This week I have been at an event organised by RKW in Germany and involving representatives of the European Association of National Productivity Centres (EANPC) and the European Management Association (EMA).

We have been discussing the current state of SMEs in Europe … and what can be done to improve their contribution to the European economy – important as Europe continues its attempt to climb out of recession.

My own view is that governments often have too many policies and programmes aimed at helping SMEs. My experience is that SMEs are flexible and adaptive … and therefore will adapt to take advantage of, and funding from, government initiatives…. but the strong ones will survive anyway … and the weak ones are unlikely to thrive and grow even with such interventions.

Governments should establish the necessary infrastructure (especially the macroeconomic and regulatory framework – where regulation should be minimal and supportive – but crucially also the education and training – for skills – infrastructure, the transport and communications infrastructures). Note that this framework applies just as much to large companies as to SMEs.

Government’s job, then, is to get out of the way and let flexible, dynamic, innovative SMEs build their businesses within that supportive environment. 

So we need fewer initiatives but a stronger, more appropriate infrastructure. Then we  let the strong survive and thrive.