SME Policy: Comparative Analysis of SME Definitions

Since the end of the Glorious Thirties, we noted a marked increase in public policies targeting SMEs with the objective to constantly strengthen innovation and to foster the development of positive entrepreneurial ecosystems.In this context, a clear SME definition should be the guiding light determining not only the efficiency but also the adequacy of government interventions in the SME sector.We therefore explore the challenges of a single definition for SMEs through an in-depth constructivist analysis while a cross-country comparison for SME definitions is carried out.On this basis, four points are addressed and developed.Firstly, the paper suggests that SME definitions are always a function of the associated political objectives.Secondly, through the basis of this comparison, the paper shows that the number of employees remains the most recurring criterion even though an heterogeneous and sectorial definition is the most optimal.Thirdly, with particular attention to the dynamics of evolution of the EU definition, the paper suggests that two definitions should be superimposed: a globally accepted statistical definition and a common definition for public policies that depends on the country's ecosystem where the associated SME policy is conducted.This latter point is a prerequisite to ensure both an effective SME policy and the emergence of a thriving entrepreneurial ecosystem.Fourthly, the paper points out that the problems posed by SME definitions are likely to arise again and soon for start-ups.The development of new definitions for SMEs should therefore include the opportunity to include start-ups in a singular form.This common staking would better articulate two intrinsically linked concepts.