EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 25.6.2008 
SEC(2008) 2102 
  
COMMISSION STAFF WORKING DOCUMENT 
accompanying the  
 
COMMUNICATION FROM THE CO MMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMI TTEE OF THE REGIONS 
 
Think Small First 
A Small Business Act for Europe  
 
Summary of the Impact Assessment 
{COM(2008) 394 final} 
{SEC(2008) 2101}
 
EN 2   EN SUMMARY 
This impact assessment (IA) report accompanies the Proposal for a “Small Business Act” for 
Europe. This proposal is the overarching element of a package of measures in tended to fully unlock 
the growth and jobs potential of EU SMEs. 
This IA first shortly synthesises some key findings from the literatur e on the crucial role that SMEs 
and entrepreneurship play in economic growth a nd social and regional cohesion. SMEs represent 
almost 70% of total employment in Europe and are responsible for most net jo b creation. In 
addition, SMEs and entrepreneurship are increas ingly important for ec onomic growth in the 
framework of a knowledge-based and global economy. 
Despite the significant progress achieved thanks to  the existing comprehensive EU SME policy, this 
IA shows that SMEs in Europe are not reaching their full potential. In particular, EU SMEs tend to 
have lower productivity growth, innovate less and grow more slow ly post entry than their US 
counterparts. Even though the existing EU SME polic y is performing well and is already targeting 
many of these problems, this worse performance wh en compared with the US shows that there is 
still room for improvement. 
This analysis has therefore screened existing  measures already imple mented or planned and 
identified a number of remaining issues that migh t individually or together hamper the performance 
of EU SMEs. This list, which does not claim to be exhaustive, due to  the wide scope and inherently 
interdisciplinary nature of SME policy, includes two categories of problems: 
• coordination and/or implementati on issues of existing policies; 
• remaining market or regulatory gaps not addressed sufficiently by existing policies. 
The table below summarises the results of the screening exercise:  
Remaining problems Implementation 
/coordination problems  Remaining market or 
regulatory gaps 
Impact of future EU legislation on SMEs   
Heterogeneity of the implementation of the “Think Small 
First” principle at national level, including:  
– Start-ups 
– Stigma of failure + bankruptcy procedures.   
Entrepreneurship is still not sufficiently reflected in 
education and training policies   
Insufficient level of women’s entrepreneurship    
SMEs’ difficult access to markets   
SMEs’ access to public proc urements and culture of 
tendering authorities   
SMEs’ difficulty in accessing, using and participating in 
the development of standards   
Insufficient access to finance 
• Availability of mezzanine finance 
• Availability of micro-credit 
• Fragmentation of venture capital   
Difficulty taking advantage of the opportunities linked to 
the environment   
SMEs’ difficulties in accessing international markets and 
especially fast growing markets    
Against this background, a number of objectives have  been set. The general objective for the “Small 
Business Act” is to fully unlock the growth and jobs pot ential of European SMEs and make full use 
 
EN 3   EN of their innovative capacities, in order to cont ribute to the objectives of the renewed Lisbon 
Partnership for Growth and Jobs decided in 2005. 
To reach this general objective, and following the analysis in the problem definition, two different 
types of specific objectives have been designed and can be summarized as follows: 
(1) Improve the implementation of the “Think Sma ll First” principle a nd the coordination of 
existing policies, by:  
• increasing the partnership with Member States to better implem ent and coordinate existing 
policies; 
• anchoring the “Think Small First” principle in policy making at EU and national level. 
(2) Address the remaining regulatory and market gaps EU SMEs are facing:  
• fostering entrepreneurship, by: 
– promoting entrepreneurship and the image of entrepreneurs, including in the education 
system; 
– encouraging new entrepreneurs, in particular female  entrepreneurs; 
• developing further SMEs’ access to finance, by:  
– increasing the availability of micro- credit and mezzanine finance for SMEs; 
– reducing venture capital market  fragmentation at EU level; 
• increasing SMEs’ access to markets, by: 
– fostering a more SME-friendly cu lture among tendering authorities; 
– improving SMEs’ access to, use of and particip ation in the development of standards; 
• increasing SMEs’ awareness of the opportunities  of sustainable products and processes by 
developing on the ground envir onmental and energy advice; 
• improving SMEs’ access to international markets a nd especially to the fa st growing markets of 
China and India. 
According to these objectives, policy options have been developed. However, due to the particular 
nature of the “Small Business Act”, which is a pack age of measures of diffe rent nature (legal and 
non-legal), only two options could be assessed: 
• the first option consists of the existing EU SM E policy, which is mainly based on the exchange 
of best practice and targeted EU  support programmes. This “no a dditional action” option serves 
as the baseline against which the other option is assessed; 
• the second option consists of stepping up the existing EU SME policy through a political 
partnership approach with the Member States , aimed at enhancing framework conditions for 
SMEs and entrepreneurship and including targeted  policies to address the remaining market and 
regulatory gaps. It aims to esta blish a true political dynamic be tween the EU and Member State 
level to put SMEs at the forefront of economic  policies as part of a long-term vision. In 
substance, this requires first an improvement in the policy approach towards SMEs both at 
Community and national levels by making sure th at legislation and programmes are conceived 
from the start and then implemented in a way that  respects the needs and specific characteristics 
of SMEs (the “Think Small First” principle). S econdly, a set of new acti ons could be developed 
into a coherent framework, in the policy areas wh ere a justification to act  has been ascertained. 
A third option, proposed by many stakeholders, could have consisted of developing and 
implementing a fully-fledged Community approach to SME policy with legally binding objectives 
and principles to be implemented at EU and Member State’ level and far-reaching Community 
 
EN 4   EN programmes to address the remaining regulatory a nd market gaps EU SMEs are facing. However, 
as many of the areas relevant to  SMEs’ growth potential are main ly or partly in the remit of 
Member States (e.g. education, start-up, insolven cy law), setting legally binding objectives would 
be clearly in contradiction with the subsidiarity principle, which is a requirement and presupposition 
for Community action. This op tion was therefore not select ed for further analysis. 
The analysis of the impacts of each option presen ts a qualitative assessment of the positive and 
negative impacts. It gives an indication of the ex tent to which each of the options can resolve the 
remaining issues established in the problem de finition as well as indications of the potential 
drawbacks. Given that the proposal for a “Small Busi ness Act” represents a package of measures in 
a wide range of areas of a different nature, and that the detailed impacts of any measures which 
would normally require an impact assessment will be analysed sepa rately, a quantitative analysis 
could not be performed. This would have requ ired complex modelling going beyond the scope of 
proportionality for this impact assessment and woul d have included a very hi gh level of uncertainty. 
Therefore, the impacts of the options are compar ed on a qualitative basi s and, where possible, 
quantitative estimation of the effects on economic gr owth, social and envir onmental dimensions is 
provided. 
The conclusion of this impact assessment is that the second option is pref erable. This option would 
enable substantial SME growth, jo b creation and increased environm ental protection, while at the 
same time being cost-effective, and being part of the Lisbon Partnership for Growth and Jobs. This 
approach would allow for a balanced approach be tween the ownership needed  at all levels and a 
necessary degree of peer pre ssure through a regu lar monitoring of a high level political 
commitment. Indeed, the “Small Business Act” for Europe would be monitored regularly in the 
framework of the Partnership for Growth and J obs in order to adapt the actions over time and 
optimize the impacts in a cost-effective manner.