What is Small- to Medium-Sized Enterprises (SMEs)

The role played by small business in economic growth and development in the world is officially recognized, in both the economic literature and in official documents (e.g., Organization for Economic Cooperation and Development, European Commission, U.S. Department of State). Information and communication technology connectivity are widespread in all sized businesses, but small businesses seem slower than larger ones to adopt and use ICT and electronic commerce. SMEs (small- to medium-sized enterprises) are independent firms that employ less than 10 (micro), 50 (small), and 250 (medium) employees (European Commission, 2003); the United States includes firms with fewer than 500 employees in the definition of an SME (OECD, 2000a). In Europe, SMEs contribute up to 80% of employment in some industrial sectors (e.g., textiles, construction, furniture), and they are defined as “a major source of entrepreneurial skills, innovation and contribute to economic and social cohesion” (European Commission, 2005, p. 3); in the U.S. economy, small businesses represent 99.7% of all employers and “broaden a base of participation in society, create jobs, decentralize economic power and give people a stake in the future” (U.S. Department of State, 2006, p. 2). To synthesize: more than 95% of OECD enterprises are SMEs, accounting for 60-70% of employment in most countries (OECD, 2000a). The same proportion is indicated by the United Nations Conference on Trade and Development; in fact, SMEs account for 60-70% of all employment in developing countries (UNCTAD, 2002).