SMEs and start-ups engaged in international activities tend to perform their domestic-only counterparts in terms of productivity, growth, job creation and innovation. Access to foreign markets fuels this growth, but integration into Global Value Chains (GVCs) and networks of multinational enterprises (MNEs), are also important determinants, , leading to knowledge and innovation spillovers. Furthermore, internationalisation can act as a source of resilience. Despite their vulnerability to recent global trade disruptions, SMEs in GVCs have shown a faster recovery.
SME trade, GVCs and competition
Access to global markets is an important driver of growth and productivity for SMEs and their integration into global value chains a significant source of innovation and knowledge. Well-functioning global markets and a global level playing field are key to SME participation. Policies can help SMEs develop capacity to tap into international markets and supply chains, and strengthen linkages with international business and knowledge networks.
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Key messages
SMEs and start-ups play a critical role in the development of more resilient, sustainable, and circular GVCs. Owing to their agility in response to changes in markets and technologies, key role in the development and diffusion of digital and green practices, local footprint, proximity and understanding of end markets, SMEs and start-ups are particularly well placed to support the deployment of circular models.
SMEs and start-ups with international presence can attract quality inward foreign direct investment (FDI) to sub-national regions and contribute to s FDI-SME ecosystems that support regional development.
Strong and reliable customer/supplier relationships, particularly those that align with Environmental, Societal, and Governance (ESG) and Responsible Business Conduct (RBC) standards, influence foreign affiliates’ investment decisions, as well as reporting by Multinational Enterprises, making disinvestment less likely.
SMEs’ ability to engage in Global Value Chains (GVCs) is constrained by internal capacity (e.g. managerial skills, access to finance, compliance with standards) and external factors (e.g. the quality of logistics services and infrastructure, and regulatory barriers). Strengthening the positioning of SMEs in global markets and GVCs is a priority for many governments. Strategies and tools to support SMEs access new markets abroad and diversify their global integration patterns include financial instruments, training, market intelligence and networking, and advisory support services.
In addition to national government actions, policies designed and implemented at subnational level can determine a supportive environment for the participation of SMEs and start-ups in global markets and GVCs. In particular, subnational authorities are key to build healthy regional FDI-SME ecosystems. This requires co-operation across diverse institutions and agencies and across a number of policy areas, including investment promotion, trade and investment facilitation, intellectual property (IP) protection, contract enforcement, innovation and industrial policies, and targeted SME and entrepreneurship policies.
Context
In 2022-23, global supply chain conditions returned to normal after a massive setback.
Programmes
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Across the OECD, about 10-15% of small and medium-sized enterprises (SMEs) that scale up contribute around 50% of new jobs. Which SMEs are scalers? How can policy makers support them?Learn more
Related policy issues
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Succinct, straightforward, and clear, jargon-free, messaging is required here: what are the (global) challenges and what is at stake (for OECD countries) with respect to this policy sub-issue? Keep in mind user perspective logic by signposting the multiple angles/sectors that can be brought to bear on the issue. 180-300 chars (3-6 lines) is ideal.Learn more
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Green entrepreneurship is key to developing and propagating innovative green solutions needed to combat climate change.Learn more
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Following the 2015 Paris Agreement on climate change, governments have made the green transition one of their top policy priorities. With SMEs accounting for a large share of business-sector environmental footprint, it is urgent to involve SMEs and entrepreneurs more closely in this transition. Equally, SMEs and start-ups ae important drivers of the many innovations that can advance sustainable development. OECD work supports governments in the design and implementation of policies that can accelerate the green transition of SMEs and foster green entrepreneurship, including through enhanced energy efficiency and better access to sustainable finance, skills and technologies.Learn more
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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 ongoing megatrends and major transformations. We provide evidence of how business conditions shape SMEs’ ability to do business and grow, and when targeted policy support is needed. This includes supporting governments in developing a conducive business environment ensuring that SMEs can access and make use of a broad range of strategic resources, such as finance, innovation assets and skills.Learn more
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To ensure small and medium-sized enterprises (SMEs) reach their full potential to build a more resilient and sustainable future, it is essential for governments to access timely, granular and comparable data and evidence on the performance of their diverse populations of SMEs, on the business conditions affecting their operations and conduct, and on the effective policies that can support them to transform and scale-up.Learn more
Get in touch
Marco BIANCHINI, Economist and D4SME Project Coordinator
Alexander Lembke, Head of Unit