in sectors with below average productivity levels. It presents evidence that more jobs in lower-productivity activities translated into more lower-paid jobs, weighing down on material well-being. The chapter also highlights that, apart for exceptions in the services sector, productivity gaps are observed between SMEs and large firms that translate in lower pay in SMEs. The findings reveal that gaps in productivity and wages are smaller for SMEs that export, and that global value chains provide scope for technology and knowledge spill-overs but also increase competition. The chapter demonstrates that current official statistics are able to provide important insights, in particular with respect to structural heterogeneity, but also illustrates the importance of continuing to expand the statistical boundary, not least to tackle emerging issues.