Editorial
Article Type: Editorial From: Journal of Small Business and Enterprise Development, Volume 22, Issue 2.
At the time of writing this Editorial feature (beginning of March 2015), small- and medium-sized enterprises (SMEs) are back,once again, at the forefront of government rhetoric and at the centre of media attention. For me, there is nothing new in this: the SME sector has long been perceived as the “engine room” of the economy and most commentators acknowledge that it has a crucial role to play in the ongoing economic recovery.
At macroeconomic level the short-, medium- and long-term economic outlook looks more positive than at any time since the onset of recessionary conditions shook the world in early 2008. The general message, broadcasted across a wide range of populist as well as specialist outlets, is that the world economy is in recovery. After seven years of uncertainty, such positive news are more than welcome. Manufacturing growth is still modest, but steady, while the service sector is buoyant. Overall inflation is under control and declining steadily, on a year-to-year basis. Employment is also recovering from its all time low in 2010. This optimistic message, however, loses some of its lustre under microeconomic scrutiny. The problem, as always, is the European economy and its influence upon near and distant markets. Recently, however, economic developments in other regions also caused concern, both locally and further afield, on the possible negative impact that these could have upon national and regional European markets. Most observers warn that European economic growth is still below expectations, and suggest that more government support is needed at regional and national levels. The European quandary is often blamed for the current “mediocre” global economic forecast. At close scrutiny, however, a much more complex and far reaching position emerges as contributing to the below average world economic performance.
Notably, in the UK, healthy and consistent economic growth levels have contributed to a steady reduction in unemployment as well as a substantive decline in inflation levels. Positive economic performance in recent years has consolidated the strength of the sterling and has also contributed considerably to the recovery of the housing market in this country. The German economy has been sustained and grown on the strength of its high level of exports. This country’s trade surplus, the largest in the world, ensured that it has gained both economic and political leadership within Europe in general, and the Euro zone, in particular. In France, after stagnating in the first half of 2014, economic activity picked up and is forecasted to grow steadily during 2015 and 2016. Unfortunately, the ongoing dispute between Russia and Ukraine continues to negatively affect economic conditions in Central and Eastern Europe. As a result, economic recovery and growth in this region is likely to be modest for as long as political uncertainty dominates the socio-economic and political scene. A likely decline of output and slowdown of economic activity in China, Russia and Japan has also been forecasted. This is likely to have negative consequences for many countries that depend largely on economic transaction with these countries. On the other hand, the recovery of the US economy and the expansion of its SME sector might be durable enough to positively influence the world economy for the next few years.
Generally, SMEs tend to do well during post recessionary conditions that are characterised by economic recovery and growth. The remaining stock of lean and hard fighting micro and small businesses, which survived the recession, is likely to be replenished by new, high tech and growth-oriented firms. Similarly, during post recessionary times, downsized medium-sized enterprises tend to regain confidence in domestic and international markets. Their contribution to local and regional economic recovery can be significant. Overall, due to its inherent flexibility and flat managerial structure, the SME sector recovers rapidly and is likely to lead economic recovery and growth. More and better focused government support would help considerably those entrepreneurs who are still struggling to find adequate start-up as well as development funds, premises and access to lucrative overseas niche markets. Notably, however, optimism amongst entrepreneurs in the UK and elsewhere is high and this alone is likely to positive influence economic recovery and growth over the next few years.
This issue incorporates nine papers which, individually and collectively, evidence the diversity of interests and themes addressed by contributors as well as the variety of empirical approaches used in their research. Finally, I would like to express my gratitude to authors, referees, members of the JSBED Advisory Editorial Board, external advisors and the support team at Emerald Publishing Group for all their hard work, commitment and continuous support.
Harry Matlay
