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Small Firms in Europe

Small Firms, Entreprise creation, Eastern European Countries

Small enterprise creation as a mean of political stabilisation and the new challenges of economic development in the enlarged Europe.

As Eastern European countries establish political stability on a democratic basis a need for innovative economic policy is evident. The governments are well aware of the need for innovative policies which will create growth and redistribute wealth.

Now that the real exposure to international competition means that there should be incentive to innovate either products, or production processes on a large scale.

Another important factor of change is the fact that the country's industry has been highly concentrated and organised vertically in large firms. This has prevented the development of more flexible systems of organisation and inhibited the development of a structure of small and medium-sized firms, while refraining the State from designing strategies for small firms.

Social factors

The creation and development of small firms is seen as a strategy for overcoming, among other problems, a situation of unemployment affecting a large base of population (young people, women, unskilled workers, new illegal or semi legal comers, etc.)
The objective is obviously ambitious and complex: this means that the State inevitably need to take on a guiding role.

A new culture

In the world-wide modern economies the growth of a business culture through the birth of small firms are encouraged to overcome economic and social discrepancies.

But this is not a spontaneous process which occur automatically. It is a gradual and delicate development which needs to be supported by political and cultural initiatives and with organisational and financial arrangements. Particularly crucial are the organisational and financial means making it possible for weaker people to have access to technical skills and to credit.

This is true of Europe, where the last ten years have seen a large number of structural development programmes that have been successful in encouraging young people, women and workers made redundant by declining industries to become entrepreneurs and undertake the challenging work of starting up their own firms.

In Italy we have good examples of public and private interventions in supporting enterprise creation and development of small firms through a number of measures that can be summarised as follows:
- national and regional laws to offer real services and financing to new businesses
- training programs
- information centres
- incubators, BIC, science park, technoparks
- industrial districts
- export consortia, buying groups

In addition, it has to be said that Italy is the Country of "a diffuse micro enterprises system", that accounts for 6.500.000 enterprises in a nation of 56 million inhabitants. 65% of the whole system is represented by individual enterprises.

It is a highly dynamic system, with a high rate of birth and where the mortality is due to lack of information, inadequacy of resources and lack of planning (business plan).

This is the Italian basic experience, it is a skeleton on which every country can build up its own system of services tailored on the local need analysis.

Among the need analysis carried on in the last ten years, there has been a particular focus on “female enterpreneuship”, for two main reasons:
1. to develop and encourage women enerpreneurial skills, seen also as a mean to lower female unemployment rate
2. to emphasise the gender specific assets, in order to supply the correct orientation and training services to women would be enterpreneurs.

Published: 2007-06-06
Author: Elsa Bettella

About the author or the publisher
Field of specialisation:
Women entrepreneurship
Enterprise creation and SME development
Training to trainers and small entrepreneurs
Analysis of the entrepreneurial skills
Business plan analysis

Education: 1980 Graduate with distinction in Political Science - University of Milan, Italy (major in economic & social disciplines).
Professional Experience record:
Professional activity in two key areas:
1. Banking, from 1975 to 1988, employee /officer for three US credit institutions
2. Training and Counselling, as a free-lance consultant since 1990

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