Improvement of competitiveness in small and medium-sized enterprises

Abstract

While SMEs (small and medium-sized enterprises) contribute much to the economy, their competitiveness compared to that of large enterprises is negligible. Periodic evaluation of the overall competitiveness of SMEs is important to determine the reasons behind their relatively low growth rate. In order to maximize the effects of support for SMEs through government policies, determining the best means of providing support and enhancing competitiveness is necessary. Government funds or other sources of support for SMEs must be supplied according to the circumstances surrounding each enterprise. For instance, if the government invests in tangible assets, SMEs must be the target, because their size guarantees that despite their lower flexibility, competitiveness will improve. If investment is made in research and development, the firm’s long-term capacity for growth must be evaluated rather than its profitability, since there is an immediate increase in costs. There are differences in the effects of investment on flexibility, immaterial capital, and the ability to compete according to the size of the firm and the number of years it has been in business; these factors must be taken into account. Also, in allocating supporting funds to SMEs, the sites at which the funds are to be used must be examined. Active use of funds in areas where SMEs cannot invest in themselves is encouraged, rather than investment in general.