Article: Competitiveness of SMEs: Fuelling the growth engine


Competitiveness of SMEs: Fuelling the growth engine

The growth of SMEs is one of most important vehicle of national productivity

It is not big that beat the small… it is the fast that beat the slow


The competitiveness of the MSMEs can be enhanced through rigorous sensitization, mentoring, awareness, education and skill building training sessions


Global competitiveness of nations and economy is determined by the effective and productive utilization of human, capital and natural resources. Different sectors such as government, public and private, corporate, agriculture and small and medium enterprises (SMEs) contribute significantly towards the overall competitiveness and sustainable growth of economies around the world. Creating and developing a productive environment is crucial to the growth of SMEs especially, which is one of most important vehicle of national productivity. Since nations and economies have become increasingly global, call for action to realize the potential of SMEs and enable them to compete globally, is immensely important. This can only be done by having a diagnostic understanding of their needs, culture and addressing their challenges.

SMEs are the largest industry worldwide in terms of employment and share of global GDP. There are about 22 million micro small and medium enterprises (MSMEs) in India today, contributing about 10% to GDP but due to lack of enough attention and support given to them, they are in a state of misery. India Inc. as one of the fastest growing and talented economies of the world cannot remain silent but have to be proactive in recognizing this huge opportunity which remains untapped. The good news is that our government has included small sector development as one of important pillars of national growth agenda but relevant macroeconomic reforms and commitments’ need to be seriously implemented so that a vibrant and dynamic environment for overall growth and transformation of this sector is seen.

Competitive excellence is a key requirement for the small sector but it cannot be achieved unless we realistically assess the needs, issues and concerns of SME environment in the contemporary context. The problems faced by the sector are of multiple types based on their size, structure and area of operations. Let us look at some of the hardcore issues affecting their survival and competitiveness.

The first and foremost factor is easy unavailability of credit and financial working capital followed by complex regulatory policies and taxation frameworks. The second but most vital element is the entrepreneurs own attitude and mindset issues of short term return and poor ability to execute, manage and monitor their businesses. The third block is their incapability to invest in technology, innovation and poor quality controls. The fourth dimension is the lack of access and affordability to implement professional systems and practices. The last but not the least is the unavailability of talented and skilled human capital and also the inability to retain people and invest in skill building. There is a poor match that exists between the supply of and the demand for trained personnel.

There is no one size fits all approach to the development of small sector but we have to plan for an organized and manageable approach wherein at the macro level the government policies and PPP initiatives do work in a collaborative fashion and institutionalize the SMEs for their betterment. We would focus here more on the microeconomic competitiveness and the fifth pillar of organization building and people capability both from culture, policy, competency and skill building standpoint. Human capital and management capital shall be one of the key areas of analysis and action which would essentially act as important growth drivers.

SMEs are the largest industry worldwide in terms of employment generation and employs a huge low cost labour force. They work in isolation with less sophisticated working standards and administrative infrastructure resulting in their competitive disadvantage. The “People Factor” is always taken for granted, just as one resource and widely remains underutilzed. We need to have a collaborative bottom up approach for small enterprises by involving all relevant stakeholders and agencies and engage them in establishing a development support ecosystem which is like a “Low cost high quality organisation development model” , affordable and especially tailored for SMEs. Providing consultative and simplistic organization development support through benchmarking of people processes and practices is required. The same could be expanded, customized and deployed in the larger interest of the sector in order to raise the professional know how and standards of people and facilitate them in enhancing their growth and competitiveness.

Competing through collaboration and developing an effective and ongoing medium of exchange of ideas and best practices is important for co-creation of value. Accessibility, affordability, advocacy and engagement are crucial forces which would break the chasm in this area. We need a sustained effort in creation and development of a series of capacity building schemes for enhancing the competitiveness of the MSMEs through rigorous sensitization, mentoring, awareness, education and skill building training sessions. The programs need to be built around relevant issues concerning the sector and no one strategic people development package shall apply in isolation, as in the case of large firms.

Creating an environment of strong professional entrepreneurship and establishing a networking mechanism is pivotal. Talented workforce and HR for SME is a building block and a lot depends upon the innovative capacity of human capital and the ability to capture, develop, implement and leverage the knowledge and skills for competitive advantage.

In summary, It is not big that beat the small…. it is the fast that beat the slow.

Read full story

Topics: C-Suite, Employee Relations, #BestPractices

Did you find this story helpful?



How do you envision AI transforming your work?

Your opinion matters: Tell us how we're doing this quarter!

Selected Score :