European scenarios

Business becomes micro

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How are entrepreneurial formulas evolving in Europe? According to the European Commission business sizes are decreasing and 85% of the new workplaces will be created by micro, small and medium enterprises.

 

Simonetta Stella

 

We should get used to giving up an acronym by now become familiar: the old expression SME (small and medium enterprise) might become obsolete and give way to MSME, where the initial “M” stands for “micro” and its addition is aimed at underlining the importance of this type of enterprises in Europe. According to some Eurostat data, in 2008 were about 20.7 millions the micro, small and medium enterprises, of which around 5 millions could be included in the definition of “craft firms”. This means that the enterprises employing less than 250 people are 99.8% of the total and absorb 67.4% of the employment. It is worth considering, however, that the vast majority of them are microenterprises. Out of the total, in fact, 91.8% are the companies with less than 10 workers, with all consequent difficulties. They have been therefore created various anti-crisis counters, targeted aids and incentives to support the innovation, the internationalization, the access to credit and the employment of micro, small and medium enterprises. In absence of resources and against the permanence of difficulties in the access to funding, local institutions, Regions, Trade Chambers and Provinces have undertaken measures to support the companies on the territory and to face the complex international scenario, through the establishment of calls that provide economic contributions as well as through the creation of expert teams that support companies in formulating an effective strategy to strengthen their competitiveness and to identify new business opportunities.

Support and funding
In Europe micro, small and medium enterprises represent the pillar of the economy with the 99% percentage of the total of companies: they are therefore the driving engine of our continent and the main employment source. In Italy, according to the Financing SMEs and Entrepreneurs 2013 report, released by Ocse, small and medium enterprises constitute 80% of the labour force. They are dynamic and lively, very flexible, but compared to those of other European Countries they have enormous unexpressed potentialities owing to the higher difficulty in the access to credit. Another critical datum is the small number of enterprises that do business abroad: 50% of Italian exports are ascribable to around 2,000 companies. It is predictable that the difference between the business volume of companies operating on international markets and of those that, on the contrary, have the domestic one as main outlet will be increasingly neat in next years. One of the strategic goals for Italy consists, then, in widening the array of enterprises committed to international markets, especially to the non-European area. The true challenge, as highlighted in the Report 2013 Small Business Act, drawn up by the Ministry of Economic Development, is the passage from the molecular capitalism to a capitalism based on smart nets, where the manufacturing industry is supported by the banking system and by the advanced tertiary industry. According to this strategy, one of the most original instruments that has been introduced is the network contract, an instrument thanks to which enterprises, operating in different sectors or Regions, can join and collaborate to fulfil common projects and targets. The target is to create a net to exchange know-how, to share the cost management, to enhance the innovation capabilities, thus improving corporate performances, especially turnover and export. According to the last available data, the most active companies in entering into this type of contract are those belonging to the following sectors: services and consulting, energy, engineering and automation, building and infrastructures. Over the last two years the Governments’ action has then focused on the measures for boosting the economic growth through the expansion and the refinancing of the Central Guarantee Fund aimed at supporting the development of MSME: it is a public guarantee against funding granted by banks also for investments abroad. The fund managed by the Ministry of Economic Development has scored a rising trend in the course of the last 12 months both in terms of demand and of allowed operations: 62,069 demands were in fact submitted (+3.5% versus 2011), of which 61,408 accepted (+ 11.2% than in 2011). The fund has therefore granted 4 billion Euros of guarantees, which have in their turn activated about 8.2 billion Euros of credit in favour of enterprises. The national innovation fund, relying on 80 million Euros, is in its turn conceived to allow companies to accede to bank loans and risk capital also in this crisis time, and is aimed at supporting those companies that intend to introduce innovative products on the market on the basis of patents, designs or models. While the Italian investment fund, the main private equity fund with resources that amount to 1.2 billion Euros, has realized twenty-seven direct investments corresponding to about 267 million Euros and thirteen indirect investments for 265 million Euros. To be constantly informed about the latest novelties and the opportunities of regional, national and European Community concessions, these two sites are available: www.pmi.it and www.finanziamentopmi.it

The role of SME in Europe. According to the Financing SMEs and Entrepreneurs 2013 report released by Ocse, in Italy small and medium enterprises constitute 80% of the labour force.

The support at Community level
Besides the initiatives carried out on national and local scale, also the European Union has undertaken various measures to promote entrepreneurship and competences of MSME, to improve the access to markets, to reduce bureaucratic burdens, to favour innovation and research and to encourage internationalization. In the specific case, the following support types are delivered: direct funding to MSME, to obtain them companies must submit projects having some characteristics like sustainability, internationality and the possibility of creating relevant added value; structural funds used by the European Union to favour cohesion and economic development; financial instruments, that’s to say interventions targeted to the risk capital and the provision of guarantees to banks granting credits to MSME.

Forecasts about future trends
According to the forecasts by the EU Commission of last November (European Economic Forecast), an improvement of the business trend of the European economy is expected to take place starting from the second semester 2013, which will lead to a GDP growth equal to +0.4%, to reach then +1.6% in 2014. USA, according to the estimates, will grow by +2.3% in 2013 and by +2.6% in 2014. While an approximate + 7.7% constant growth is expected for China in the biennium. In Italy, according to the projections of Confindustria Study Centre, after the 2.1% downturn of GDP in 2012, a negative trend is still expected in 2013 that, on the contrary, should become positive again in 2014 (+0.6%). The GDP drop is mainly ascribable to the 3.2% decrease of the domestic demand registered in 2012: in 2013 families’ consumptions are expected to drop by further 1.4%, while the gross fixed capital formation, diminished according to the CSC estimates by 8.2% in 2012, will further decrease by 1.8% in 2013. In recovery phase, on the contrary, exports with the 2.8% expected growth in 2014. In this difficult economic period it is however worth signalling a positive factor: Italy lost only 0.8 points of world production share at current prices between 2000 and 2011, while United States saw 10.3 points evaporate, Japan 6.4 points, Great Britain 1.5 points and France 1.1 points. In 2000 the first manufacturing power in the world, the United States of America, were almost three times more important than China; eleven years later, the value of the Chinese manufacturing industry is already 50% higher than America’s. The scenario is going to change rapidly: it is conceivable that during next years Brazil and India will confirm to be among the liveliest economies in the global scenario.

 

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