SME and entrepreneurship: challenges, enablers, and policy

 

SME AND ENTREPRENEURSHIP: CHALLENGES, ENABLERS,AND POLICY WORKFORCE DEVELOPMENT, EDUCATION REFORMS, DEMOGRAPHIC CHANGE, AND THE FOURTH INDUSTRIAL REVOLUTION DECENTRALIZATION, FEDERALISM, GOVERNANCE, AND DEVELOPMENT

SME and entrepreneurship: challenges, enablers, and policy

Micro, small, and medium enterprises (MSMEs) are important components of an economy, particularly of developing countries. In the Philippines, 99.5 percent of all firms are MSMEs and they account for 62 percent of private sector employment. However, they account for only 36 percent of the total Gross Value Added of all firms, suggesting that MSMEs are much less productive than large businesses. Some studies show that SMEs face challenges that keep them from growing and reaching their full potential. Among these are access to finance, access to markets, inefficient business processes, and lack of technical knowledge.

Over the past few years, the AIM RSN PCC has engaged in empirical research on factors that can influence SME competitiveness, such as linkages with large firms, participation in global value chains, and credit access, among others. The Center has also focused on regulations and the business environment for SMEs. Worldwide competitiveness reports indicate that ease and cost of doing business, including regulatory compliance, are significant obstacles to SME growth.

While external factors such as institutions, markets, and supply chains are crucial to SME growth, factors internal to the SME are sometimes overlooked. A leading internal factor that affect SME success is the entrepreneur, which, for many micro enterprises acts as the owner, manager, accountant, marketeer, and salesperson. This crucial role of the entrepreneur motivated the Center to study entrepreneurship, looking at factors that influence a person to go into entrepreneurship, and on policy interventions that can help improve entrepreneurship skills.

The SME program continues to serve as the Center’s avenue in contributing to policy discussions in the Philippines. In the past few years, it has been invited to sit in technical working groups in the government and to present its results in events both locally and abroad. Its recent surveys are pioneering works in terms of methodology, coverage, and topics included.