SME and its importance

SME or a Small and Medium-sized enterprise is a business that maintains revenues, assets, or a number of employees below a certain threshold. The number of employees in SMEs is varied across the countries, though the most frequent number is 50–250 employees. The world bank stated that SMEs represent about 90% of businesses and more than 50% of employment worldwide. SMEs — which cover most the businesses worldwide — are found related to sustainable development in terms of economic and social improvement. Why does it do so?

Sustainable development in SMEs can be demonstrated as a concept of small and/ or medium enterprise businesses creating shared value in an overall economic and social improvement. Especially on the economic side, SMEs play an important role in both the developing and developed countries by creating job opportunities, empowering regional economies, and promoting technological advancement that can significantly drive the economy forward. Meanwhile, on the social side, SMEs have been reducing poverty, creating employment, and generating social resilience.

The sample evidence that shows the economic and social responsibilities of SMEs are as follow:

• SMEs are contributing to economic growth at a higher rate than other larger business corporations.
• SMEs are an important source of employment for every group of people including women, low-skill workers, and the youth.
• SMEs create skilled workers by raising the level of skills with their working culture: flexible and innovative nature.

Despite the importance of SMEs, they are found to encounter challenges mostly from lack of resources regarding limited funding, poor supply chain management, lack of technology resources, etc. Some of these challenges can be solved, some cannot. SMEs — in any kind of business industry — owners have to overcome the challenges with their flexibility and adaptability in order to survive and become long-term sustainable businesses.