Roles Of SME

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Small and Medium Enterprises (SMEs) are crucial for the economic growth and stability of any country. By facilitating economic activity and providing employment they play a vital role especially for developing countries for contributing to poverty reduction. They contribute to wealth creation and generate tax revenues. SMEs account for a lion’s share of the enterprises in most economies, and employ significant numbers of people. They are also thought to be an engine of new growth and innovation. SMEs understand the communities within which they operate and are able to provide goods and services tailored to local needs and at costs affordable to local people. They often have a vested interest in community development and bring social benefits…show more content…
They are also an important source of innovation. Their activities can include re-engineering products or services to meet market demands, exploring innovative distribution or sales techniques, or developing new and untapped markets. SMEs are often treated synonymously with innovation and entrepreneurship, which is an important source of growth. They are generally more market driven and less research-driven, but quicker to respond to new opportunities and more oriented to small incremental advances making their overall contribution very significant to R&D or broadly based innovation and to high-technology employment . The SME space tends to be highly complex – with heterogeneity in firm size, specialisation, spatial dispersion and performance. Many of them also operate in the informal sector compounding complexity. Modern SMEs, which are run by innovative techno-entrepreneurs and which are operating in new industries, will be able to perceive and pursue the opportunities offered by globalisation appropriately and, therefore, prosper rapidly. Churchill and Lewis (1983) identified five stages of growth for the SME’s as…show more content…
They may survive for longer time, but they remain small both in terms of staff strength and sales revenue. These firms are identified as the “Life-style”. The empirical study finds that these firms do not grow much since their inception, though they may stay in business for a relatively long time (average about 18 years). The” Capped growth“enterprises appear to have disengaged from the growth process after successfully expanding to modest size following start-up Many firms do not survive for more than a few years. Across a wide range of countries studied, about 20-40 per cent of newly-established firms fail within two years and only 40-50 per cent of new firms survive for more than seven years (Bartelsman et al. (2003) Indian SMEs can play a crucial role in achieving the transition from a dominant agricultural economy to a service oriented economy. They provide the maximum opportunities for both self employment and jobs after agriculture sector. They would be well placed to drive India's sunrise industries, and develop products that find ready global markets. Food products and Wearing apparel constitute the major production of India

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