Providing institutional support for business development

Adopting proactive policies, together with institutional support, for the development of small and medium sized enterprises (SMEs).

Such institutional support is an exercise of partnership, or of consultation, between the government and the private-sector.

Small and medium sized enterprises play an important role in industrial and export development, particularly in the context of a globalizing and liberalizing world economy. Institutional support for the development of SMEs will obviously to involve SMEs and their organizations. This will ensure that: (i) the organization of support services is market-based, i.e. they complement or encourage, rather than duplicate, private-sector initiatives or services and, where appropriate, compensate for market deficiencies and thus help to enhance the availability and effective utilization of essential inputs for SMEs, such as finance, physical facilities and equipment, training, market information, business advice, export marketing tools and business software packages; (ii) it can encourage, support or facilitate inter-firm cooperation, including in the context of industrial districts and of subcontracting arrangements with foreign firms, so as to increase the skills, flexible specialization, technological capacity, production and trading opportunities of SMEs; and (iii) it gets adequate feedback from the private-sector and SMEs concerning the effects of the framework and market conditions on business activities and possible improvements.

Various governments, as in Canada, France, Indonesia and UK, have established Ministries or Departments for Small Business to act as a catalyst or a "lightning rod" for Cabinet-level policy development in support of SMEs. Institutional support is then normally located in such a lead support agency, under the executive leadership of representatives of both the public and private sectors. However, in some countries, many of the support services are provided by private institutions, such as SEBRAE in Brazil. Coordination of the lead agency's activities with those of specialized institutions – such as in the areas of automation applications, science and technology, information technology, productivity improvement and standards and industrial research – helps to ensure a coordinated or integrated approach to assistance. For example, financial assistance for the purchase of equipment needs to be integrated with technical support for the operation of the equipment, where needed, if assistance is to be effective. In the United Kingdom, the Business Links programme integrates a wide variety of services, ranging from business consultancy to export services, in one-stop centres.