7. 3. 90 Official Journal of the European Communities No C 56/65 
Additional opinion of the Economic and Social Committee on the proposal for a Council 
Decision relating to the improvement of the business environment and the promotion of the 
development of enterprises in particular of small and medium-sized enterprises, in the 
Community (*) 
(90/C 56/17) 
On 25 April 1989 the Bureau of the Economic and Social Committee, acting under the third 
paragraph of Article 20 of the Committee's Rules of Procedure, decided that the Committee 
should draw up an additional opinion on the abovementioned proposal. 
The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing 
the Committee's work on the subject, adopted its opinion on 4 October 1989. The rapporteur 
was Mr Lustenhouwer. 
At its 271st plenary session (meeting of 16 November 1989) the Economic and Social 
Committee adopted the following opinion unanimously. 
1. Small and medium-sized enterprises in the Com­
munity 
1.1. SMEs and craft businesses play an important 
role in practically all sectors of the Community's econ­
omy. The millions of SMEs in the European Com­
munity are therefore vital for growth and employment, 
and for a number of years now the Community has 
quite rightly been working on a policy especially for 
such enterprises. The Committee has also referred to 
this in various reports — and in particular in its opinion 
on the action programme for SME (Rapporteur: 
Mr Calvet Chambon) (2). 
Only recently the Committee endorsed the Com­
mission's plans for the coming years and the requisite 
budget. This follow-up opinion will look more closely 
at a number of features of SMEs in an attempt to help 
the Community solve the problems inherent therein. 
As European integration progresses, the need for a 
Community SME policy will increase. It is already clear 
— and will soon be even clearer — that more and more 
national powers are being transferred to the Com­
munity. This also means that the Community must pay 
attention to issues of concern to SMEs which can no 
longer be dealt with solely at national level and there­
fore must not be neglected by the Community. 
The Committee notes with satisfaction the recent resol­
ution adopted by the Council on 26 September 1989 on 
the development of subcontracting in the European 
Community. The Committee supports all action to 
promote a greater participation of SMEs in the area of 
subcontracting. 
(!) OJ No C 79, 30. 3. 1989, p. 5. 
(2) OJ No C 232, 31.8. 1987. The Committee also notes that the same day the 
Council invited the Commission to proceed with its 
work on the role of craft industries and very small 
firms in the Community. The Committee expresses its 
willingness to give an opinion on the subject whenever 
appropriate. 
1.2. It is necessary at this point to refer to an 
extremely thorny problem which often makes Com­
munity SME policymaking particularly difficult. This 
problem concerns the statistical data which are fre­
quently vital for policymaking. For a good many years 
now there have been calls from many quarters for better 
coordination of statistics about SMEs. Sad to say, the 
Committee has been forced to conclude during its prep­
aration of this opinion that this situation has not 
improved. There are still no Community-wide statistics 
on SMEs, as a result of which it is possible to gain only 
a rough idea of developments. The Committee calls for 
better coordination of the different national statistics 
(to be achieved, inter alia, by harmonizing the classifi­
cation criteria applied by Member States) so that policy­
makers can better understand and gear their policies to 
these statistics, whithout this involving too much red 
tape for the entrepreneurs who have to supply the data. 
2. Typical features of SMEs 
2.1. The SME policy to be pursued by the Com­
munity in conjunction with all the relevant sectors of 
society must be aimed primarily at helping to solve the 
problems facing such firms. It is therefore necessary to 
analyze the typical features of SMEs so that policy can 
be tailored accordingly. 
Despite SMEs varying considerably from one Member 
State to another and one sector to another, they gener­
ally have specific size-related features. It should be 
No C 56/66 Official Journal of the European Communities 7. 3. 90 
noted that, in the case of cooperatives in particular, 
characteristics other than those listed below are some­
times relevant and that these features together do not, 
of course, provide a full definition of SMEs. 
The characteristic features are: 
— the central role of the owner/entrepreneur in the 
running of the enterprise, 
— a high degree of flexibility associated therewith, as 
borne out by a high level of adaptability to changing 
circumstances, 
— a frequent lack of specialized staff functions, 
— relatively labour-intensive, 
— highly-skilled staff in many cases, especially in craft 
industries, 
— difficulty of access to the capital market, 
— generally active at only local or regional level, 
— no market dominance, 
— little R&D capacity, but more applications-orient­
ed, which, with technology advancing so rapidly, 
can cause problems in particular for sub-contrac­
tors, 
— no or little use of market research, 
— poorly developed costing arrangements, 
— little planning and few medium-term financial pro­
jections, 
— the frequent lack of resources and know-how for 
the optimum performance of a number of key entre­
preneurial activities. 
2.2. It is true to say in the case of many of these 
features and the problems resulting therefrom that prac­
tical advice for entrepreneurs and training for entre­
preneurs and workers can produce very good results. 
The machinery required for this will have to be created 
in the Member States. The Committee notes that the 
Commission rightly attaches a lot of importance to the 
supply of information to SMEs. However, it is necessary 
not to overlook the fact that information goes hand-
in-hand with advice. It is important that SMEs learn 
how to use the information they receive. In a number 
of Member States special advisory services have been 
set up by or for small business organizations. It would 
be useful to bring these services, and business consult­
ants from the Member States, into contact with each 
other at Community level and to consider how they 
can learn from each other's experiences. 3. Place and position of SMEs and craft businesses in 
the Community 
3.1. As stated above, Community statistics about 
SMEs are still practically non-existent. However, it is 
generally possible to say that SMEs are a very large 
employer in the Member States, and they have certainly 
been responsible for the growth in jobs to a significant 
extent. In addition, they have proved in a number of 
cases to be a stable source of employment in periods 
of economic recession, although many have been ruined 
by large firms going out of business. 
The importance of SMEs for the Community's econ­
omic development therefore makes it necessary, for a 
number of reasons, to take a look at these firms. 
3.2. Reasons why the Community should pursue a 
specific SME policy 
— on economic grounds: SMEs have a huge economic 
potential and more than 90% of all businesses in 
the EC belong to the SME sector, 
— on competition grounds: it is absolutely vital to 
promote competition in the internal market. It is 
already clear that in anticipation of this market's 
completion a wave of mergers, takeovers and coop­
eration ventures is already under way in Europe. 
Even a good many large firms consider themselves 
to be too small to operate efficiently on the large 
market by themselves. An active Community com­
petition policy and the encouragement of SMEs may 
prevent such concentrations from overwhelming the 
market and restricting healthy competition, 
— because of SMEs' intrinsic nature: they have a num­
ber of size-related problems, for example poor 
access to sources of finance, staff shortages, lack 
of training, limited export opportunities, lack of 
internal expertise, etc. Community policy should 
help to offset these disadvantages, 
— because of regional policy considerations: especially 
in the less-developed and — in many cases — per­
ipheral regions of the Community the SME fulfills 
an important role. The maintenance of distributive 
trades (e.g. shops) is of major importance, and the 
SME also plays a major part in the promotion of 
tourism. In this connection it is important to further 
promote the hotel and catering trade in order to 
prevent spending in this sector from going outside 
the Community. Above all, steps will have to be 
7. 3. 90 Official Journal of the European Communities No C 56/67 
taken, in connection with the harmonization of 
VAT, to prevent hotel prices, ect., from rising and 
making it more difficult for the Community to 
compete in this sector. The Community will have 
to provide extra funds to encourage tourism and the 
hotel and catering trade on regional policy grounds, 
too. In particular the Structural Funds and the NCI 
will have to be made more accessible. Certain areas, 
such as declining agricultural areas, should not be 
allowed to draw on Community funds as long as 
new jobs can still be created there, especially in 
tourism. Cooperatives are also frequently active 
here, 
— on social policy grounds: close, direct contacts 
between the employer/entrepreneur and the 
employees are a feature of SMEs. Structures are 
mostly not as formal as they are in large enterprises 
and therefore have their own characteristics with 
their own specific problems because contact is so 
direct. Priority should be given to the training and 
instruction of employees and young people in SMEs 
by improving existing machinery in the Member 
States and drawing on the experiences of Member 
States which are well versed in this matter. The 
further training made necessary all the time by 
technological change may not be possible in SMEs 
or possible only to a limited extent since when the 
workforce is so small it is difficult, if not impossible, 
to release employees for such training. Therefore 
special facilities must be created for the further 
training of SME employees. The Committee would 
refer here to the addition of Article 118a to the 
Treaty in accordance with the Single European Act. 
This addition expressly states that Directives aimed 
at encouraging improvement in the working 
environment should avoid imposing administrative, 
financial and legal constraints in a way which would 
hold back the creation and development of SMEs; 
the Committee notes, however, that this must not 
mean less protection — either de jure or de facto 
— for SME employees, 
— on consumer policy grounds: since the SME has to 
deal with consumers in many sectors, provisions 
protecting the consumer must make allowance for 
the place and role of the SME in the distributive 
network, without this undermining consumer pro­tection to any appreciable extent. Firstly, SMEs 
have every interest in higher living standards for 
consumers, and secondly the consumer too benefits 
from a well-functioning SME sector which is able 
to maintain an extensive distributive network. The 
need for this is certainly heightened by the fact that 
the Community's population is ageing. 
3.3. The above reasons — to which many more 
could be added including the need to consider transport 
policy, which can also help to make SMEs more access­
ible in remote areas — show clearly that the Com­
munity should devote attention to SMEs. 
The need for this is ever increasing now that completion 
of the internal market has speeded up the transfer of 
powers to the Community following the Single Act's 
entry-into-force, thereby restricting national policies' 
room for, say, providing SMEs with tax incentives. In 
order to prevent a vacuum from arising, the Community 
will have to act. 
This is particularly evident in a field such a as compe­
tition policy, but new policy areas such as SME finan­
cing are also affected. 
The Community must realize that its SME policy must 
be geared, as far as possible, to national policies. Hence 
the need to strictly apply the principle of subsidiarity. 
This will require close contacts with Member States' 
policymakers and SME organizations. 
4. The taks which the Community will have to per­
form falls into two main parts: 
A. SME integration policy; 
B. specific SME policy in which greater allowance is 
made for SME sectors and structures. 
4.1. With regard to A 
The Community's SME integration policy must be a 
practical expression of the idea that all Community 
policies must make allowance for their effects on SMEs. 
These effects must therefore be constantly monitored. 
The impact assessment statements introduced some 
time ago are a good example provided that they are 
used seriously and accurately. However, of more 
importance is the political component of integration 
No C 56/68 Official Journal of the European Communities 7. 3. 90 
policy — i.e. the fact that the whole of the Commission 
is aware of its task with regard to the integration of 
SMEs and accepts that one of its members keeps a 
watch on the implementation of this integration idea 
as part of overall policy. 
This will require some reorganization of the Com­
mission's highly vertical structure. 
4.2. With regard to B 
The specific policy for SMEs also falls into two parts, 
namely: 
1. sectoral policy, and 
2. policy directed more at the features of SMEs. 
4.2.1. Sectoral policy covers measures which are 
aimed at small firms in a specific sector. 
Distribution is an example of one such sector, In both 
the wholesale and retail trades the SME has to contend 
with mergers and larger structures. These special prob­
lems need to be addressed by Community sectoral pol­
icy as a matter of urgency. 
4.2.2. Matters such as SME financing, the promotion 
of exports, the provision of information, proper advice 
and innovation within SMEs come under the policy 
which is focused more on the features of SMEs. 
This area of Community SME policy should also pay 
attention to the structural processes which influence 
the operation of SMEs and which alter the requirements 
demanded of entrepreneurs, such as training and re­
training. Activities in this area will also have to extend 
to SME employees on the basis that training and re­
training must be regarded as an investment for the 
future. In addition, entrepreneurs' wives who work in 
the business should be able to take part in vocational 
training. 
5. The future for SMEs 
5.1. The structure of Community business is chang­
ing rapidly. 
Increases in scale and mergers are a good example of 
this. 
Networking, the supply and contracting out of work, 
back-to-core business, make-or-buy decisions, elec­tronic data interchange — all of these developments 
have an effect on SMEs. Even the definition of the small 
businessman is evolving. More and more small firms 
which previously operated independently are embark­
ing on business cooperation ventures in distribution, 
industry and the services sector. Franchising is the best 
example to have emerged in recent years, although 
apart from its positive aspects this phenomenon also 
poses problems from the point of view of entrepreneur­
ial freedom and independence. 
The SME must adapt to or, better still, anticipate these 
developments. Encouragement should be provided here, 
inter alia, by the Community authorities pursuing an 
active policy to this end. This is only possible in the 
right climate. Laws and regulations must be tailored 
accordingly and not be too restrictive. Relevant infor­
mation must be easily accessible, e.g. through one-
stop shops which are easy to set up. The use of this 
information must be encouraged and good counselling 
is necessary. 
5.2. There are new structures with which the SME 
has to contend, and also new issues affecting life in 
society. The most important example is the environ­
ment. How can SMEs make a contribution and under 
what conditions? 
In a society in which new issues are coming more 
rapidly to the fore, the SME will have to play its part 
if it is not to lose its place on the market. The Com­
munity must also be adequately equipped. The creation 
of DG XXIII at the Commission is a good start provided 
that the needs of SMEs can be fully satisfied unbureau-
cratically in the interests of the whole of society. 
6. The future for Community SME policy 
6.1. A large number of initiatives have been taken 
by the Commission in recent years to help SMEs. The 
Committee has already examined these in its relevant 
opinion. Take, for example, the new European Econ­
omic Interest Grouping (EEIG) instrument, SME access 
to New Community Instrument (NCI) loans, the Com­
mission proposals on single-member companies and 
annual accounts (although the Committee was unable 
to endorse the latter proposal), the two exemption 
Regulations on categories of know-how licensing and 
franchising agreements, the creation of Euro Info Cen­
tres, the Business Cooperation Network (BC-NET) and 
the Europartnership. 
7. 3. 90 Official Journal of the European Communities No C 56/69 
A thorough analysis of the problems facing SMEs 
should, however, point the way to new measures. A 
good example here is the Commission communication 
on public procurement — regional and social aspects 
(COM(89) 400 final). The Committee is interested to 
note therein that SMEs' participation in public con­
tracts is on the increase. 
The Committee notes that it is emphasized time and 
again in discussions that the management qualities 
needed for SMEs are still underdeveloped. 
The Community has an important task to perform 
here, namely the development, in conjunction with 
the relevant socioeconomic organization of training 
modules for improving the management qualities of 
small businessmen. The courses must be practical and 
tailor-made. 
Strategic management calls for skills which are not 
adequately developed in SMEs at the moment but which 
will be especially valuable when competition becomes 
keener. SME managers who have benefited from basic 
and further training will be in a better position to make 
use of the facilities offered by the Community. This 
does not mean that the (further) training of other SME 
employees should not be given equal attention. 
The Committee takes a very positive view of the activi­
ties which the Community is developing in the form of 
experimental training schemes to prepare small busi­
nessmen for the changes wrought by the advent of the 
internal market. These activities are bound to contrib­
ute in due course to the establishment or improvement 
of the requisite training structures at national level. 
Done at Brussels, 16 November 1989. 6.2. The Community itself will have to offer a help­
ing hand by taking further serious steps to combat 
unnecessary bureaucracy. The Community impact 
assessment statements are a good start in the right 
direction. However, the procedure will have to be 
improved . One possibility may bo to publish the assess­
ments in the Official Journal of the European Com­
munities at the same time as the text of the proposal. 
An annual evaluation of the system's operation may 
also be useful. 
The policy for improving the position of small business­
es should also be assessed periodically in consultation 
with SME representatives. The Committee can easily 
imagine that well-intentioned measures may miss their 
target because they are launched without the involve­
ment of SME organizations and are therefore too nar­
rowly based. 
By carrying out a periodic policy evaluation it will also 
be possible to prevent independent courses of action 
within the Commission which detract from the trans­
parency of the overall plan. 
The impact of Community policy on deregulation also 
needs to be assessed. 
6.3. The encouragement of small business is an area 
in which countries outside the Community also have 
experience. In the United States of America, for exam­
ple, special legislation for the protection of small busi­
ness — the Small Business Act (SBA) — has been in 
force for many years. The Committee calls on the 
Commission to analyse the effects of SBA-based policies 
and also policy in other countries such as Korea and 
Japan. 
The Chairman 
of the Economic and Social Committee 
Alberto MASPRONE