SME is the European-wide abbreviation for small to medium sized enterprises. In the terms of their value to the economy, many indicators can be looked at. With a look into European statistics on enterprises on employment, turnover and Gross Value Added and by comparing those to larger enterprises; it will give a more realistic picture of how SMEs do contribute massively to the economy. Additionally, the difference of lifestyle and entrepreneurial firms will be discussed, adding to how each contribute to the European economy. In EU SMEs in 2012: at the crossroads (European Commission, 2012, p.15) it states that ‘SME’s form the backbone of the EU economy ‘, with the European Commission Vice President Antonio Tajini announcing that ‘if SME’s grow, the economy grows’, from an Information Daily report (2012).
This seems a reasonable statement as according to a European Commission report (2012, p.15) there are 20.7 million small to medium sized businesses in Europe which account for more than 98 per cent of all enterprises overall. This may be a surprise to many but the European framework states that a business with less the 249 employees is a medium-sized business, then this dramatically declines to 10-49 for a small enterprise followed on by a micro enterprise which is classified with employee numbers as little as 0-9. The number of employees can be zero because as this cohort can include a sole trader with no employees. Just over 40,000 of businesses in the 27 EU countries employ over 250 employees (Lukacs, 2005, p.6). This reiterates the European Commission’s statement that it is very clear that SME’s are important in stabilising the economy and for European citizens depending on them for employment.
Furthermore, in relation to the employment structure, more than two thirds (85 million) of the 127 million employees in Europe are working for an SME (Storey and Greene 2010). This again echoes the small and medium size enterprises have a massive impact on the...
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