Enterprise and Small Business Principles
International comparisons
Table 2.4 shows an estimate of the number of enterprises in the EU (EU-15). Italy, Germany, Spain, France and the UK (in that order) clearly have the largest number of enterprises in the EU. In all EU countries, SMEs account for more than 99% of the total number of enterprises.
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Table 2.3 Number of enterprises, employment and turnover in the whole economy by number of employees, UK start 2003
1. All turnover figures exclude Section J (financial intermediation) where turnover is not available on a comparable basis. 2. 'With no employees' comprises sole proprietorships and partnerships comprising only the self-employed owner-manager(s), and companies comprising only an employee director. |
Source: Small Business Service (2004); (www. sbs. gov. uk/smes)
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Table 2.4 SMEs in EU-15
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Source: ENSR (2004); adapted from Tables IV.2, IV.3 and IV.4 |
There are differences, though, between the employment profile of European countries. Table 2.4 shows that there is a distribution in terms of the average employment size of a business. Countries below the EU average (seven employees) include Mediterranean countries such as Greece with two employees per enterprise, Italy with four, Portugal with five and Spain with six per enterprise. By comparison, countries such as the Netherlands, the UK and Austria have enterprises that are, on average, more likely to employ greater numbers of individuals. A similar distribution is also evident when we consider the employment shares of individual countries in relation to SMEs and larger enterprises.
Countries such as Greece, Italy, Spain and Portugal are more reliant on SMEs than economies such as the UK, Finland and Germany. For instance, SMEs contribute around 80% of employment in the four Mediterranean countries whilst in the UK, Finland and Germany they contribute less than 65% of total employment. These differences have led to the assertion that economies dominated by smaller-sized enterprises are less prosperous: ‘there is a strong correlation between average enterprise size and economic prosperity, as measured by per capita GDP’ (ENSR, 2004: 28).
Comparisons between the EU, Japan and the US further demonstrate the importance of SMEs. Table 2.5 indicates again that more than 99% of enterprises in these three economic area are SMEs. Equally, the EU and the US have similar distributions in terms of the percentage share of micro, small and medium-sized enterprises. This is also true for EU and US SMEs in terms of average employment size and employment share. Where, however, the EU and Japan differ from the US is in terms of the employment share of micro enterprises and large-scale enterprises (LSEs). Here, the average
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Table 2.5 SMEs in the EU, Japan and US
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US micro enterprise is likely to be a sole proprietor whereas in the EU the average number of employees in a micro-sized enterprise is three. A bigger contrast, though, is the employment share of LSEs. In the US, LSEs contribute more than half of all employment; in Japan and the EU, LSEs contribute one-third of employment.
This section has demonstrated - despite their being problems in estimating the number of smaller enterprises in any given economy - that SMEs in the UK and internationally constitute around 99% of all enterprises and make a significant contribution to employment. It has also shown that the average size of an enterprise tends to be that of a micro business (0-9 employees). Nonetheless, larger enterprises remain critical to very many economies, particularly in the US.
