Small and Medium-Sized Enterprises

Abstract

Though both of the above texts have as their primary focus the organisation of production in small and medium-sized enterprises (SMEs), in terms of intellectual style, the mode and level of analysis and the public policy prescriptions and ambitions of their authors, they contrast sharply. Nevertheless, the texts com plement each other. The volume edited by Bagnasco and Sabel, part of the 'Social Change in Western Europe' series, consists of a collection of national case studies that attempt to explain why the SME sectors of different regions and countries have each followed their (highly particular) historical trajectories and have deve loped the characteristics we observe today. Bagnasco's introduction reviews the lessons of the past 20 years or so since the academic and public policy com munities in all of the EU countries first began to take a serious interest in the economic potential and comparative advantages associated with small and medium-size enterprises (SMEs). The reasons for this interest are not difficult to fathom and mirror the greatly increased perceived importance of relatively small-scale and independently owned and controlled production units for the economic well-being and growth potential of the European economies. Researchers and policy makers were drawn to the many SME-dominated districts, initially within the 'Third Italy' and later throughout Europe, to seek explanations for the plainly evident economic viability of this form of production. As economic difficulties and unemployment levels throughout Europe increased after the oil price crisis of the early 1970s, policy makers became ever more desperate to apply what they thought were the lessons to be learnt from highly successful SME districts in order to nurture similar success stories in less-favoured regions currently lacking in SME activity. These developments were largely unexpected, particularly for those wedded to a view that the development of western industrial economies was inevitably destined to lead to ever greater concentrations of production in order to exploit the cost advantages arising from economies of scale. Bagnasco's review of the research to date, and confirmed by each of the national case studies in subsequent chapters, indicates that the reasons why some regions have developed successful SME economies are many and varied. Moreover, as Sabel's concluding chapter points out, in the context of a comparison of the features of the largely craft-based SMEs characteristic of the German districts with that of the Japanese 'network firm', current sources of competitive advantage may become impediments to future success in today's fast-changing economic environment. Hence, even if researchers have accurately identified the causes of past success, imitation is unlikely to be a reliable strategy to achieve comparable success in future.