Small and Medium-Sized Enterprises (SMEs): The Engine of Economic Growth through Investments and Innovation

Ștefan Cristian Gherghina,Mihai Alexandru Botezatu,Alexandra Hosszu,Liliana Nicoleta Simionescu

doi:10.3390/su12010347

Abstract

Small and medium-sized enterprises (SMEs) are crucial for local economic development, playing a noteworthy role in job creation, poverty alleviation and economic growth, but they encounter many funding barriers. The purpose of the current paper is to investigate the impact of investments and innovation on territorial economic growth, as measured by turnover, for Romanian active enterprises, especially SMEs, over the period 2009–2017. By estimating several log–log linear regressions, the quantitative outcomes provide support for a positive influence of investments on turnover. The association was confirmed both for all active enterprises at the national level, as well as for micro, small, middle-sized and big companies. As regards expenditures on innovation, a positive impact on turnover was acknowledged for all enterprises and particularly for big companies, but there was an absence of any statistically significant relation in the case of SMEs. The impact of firm size on turnover was positive for all active enterprises at the national level, along with active micro-units. Also, the estimation results show a positive impact of the number of active micro-units on territorial economic growth. The empirical findings are relevant to managers and policymakers in order to stimulate, encourage and offer support to SMEs’ development through their strategies.

Highlights

Small and medium enterprises (SMEs) are a noteworthy driver of economic development [1], being vital to most economies across the world, in developing and emerging nations [2].They represent 99% of all businesses in the European Union (EU) and in the last five years, provided about 85% of new jobs, ensuring two-thirds of the total private sector engagement in the region [3].For instance, in 2015, there were about 23 million Small and medium-sized enterprises (SMEs) that provided 90 million jobs, generating a higher added value of 3.9 billion EUR [4]
SMEs are viewed as the backbone of an economy [8] since they exert a significant role in lessening poverty, employment creation, foreign trade promotion and technique innovation [9], contributing meaningfully to the growth of developing economies [10]
This paper aims to investigate the role of active enterprises, especially SMEs, in territorial development in Romania, as measured by their turnover

Summary

Introduction

Small and medium enterprises (SMEs) are a noteworthy driver of economic development [1], being vital to most economies across the world, in developing and emerging nations [2].They represent 99% of all businesses in the European Union (EU) and in the last five years, provided about 85% of new jobs, ensuring two-thirds of the total private sector engagement in the region [3].For instance, in 2015, there were about 23 million SMEs that provided 90 million jobs, generating a higher added value of 3.9 billion EUR [4]. SMEs are highly flexible, revealing a superior flexibility to technical shifts, higher promotion of income distribution and better adaptability to fluctuations in the market and new customer requirements, while their organizational structure allows for quicker decision making [5]. To achieve this potential, SMEs need a continued source of longstanding funding so as to invest in growth opportunities [6]. SMEs are viewed as the backbone of an economy [8] since they exert a significant role in lessening poverty, employment creation, foreign trade promotion and technique innovation [9], contributing meaningfully to the growth of developing economies [10]

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Results

Conclusion