TITLE:
The Competitiveness of Small and Medium Enterprises in Adverse Economic Environments
AUTHORS:
Thomas Poufinas, George Galanos, Pyrros Papadimitriou
KEYWORDS:
Competitiveness, Small and Medium Enterprises, Crisis, Adverse Economic Environment
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.13,
September
29,
2018
ABSTRACT: Small and medium enterprises (SMEs) are the backbone
of most economies and in particular of the economies of the European countries.
They represent 99% of all businesses in the European Union. They considered in
total one of the biggest employers as they provided two thirds of the total
private sector employment in the European Union (EU), where by EU we refer to
the 28 countries of the European Union. These are Austria, Belgium, Bulgaria,
Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and
the United Kingdom. Furthermore, SMEs have a significant contribution from a
social perspective; they provide employment to the vulnerable members of the
society, such as less experienced, less educated and lower income workforce. However, SMEs were hit by
the financial crisis with a notable number of them going out of business and
suffering job losses. The latter were heavily concentrated in the Member States
which were affected the most by the sovereign debt crisis. At the same time, compared
to the large enterprises, SMEs appeared to be more resilient than large
enterprises, particularly regarding employment. Consequently, a question that
arises is how can SMEs weather the crisis and maintain their competitiveness in
adverse economic environments. In this paper an attempt to address the issue of
SME competitiveness in adverse economic environments is made, by investigating
the relationship between the appropriate enterprise competitiveness metrics, as
measured by their capacity to compete (quantity and cost requirements, time
requirements, certification and standards, competitors), to connect (ICT
requirements, linkages with customers, linkages with businesses, linkages with
institutions) and to change (financing
requirements, skills requirements, intellectual property requirements,
innovation requirements) and country statistics, including the competitiveness
of each particular country, as measured by the unemployment rate, the unit
labor cost, the total employment growth, the GDP (in billion USD), the GDP
growth, the GDP per capita (in USD) and the competitiveness indicators (in
terms of relative consumer prices and relative unit labor costs). The
methodological approach relies on the use of linear regressions. In doing so,
we expect to derive the country policies and dynamics that can help SMEs
maintain their competitiveness and comparative advantages in periods during which the economies
are not performing as well. This is quite important, in securing not only the viability but also the
growth of SMEs, taking into consideration the importance of their contribution
to the economies of their countries of domiciliation as exhibited above.