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Strengthening SMEs and Entrepreneurship for Productivity and Inclusive Growth

OECD 2018 Ministerial Conference on SMEs

image of Strengthening SMEs and Entrepreneurship for Productivity and Inclusive Growth

SMEs that grow have a considerable positive impact on employment creation, innovation, productivity growth and competitiveness. Digital technologies and global value chains offer new opportunities for SMEs to participate in the global economy, innovate and strengthen productivity. Yet SMEs are lagging behind in the digital transition and are disproportionately affected by market failures, trade barriers, policy inefficiencies and the quality of institutions. A cross-cutting approach to SME policy can enhance SME innovation and scale-up, as well as their contributions to inclusive growth. This includes a business environment conducive to risk-taking and experimentation by entrepreneurs, as well as access to entrepreneurship competencies, management and workforce skills, technology, innovation, and networks.

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Promoting innovation in established SMEs

Innovation is a key driver of productivity and long-term growth and can help solve social challenges at the lowest possible cost (OECD, 2015a). Innovation in small and medium-sized enterprises (SMEs) is at the core of inclusive growth strategies: more innovative SMEs are more productive SMEs that can pay better wages and offer better working conditions to their workers, thus helping reduce inequalities. Furthermore, recent developments in markets and technologies offer new opportunities for SMEs to innovate and grow. Digitalisation accelerates the diffusion of knowledge and is enabling the emergence of new business models, which may enable firms to scale very quickly, often with few employees, tangible assets or a geographic footprint (OECD, 2017c).

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