COMMUNICATION FROM THE COMMISSION - Evaluation of the second multiannual programme for entreprise and SMEs (1993-1996) - Observations from the Commission on the report submitted by Arthur Andersen & Co-Business Consulting Services
Date: 1996-03-20
Institutions: European Commission
Subjects: EU programme, project evaluation, report, small and medium-sized enterprises, type of business

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels,  20.03.1996 
COM(96)  99  final 

COMMUNICATION  FROM  THE  COMMISSION 

EVALUATION  OF THE  SECOND MULTIANNUAL  PROGRAMME 

FOR ENTERPRISE  AND SMEs  (1993-1996) 

OBSERVATIONS FROM THE COMMISSION 

ON THE REPORT SUBMITTED BY 

ARTHUR  ANDERSEN &  co  -  BUSINESS CONSULTING SERVICES 

INTRODUCTION 

Article  5  of  the  Council  Decision  of  14  June  1993  on  the  Second  Multiannual 
Programme  for  Enterprise  and  SMEs  (1993-1996)  stipulates  that  an  evaluation  of  the 
implementation  of the Decision is to be conducted by an external  evaluator.1 

This  evaluation  has  been  carried  out  by  Arthur  Andersen  &  Co  - Business  Consulting 
Services,  and  an  executive  summary  of  this  evaluation  (hereafter  called  "AA  report") 
was submitted to the Commission on 31 January  1996.2 

This  Communication,  which  contains  a summary  of the  Commission's  observations  on 
the  AA  Report,  will  be  forwarded  to  the  Council,  European  Parliament  and  Economic 
and  Social  Committee  alongside  a  proposal  for  a  Council  decision  on  a  Third 
Multiannual  Programme  for  Enterprise  and  SMEs  in  the  European  Union. (1997  -
2000).3 

I. GENERAL  COMMENTS 

| 

The  Commission  welcomes  the  AA  report,  particularly  in  view  of  the  positive 
assessment of the overall  implementation  of the current Multiannual  Programme and the 
helpful  suggestions made in the report for future  Community  action in this  field. 

The  overall  achievement  of  the  objectives  of  the  current  Multiannual  Programme  is 
rated positively  by the evaluator4  for the following  reasons: 

•  The  different  measures  have  been  well  conceived  by  the  Commission  as  they 

respond to the objectives  of the Council Decision; 

•  The  implementation  and  achievement  of  the  objectives  are  adequate.  From  a 
dynamic perspective, major  progress has been achieved over the last two years in the 
implementation  of some measures and for most measures considerable  improvement 
has been identified  in terms of quantitative and qualitative impact. In this context the 
AA  report  highlights  the  existing  imbalance  between  the  broad  and  ambitious 
objectives  on the one hand and the limited  resources on the other hand; 

•  The  cost-effectiveness  ratio  varies  from  "adequate"  to  "good"  and  "exceed",  which 
demonstrates  the  "value for  money"  provided  by the Community's  Enterprise  Policy 
actions. 

Council  Decision  93/379/EEC  of  14.6.1993  on a Multiannual  Programme  of Community  measures  to 
intensify  the  priority  areas  and  to  ensure  the  continuity  and  consolidation  of  policy  for  enterprise,  in 
particular  small  and  medium-sized  enterprises  in the Community, OJ N°L  161 of 2.7.1993, p.68. 
See Annex  1. 
In this  proposal,  a number  of  key conclusions  of the  evaluator  are  cross-referenced,  especially  where 
modifications  proposed  reflect  suggestions  of  the  evaluator  or,  as  in  some  cases,  where  the 
Commission  disagrees with the comments made by the evaluator. 
See  AA report,  Conclusion. 

The Commission  agrees that, while progress is being made in the right direction, there is 
still  room  for  improvement.  Therefore  the  Commission  has  carefully  considered  the 
various  recommendations  made  in  the  AA  report  for  increasing  the  impact  of  the 
individual measures. Some of the proposed changes have already been introduced by the 
Commission,5  while  others  will  be  implemented  in the  framework  of  its Proposal  for  a 
Third Multiannual  Programme for Enterprise and SMEs. 

II. OBSERVATIONS  ON THE ASSESSMENT OF SPECIFIC MEASURES 

Chapter  I:  Improvement  of  the  administrative  and 
enterprises  including the area of indirect taxation 

legal  environment  of 

The  AA  report  evaluates  the  different  measures  in  this  field6  as  well  conceived  and 
adequately  implemented,  with  an  adequate  rate  of  achievement  and  an  excellent  cost-
effectiveness  ratio. 

The  Commission  shares  the  evaluator's  positive  assessment  of the  individual  measures. 
In  particular,  the  measures  in  relation  to  legal  and  administrative  simplification 
(including  the  business  impact  assessment  system)  present  an  enormous  leverage 
potential,  combining  very  broad  impact  (the  entire  enterprise  population)  with  limited 
cost. 

The  AA  report  states  correctly  that  there  remains  room  for  improvement  in  the 
evaluation  of  the  impact  of  legislative  proposals  on  SMEs.  Extensive  work  has  been 
carried  out under the Community's  Enterprise  Policy to this effect,  and the result  makes 
up part of the proposal  for  a Third Multiannual  Programme.7 The AA report  also cites a 
considerable  number  of  high  profile  bench  mark  success  cases  where  the  business 
impact  assessment  system  was well  exploited.8  The evaluator's  recommendations  are  in 
line with the  Commission's  thinking  and have been taken up in the proposal  for  a Third 
Multiannual  Programme.9 

Report  on  the  future  operation  of  the  information  and  cooperation  networks,  COM(95)  435  final  of 
5.12.1995. 
The  AA  report  focuses  on  the  work  of  the  Community's  Enterprise  Policy  in  the  field  of 
administrative  simplification  and  legal  environment.  It does not cover  all the work  carried  out  by the 
Commission  in  this  field  (e.g.  the  recent  Commission  Guidelines  on  regulatory  policy  and  the 
Commission's  actions  in  the  area  of  consolidation  of  Community  legislation)  and  to  a  certain  extent 
goes  beyond  the remit  of the  Second  Multiannual  Programme  (e.g. cross-border  access  to Courts  and 
arbitration  has been taken  up in the proposal  for a Third  Multiannual  Programme). 
See AA report,  Footnote  10. 
See AA report, Chapter I. 
See AA report,  Chapter  I, recommendations. 

The  Commission  notes  that  both  representatives  of  SME  organisations  and  Member 
States  support  the  view  that  the  objective  of  improving  the  administrative  and  legal 
environment  for  enterprise  should  remain  a  priority  objective  of  the  Community's 
Enterprise  Policy.10  The  critical  importance  of  legal  and  administrative  simplification 
has  also  been  highlighted  in  the  Commission's  SME  Report  presented  to  the  Madrid 
European  Council.11  The  conclusions  of  this  European  Council  should  give  further 
impetus to the work which needs to be made in this area both by Member  States and the 
Commission. 

Chapter II  : Better access to Community  information  for enterprises 

A. The Euro-Info-Centres CEICs^ 

The evaluator  states that the different  measures in the field of information  for  enterprises 
are  well  conceived.  In  particular,  the  AA  report  points  out  that  the  Commission's 
approach  of  integrating  the  Euro-Info-Centres  (EICs)  into  national,  regional  or  local 
"host  structures"  should  allow  deep  penetration  of  the  SME  business  environment  and 
allow the  Commission  to run a network  at minimal  cost by  sharing  part  of the  financial 
and administrative  burden with these host organisations.12 

As  regards  the  implementation  of  the  EIC  network,  which  is  rated  adequate  by  the 
evaluator,  the  Commission  only  partially  agrees with  a number  of  remarks  made  in  the 
AA report:13 

•  Location  of  EICs:  It  is  true  that  the  EIC  network  has  grown  historically  from  an 
initial  pilot  action  covering  39  host  structures  to  a  first  enlargement  covering  189 
host  structures.  In  the  third  stage  of  development  the  total  number  reached  228 
mainly  arising  from  the  accession  of  new  Member  States.  However,  it  should  be 
borne  in  mind  that  the  selection  of EICs  in the  second  phase  was  the  outcome  of a 
call  for  proposals,  with  careful  consultations  being held  with  Member  States  before 
taking  a  decision.  A  compromise  had  to  be  reached  between  the  need  to  service 
areas of high  concentration  of SMEs and more remote areas where the population  of 
SMEs  is  limited.  A  major  factor  in the  choice  which  was  made,  the  importance  of 
which  should  not  be  underestimated,  was  the  role  of  the  EIC  network  as  an 
instrument  for  achieving economic and social cohesion of the Union. 

10  Ibidem. 
11  "SMEs:  a  dynamic  source  of  employment,  growth  and  competitiveness  in  the  European  Union", 

Report presented  by the Commission  to the Madrid  European  Council, CSE(95) 2087. 

12  See AA report, Chapter II. 
13  Ibidem. 

•  Host structures:  The number of banks and other private institutions in the network is 
quite  considerable  (approximately  30%,14  while  many  EICs  established  close 
contacts with this type of entities), but it must be taken into account that provision of 
information  to  enterprises  is  generally  considered  a  public  service,  and  that  the 
number  of  volunteering  banks  is  therefore  limited  on  account  of  the  considerable 
cost the host structures have to bear for setting up and running an EIC. 

•  Central  structure:  The  AA  report  states  that  the  EICs  are  generally  satisfied  with 
most support  services provided by the EIC Central structure. However, the  evaluator 
suggests  that  the  existing  quarterly  evaluation  reports  of  the  EIC  network  do  not 
allow  the  central  structure  to  monitor  effectively  the  quantitative  and  qualitative 
development  of the network.  This is a weakness which stems from  the  methodology 
chosen  right  at the outset  of the EIC network,  whereby the Commission  works  with 
volunteering  host  organisations  on the  basis  of  a co-operative  effort  largely-funded 
by host structures, whose relationships with their customers are not monitored by the 
Commission.  The  quarterly  reports requested  by the Commission  have  always  been 
a  key  element  in the  relationship  between  the  central  structure  and  the  EICs.  Their 
information  content  is  the  most  important  basis  for  the  evaluation  of  the  EIC 
activities carried out for the whole structure by an independent evaluator. There have 
been  constant  efforts  by  the  Commission  to  improve  this  aspect.  This  has  led  to 
major  improvements, although it has to be conceded that the system of sanctions and 
incentives  existing  under  the  Second  Multiannual  Programme  has  not  been  fully 
efficient.  This  is why the proposal  for  the Third  Multiannual  Programme  suggests  a 
strengthening  of  both,  with  the  aim  of  achieving  a  higher  and  more  homogeneous 
level of services rendered by the EICs. 

•  An  alternative  approach  ? The evaluator proposes to consider the merits of a radical 
shift  to a network consisting of a significantly  reduced number of EICs which would 
be  operated  and  funded  totally  by  the  Commission.  While  this  may  theoretically 
offer  an  even  greater  potential  of  reaching  a  homogeneous  level  of  quality 
throughout the network, the Commission does not consider it wise to follow this line 
of  action  for  the  reasons  set  out  in  the  proposal  for  a  Third  Multiannual 
Programme.15 

As  to  the  cost  effectiveness  of  the  EIC  network,  which  is  also  rated  adequate,  the  AA 
report  suggests  that,  at the  current  level  of  resources  employed,  the  network  should  be 
able  to  achieve  a  greater  qualitative  and  quantitative  impact  within  the  business 
community.16  While  the  Commission  shares  this  objective  with  the  evaluator,  it  has 
come  to  the  conclusion  that  the  stimulation  method  employed  by  the  Commission  has 
now  reached  its  limits,  unless  additional  resources  can  be  mobilised.17  In  reality,  the 

14  An additional  25% are both of a private and public nature. 
15  See  Explanatory  Memorandum  of  the  Commission  Proposal  for  a  Council  Decision  on  a  Third 

Multiannual  Programme  for  Enterprise and  SMEs, Section  IV.B.l. 

16  See A A report, Chapter II. 
17  Report  on  the  future  operation  of  the  information  and  cooperation  networks,  COM(95)  435  final  of 

5.12.1995. 

Commission  only  bears  25% of  the  total  cost  of  the  EIC  network,  and  the  evaluation 
report  notes  that  the  current  financial  structure  of  the  network  adds  considerable 
leverage to DG XXIII's resources.18 

The proposal  for  a  Third  Multiannual  Programme  presents  a  number  of  improvements 
which  from  the  Commission's  perspective,  would  improve  the  overall  result  and 
increase the  impact  of the  EIC  network.  It  also  sets  out  reasons  why  more  far-reaching 
suggestions made by the evaluator are not considered more cost  effective. 

B. Promotional  activities 

The  Commission  agrees  with  the  evaluator's  view  that  the  promotional  effort  made 
under  the  Community's  Enterprise  Policy  was  a  rather  weak  point.  This  is  mainly  on 
account  of  the  limited  resources  available  for  this  important  activity.  The  evaluator 
recognises the improvements made between  1993 and  1995,19 but clearly, more needs to 
be done in order, for  instance, to improve the impact  of the EIC network  in the Business 
community.  In  this  respect,  the  Community  shares  the  strengths  and  weaknesses  of  its 
partners in the network,  and a discussion  at the  informal  Industry  Council  in Biarritz  of 
10  March  1995  has  brought  to  light  a  need  for  action  both  at  Member  State  and 
Community  level.20  The  proposal  for  a  Third  Multiannual  Programme  puts  a  strong 
emphasis on strengthening the promotional  effort  and it is hoped that this, together  with 
the  decentralised  approach  adopted  by the  Commission  in the  last  two  years,  will  bear 
fruit.21 

Chapter HI  : Improving the business-partner-search  network 

The  evaluator  recognises  the  merits  of  the  business  search  networks  (BC-NET  and 
BRE): their public service function  is recognised; their unique character  is underlined  as 
there are thus  far  no comparable  European-wide  networks  available; their  conception  is 
good, as they  contribute to the realisation  of transnational  co-operation and hence to the 
development  of  the  Single  Market;  they  have  low  operating  costs  for  the  Community 
and  good geographical  coverage.22 

18  See A A report, Chapter II. 
19  Ibidem. 
20  See also  Integrated  Programme  in favour  of SMEs and the Craft  Sector (pp.19 and 20) where the need 
for a stimulation  of the demand  for business services is considered  to be a field  for concerted  action. 

21  See A A report, Chapter II. 
22  See A A report, Chapter III. 

While  the  overall  evaluation  of  these  networks  is  positive,  their  impact  may  appear 
relatively  modest.23  However,  current  user  figures  are  more  satisfactory  than  it  would 
appear  on  the  surface.  Given  that,  as  recognised  by  the  evaluator,  only  a  small 
percentage  of  SMEs  have the  ambition  to  grow  and  internationalise,  and  that  not  all  of 
these will choose transnational  co-operation as the approach to achieve these  objectives, 
one should not underestimate the current utilisation  figures.24 

This  does  not  mean  that  considerable  improvements  are  not  necessary  to  achieve  a 
higher  impact.25  As a matter of fact, these improvements  are among the proposals  made 
for the Third Multiannual  Programme. These will also improve on the  cost-effectiveness 
ratio of these networks which is well rated by the evaluator. 

Chapter  IV  :  Continued  development  of  instruments  permitting  direct  contact 
between entrepreneurs  and aimed at promoting transnational  subcontracting 

A. The partnership programmes Œuropartenariat and Interprise) 

The evaluator  states that the concept behind  Europartenariat and Interprise  is sound  and 
the results achieved  are good, in particular taking into account the considerable  leverage 
and synergy  effects.26 

The Commission  agrees that some implementation  and follow-up problems remain to be 
addressed.  The  proposal  for  a  Third  Multiannual  Programme  therefore  contains  a 
number  of improvements,  including  in the  area  of upstream  and  downstream  assistance 
to the undertakings  selected for participation. 

B.  Subcontracting 

The  AA  report  states  that the  different  measures  in the  area of  subcontracting  are  cost-
effective  and  well  conceived,  while customer  satisfaction  with their  quality  is  generally 
high. 

23  Ibidem. 
24  At  present,  only  about  460  000  enterprises  take  a  significant  part  in transborder  operations.  On  this 
basis, the  objective  to  mobilise  about  one  million  enterprises  for  this type  of  activities  would  appear 
very  ambitious. 

25  See A A report, Chapter  III. 
26  See AA report, Chapter  IV. 

As  far  as  the  specific  pilot  actions  are  concerned,  the  Commission  does  not  share  the 
evaluation  of  the  actions  aimed  at  encouraging  co-operation  between  large  and  small 
enterprises.  In  particular,  the  evaluator  seems  to  have  underrated  the  impact  of  the 
consumer  electronic  pilot  programme  and  the  hitherto  successful  attempt  to  organise 
buyers' exhibitions.  Both  measures  were  strategically  focused  on  identified  weaknesses 
in  the  European  subcontracting  system.27  The  Commission  proposes  in  the  Third 
Multiannual  Programme  a  continuing  emphasis  on  those  measures  which  have  a  high 
strategic impact, with a particular effort  to improve their  implementation. 

Chapter  V  : Ensuring  consideration  of  SME  interests  in  the  various  Community 
initiatives and  policies 

While recognising the complexity of implementing this objective, the evaluator-rates the 
Commission's  strategy  in this area as good  : the different  measures  have  a  considerable 
leverage potential, create synergy effects  and address priorities.2'8 

The  report  places  a  high  emphasis  on  inter-service  consultations  and  on  the  co 
ordination  efforts  of  DG  XXIII.  This  must  be  welcomed.  In  general,  the  Commission 
also shares the recommendations made by the evaluator with a view to strengthening  the 
co-ordination efforts  inside the Commission. 

The  poor  rating  of  the  report  on  co-ordination  is  however  due,  in  the  Commission's 
view,  to  a  misunderstanding  arising  from  the  title  of  this  report.  While  future  reports 
will put greater emphasis on the developments which have taken place, they will  remain 
reports covering  the work of the Commission  as a whole and not only the  co-ordination 
efforts  of  DG  XXIII.  The  question  of  the  title  of  the  report  was  discussed  previously 
when  the  Second  Multiannual  Programme  was  formulated,  and  was  taken  into  account 
Insufficient 
when  formulating  Article  5  of  the  new  Multiannual  Programme. 
consideration  has been given in the AA report to the fact  that the Integrated  Programme 
for  SMEs  and  the  Craft  Sector  has  brought  about  major  progress  in  the  co-ordination 
effort. 

The  evaluator  places  high  priority  on a harmonised  definition  of  SMEs  and  recognises 
the  progress  achieved  by  DG  XXIII.  The  encouragement  expressed  by  the  evaluator  is 
welcomed by the  Commission. 

27  Ibidem. 
28  See AA report, Chapter V. 

8 

Chapter  VI  :  Encouraging  SMEs  to  adapt  to  structural  change  and  to  changes 
brought  about  by  the  Internal  Market 

In  this  chapter,  a  variety  of  pilot  actions  launched  by  the  Commission  are  assessed.  The 
evaluator  expresses  strong  support  for  the  "laboratory  approach"  of  working  with  pilot 
projects,  provided  that  sufficient  resources  and  Severs  can  be  mobilised  to  disseminate 
their  findings.29 

Although  only  a  few  pilot  projects  have  reached  a  mature  phase,30  most  of  them  have 
been  rated  as  well  conceived  and  adequately  implemented,  thus  laying  the  foundations 
for  achieving  useful  and  practical  results.  Certain  question  marks  are  expressed  in  view 
of  the  human  resources  problems  of DG  XXIII. 

As  recommended  by  the  evaluator,  the  Commission  will  continue  its  "test  by  doing" 
approach  through  the  launching  oi" new  pilot  projects  under  the  Third  Multiannual 
Programme.  The  Commission  shares  the  view  of  the  evaluator  that  this  is  a  legitimate 
and  sensible  way  of  assessing  new  ideas without  spending  large  amounts  of  money  31 

As  in  the  past  new  pilot  actions  will  be  drawn  up  in  close  co-operation  with  European 
SME  organisations  in  order  to  clearly  identify  market  needs  ("bottom-up  approach"). 
The  Commission  will  also  consult  Member  States  and  publish  calls  for  proposals  in  the 
Official  Journal  to  achieve  European  wide  publicity.  Furthermore  each  pilot  action  will 
be  evaluated  by  an  external  consultant  upon  completion  of  the  project.  With  regard  to 
Euronianagement  pilot  actions,  the  Commission  will  encourage  close  co-operation 
between  the  European  co-ordinator  for  the  project  (selected  by  the  Commission)  and 
national  co-ordinators  (nominated  by  the  Member  States  and  the  Commission)  in  order 
to  achieve  the  best  possible  results  of the  pilot  action  and  to  ensure  best  value  for  money 

29  See AA report.  Chapter  VI. 
30  The  AA  repoil  questions  the  cosl-cffcctivencss  of  one  of  these  pilot  projects,  i.e.  the  one  aimed  at 
training  apprentices  from  the  peripheral  areas  in  the  Community  through  a  three  year  sandwich 
course  in  the  Federal  Republic  of  Germany.  The  special  evaluator  mandated  by  the  Commission  to 
review this project  comes to similar  conclusions and  makes a number  of important  suggestions  which 
should  be  taken  into  account  before  undertaking  any  further  action  in  this  field.  For  this  reason  the 
pilot  action  launched  in the early years of DG XXIII  should be considered  useful. 

3 1 Sec AA  report.  Chapter  VI. 

Chapter VII  : Promoting a better financial environment for  enterprises 

9 

The  AA  report  states  that  the  different  activities  launched  by  the  Commission  in  this 
field  are  well  designed  and  adequately  implemented,  while  having  a  good  qualitative 
and quantitative impact and an excellent cost-effectiveness  ratio. 

The major  concern expressed, namely that the Commission tried to do too much at once, 
can be explained  by the fact  that the evaluator  also assessed projects  which  are still  in a 
preparatory  phase  (i.e.  factoring  and  retention  of  title).  Accordingly,  the  evaluator  is 
under  the  false  impression  that  too  many  initiatives  are  taken  simultaneously,  while  a 
number  of them  are  still  at a very  early  stage. On the  other hand  it  is true  that  requests 
for  inter-service  consultation add to the workload of the units involved  in this work, that 
the  limited  number  of responsible  officials  are overwhelmed  with  a lot  of  consultations 
and  that  the  human  resources  of  DG  XXIII, here  as in other  cases, are  stretched  to  the 
limit.  The  implementation  of  these  measures,  however,  is  a  matter  which  lies  largely 
with  the  operators  within  the  Community.  Here,  as  in  other  fields,  the  Commission  is 
mainly working as a catalyst. 

The remarks by the evaluator concerning conception flaws  in the case of the seed capital 
pilot project  (i.e. that the size of some funds  is too small to pay back the operating  costs) 
calls for the following  response: 

• 

It  was  necessary  to  ensure  that  all  funds  were  new  funds  so  as  to  make  sure  that 
Community  support was not in fact used also for  activities other than  seed  funding. 
New funds  by definition  are small; 

•  Most  funds  foresee  an  increase  in  their  capital  base  and  as  a  matter  of  fact  have 

increased their capital since the beginning of the pilot project by 40%; 

• 

It  is  too  early  to judge  their  ability  to  pay  back  the  Community  advance  on  their 
operating  costs,  given  that  most  funds  have  up  to  five  years  before  they  have  to 
reimburse the advance. 

In  considering  the  suggestions  for  new  measures  made  by  the  evaluator,  the  following 
comments are pertinent: 

•  The  creation  of  round  tables  for  each  of  the  different  parties  and  professions 
involved  in the  financing  of  SMEs might put  too much  strain  on the  limited  human 
resources  of  the  Commission.  DG  XXIII  has,  however,  very  good  working 
relationships  with most of these  professions; 

10 

•  The  creation  of  a committee  for  improving  the  financial  environment  to  study  such 
measures  as taxation  has already  been undertaken with the setting-up  of the  steering 
committee  for  the  Concerted  Action  concerning  support  mechanisms  for  SMEs.  At 
present,  this  steering  committee  is considering  setting  up  special  working  parties  to 
follow  up on the results of the Madrid Forum on support mechanisms  in the  start-up 
phase of  firms. 

Chapter  VIII  :  Promoting  better  observation  of  the  economic  development  of 
enterprises 

While  this  part  of  the  activity  of  DG  XXIII  is  generally  evaluated  in  positive  terms, 
some critical remarks are made as to: 

• 

• 

the quality  of the statistical  data made available through national  statistical  institutes 
and Eurostat, 

the  inclusion  of  statistics  for  co-operatives,  mutuals,  associations  and  foundations 
(CMAFs)  in the work programme, whose priority  is questioned by the evaluator, 

• 

the composition  of the network responsible for the European Observatory  for  SMEs, 

•  distribution  policy  for  the  publications  concerning  the  Community's  Enterprise 

Policy, mainly  as regards the Member  State level. 

Some of these concerns go beyond the reach of the Commission's responsibility  (e.g. the 
collection  of  statistical  data).  However,  it  should  be  noted  that  the  initial  situation  of 
data availability  was quite bad and  could not easily  and rapidly  be improved  because  of 
the  size  of  the  enterprise  population.  Considerable  improvements  have  already  been 
introduced  and  should continue in the coming years. 

As regards  the priority  given to  CMAF  statistics, the doubts  expressed  by the  evaluator 
conflict  with  the  remark  that  the  statistics  clearly  fill  a  gap  as  no  comparable 
publications  exist  at  European  level.32  According  to  the  evaluator,  they  provide 
enterprise  policy  makers  at  a  national  and  European  level  with  a  useful  tool  for 
identifying  appropriate  initiatives in enterprise policy. 

32  See AA report, Chapter  VIII. 

11 

As  to  the  composition  of  the  network  responsible  for  the  European  Observatory  for 
SMEs, the Commission  is of the opinion that reliance on an independent  network  with a 
strong  research  component  should  be  pursued  both  in  the  interest  of  the  objective 
interpretation  of  the  available  data  and  the  effectiveness  of  co-operation  within  the 
network. However, co-operation between the European Observatory  for  SMEs and other 
organisations  should  be  encouraged.  For  instance,  the  Third  Multiannual  Programme 
proposes to examine the possibility of developing a selection of key indicators for  SMEs 
based on existing  inquiries. 

Finally,  the  Commission  agrees  that  the  distribution  policy  for  publications  on  the 
Community's  Enterprise  Policy  could  be  improved  by  making  greater  use  of  new 
information  technologies.  The  proposal  for  a Third  Multiannual  Programme  contains  a 
number of initiatives along those lines, which should  indeed ensure greater practical  use 
and also give a wider audience to the Commission's publications on Enterprise  Policy. 

CONCLUSION 

In line with the Council's request,33 the Commission  has examined  the Arthur  Andersen 
report  on the  implementation  of the  Second  Multiannual  Programme  for  Enterprise  and 
SMEs (1993-1996). 

This  Communication  provides  a  non-exhaustive  summary  of  the  Commission's 
observations on this report. 

The  Commission  welcomes  the  overall  positive  assessment  made  by  the  evaluator  and 
will  take  the  valuable  information  contained  in  the  evaluation  report  into  account  for 
devising  its  future  policy  for  enterprise  and  SMEs, in particular  in the  framework  of  its 
proposals for  a Third Multiannual Programme (1997-2000). 

33  Article  5 of Council  Decision  93/379/EEC  of  14.6.1993  on a Multiannual  Programme  of  Community 
measures  to  intensify  the  priority  areas  and  to  ensure  the  continuity  and  consolidation  of  policy  for 
enterprise,  in  particular  small  and  medium-sized  enterprises  in  the  Community,  OJ  N°L  161  of 
2.7.1993, p.68. 

Evaluation of the Multi-annual Programme 
to assist SMEs 

Executive  Summary 

Arthur Andersen  & Co. - Business Consulting Services 

January  3 1, 1996 

/IL 

AARTHUR 
ANDERSEN 

Arthur  Andersen  &  Co 
Specialty  Consulting  Services 

Avenue  des  Arts  56 
B-1040  Bruxelles 
Tel  02 510 43 75 
Fax  02 513 OS 62 

January  31,1996 

Mr. H. von  Moltke 
Director-General 
European  Commission 
Directorate-General  XXIII 
R u e d ' A r l o n 80 
1049  Brussels 

Dear  Mr. von  Moltke, 

We  have  the  honour  to  present  you  the  executive  summary  of  our  evaluation  of  the  Multi-
annual  Programme  to assist SMEs. 

The  executive  summary  has  been  prepared  following  to  Article  5 of  the  Council  Decision  of 
June  14,1993  that  requested  an  external  evaluation  of  the  Multi-annual  Programme  to  assist 
SMEs.  We  have  finalized  our  executive  summary  in  accordance  with  the  specifications  of 
tender  n°  94/S  81-40 358 and  our  proposal  for  professional  services  of June  7,1995. 

We would  like  to  thank  you  and  Directorate-General  XXIII for  being  offered  the  opportunity 
to carry  out  this  evaluation. 

Yours  sincerely, 

ARTHUR  ANDERSEN  & CO. 
Business  Consulting'SeT^ices 

q : \ e e c \ d g x x i i i\  e x e c - s u r n \ e n g l i s h \ l e t t e r . d o c ( v f b) 

TVA 438 676 164 
Banaue  435 0304191 79 
RCB'r29 486 

Société  Coopérative 

yn> 

TABLE OF CONTENTS 

TABLE  OF  CONTENTS 

INTRODUCTION 

CHAPTER  I : 

Improvement  of the administrative  and  legal environment  of enterprises  including 

the area  of  indirect  taxation 

CHAPTER  II  : 

Better  access to community  information  for  enterprises 

CHAPTER  HI  : 
CHAPTER  IV  : 

CHAPTER  V : 

Improving  the  business - partner  - search  network 
Continued  development  of instruments  permitting  direct  contact  between 
entrepreneurs  and  aimed  at  promoting  transnational  subcontracting 
Ensuring  consideration  of SME  interests  in the various  community  initiatives  and 
policies 

CHAPTER  VI  : 

Encouraging  SMEs  to adapt  to structural  changes  and  to changes  brought  about 
by the  Internal  Market 

~~ 

CHAPTER  VII  : 

Promoting  a better  financial  environment  for  enterprises 

CHAPTER  VIII  :  Promoting  better  observation  of the economic development  of  enterprises 

CONCLUSION 

RECOMMENDATIONS 

5 

9 

15 

19 

23 

27 

30 

34 

37 

39 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG  XXIII 

yi/ 

INTRODUCTION 

Small  and  medium-sized  companies  (SMEs)  are  very  important  to  the  European  economy. 
SMEs  account  for  approximately  99.8% of all companies  and  63% of turnover  in the  European  Union.  There  are 
in  Europe  more  than  15  million  SMEs,  representing  approximately  65.6%  of  total  employment  in  Europe1.  In 
addition, they  play  a primary  role  in a harmonious  local  and  regional  development  and  are a driving  force  behind 
effective  adaptation  to structural changes and  innovation. 

The  weight  attributed  to  SMEs  is  also  translated  in  the  various  contemporary  national  and  European  policies. 
Political  momentum  in  favour  of Community  enterprise  policy to assist  SMEs continues to be strong: SMEs  have 
an  essential  contribution  to  make  in the  achievement  of the  objectives  laid  down  in the  White  Paper  on  Growth, 
Competitiveness  and  Employment  and  in the Integrated  Programme  in favour  of SMEs. The report  on "Small  and 
Medium-Sized  Enterprises:  A  dynamic  Source  of  Employment,  Growth  and  Competitiveness  in  the  European 
Union",  recently  submitted  by  the  Commission  to  the  Madrid  Summit,  underlines  the  particular  importance  and 
the role SMEs play  in the  Community. 

Enterprise  policy  has historically  been  important.  It was traditionally  based  on Article 235 of the Treaty  of Rome. 
The Treaty on European  Union  created a new framework  in which the enterprise policy has to be  conducted: 

• 

• 

• 

• 

Article  130  addresses  the  competitiveness  of  industry:  the  Community  and  the  Member  States  shall  take 
action aimed  at "encouraging  an environment  favourable  to initiative and to the development  of  undertakings 
throughout  the  Community,  particularly  small  and  medium-sized  undertakings".  The  Article  further  states 
that  "an  environment  favourable  to  co-operation  between  undertakings"  and  a  "better  exploitation  of  the 
industrial  potential  of policies of innovation, research and technological  development"  should be promoted. 

Article  130 f.  2) refers  to the encouragement  of "small and medium-sized  undertakings  "in  their research and 
Technological  development  activities of high  quality". 

Title  XIV  of  the  Treaty  is  of  direct  concern  to  SMEs. This  chapter  of  the  Treaty  concerns  the  objective  of 
economic  and  social  cohesion  to  promote  a  harmonious  development  throughout  the  Union  and  to  reduce 
disparities  between  the  levels  of  development  of  the  various  regions  and  the  backwardness  of  the  least-
favoured  regions, including rural areas. 

Article  118  a.  concerning  the  introduction,  by  means  of  a  Directive,  of  minimum  obligations  for  the 
protection  of the health  and safety  of workers,  indicates that these obligations  should  not  impede the creation 
and development  of small  and medium-sized  enterprises. 

Despite  the  importance  of  the  topic,  a  coherent  enterprise  policy  at  a  Community  level  has  only  been 
institutionalised  recently.  A Directorate-General  responsible  for  enterprise  policy  in the  Commission  (DG  XXIII) 
has been created  in  1989. DG XXIII took over the action programme of the SME Task  Force. 

Directorate-General  XXIII  is  responsible  for  the  implementation  of  the  Multi-annual  Programme,  in  which  a 
framework  is set  and  the  different  objectives  are defined.  The Council  Decision  of 28 July  1989 adopted  the  first 
Multi-annual  Programme  for the  improvement  of the business  environment  and the promotion  of the  development 
of enterprises, and  in particular  small and medium-sized  enterprises". 

The  Council  Decision  93/379/EEC  of  14 June  1993  decided  on  a new  "Multi-annual  Programme  of  Community 
measures  to  intensify  the  priority  areas  and  to ensure  the  continuity  and  consolidation  of  policy  for  enterprise,  in 
particular  small  and  medium-sized  enterprises,  in  the  Community".  This  second  Multi-annual  Programme  was 
adopted  for a period  up to 31 December  1996. 

The same Council  Decision  of  14 June  1993 stipulates (Article  5) that  an evaluation  on the  implementation  of this 
decision  is to  be  conducted  by  an  external  evaluator.  A report,  together  with  any  proposals  or  comments  by  the 
Commission,  is to be  submitted  to the  European  Parliament, the Council  and  the  Economic  and  Social  Committee 
before  the end of March  1996. Such  is the object of our report. 

Enterprises in Europe. Third Report,  1994, p.  42 

2  This  Programme  has  been  evaluated  in a First  Evaluation  Report (SEC (92)  1999) which  the Commission  presented  to the  European 

Council on November  11, 1992. 

Arthur  Andersen 
Business  Consulting 

Evaluation  of  the  Multi-annual  Programme 
to  assist  SMEs  -  DG  XXIII 

/> 

- 2-

The  mission  for  Directorate-General  XXIII  laid  down  in  the  above  Council  Decision  consists  out  of  two  major 
priorities,  which  are,  as  mentioned  below,  growth  and  internationalisation.  This  mission  encompasses  nine  major 
objectives.  To achieve  these  objectives,  Directorate-General  XXIII  has  initiated  a number  of measures  to  respond 
to market  or SMEs'  needs. 

Art. 5 of  Council  Decision  of  Tune 14,1993 

The Commission  shall  submit...  an external  evaluation  report  on  the  implementation  of  this 

including  a  cost-effectiveness 
evaluation,  and  any  proposal  which  it 
deems  necessary  in  light  of  the 
evaluation 

D e c i s i on  :  A  programme  including  the objectives  as  mentioned  in  Art. 2 

Multi-annaal Programme 

Objectives 

OUR  EVALUATION 

OUR  RECOMMENDATIONS 

It was  not the  evaluator's  task  to judge  on the  legitimacy  of the mission  nor on  the objectives  of the  Multi-annual 
Programme.  Instead  the  evaluation  focused  on  the  nature  of  the  different  measures  and  their  effectiveness  in the 
achievement  of the  objectives  set  forth  in  the  above  Council  Decision.  The  present  report  describes  the  extent  to 
which  the  various  objectives  and  their  underlying  aspects  have  been  fulfilled  and  the  performance  made  of  the 
individual  measures.  A dynamic  perspective  was  also  adopted  to  evaluate  the  progress  made  during  the  current 
Multi-annual  Programme.  Consideration  should  be  given  to the  fact  that  the  current  Multi-annual  Programme  is 
not terminated  and runs to  December  1996. 

It  was  also  not  our  purpose  to  make  an  evaluation  of  the  human  resources  dedicated  to  the  Multi-annual 
Programme  and of the organisation  of DG XXIII. 

The document  also  includes  a cost-effectiveness  assessment  and suggestions  for  improving the different  measures. 
The  scores  attributed  to  the  different  objectives,  measures  or  criteria  are  meant  to  render  a  clear  opinion  and  to 
serve as a basis for  discussion. 

Operating  resources  attributed  to  the  Multi-annual  Programme  1993-1996  amounted  to  ECU  112.2  million  in 
aggregate. Our evaluation  of the different  measures was made  in light of the resources  allocated. 

The scheme  below  describes the underlying philosophy  of the evaluation  methodology  adopted: 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the Multi-annual  Programme 
to assist SMEs - DG XXIII 

/ r 

Context 

Objectives 

9  b r o ad  &  a m b i t i o us  objectives 

M.A.P.  through  DG XXIII 

-  Limited  number  of human  resources 
-  Limited  budget 

Complex  but  abundant  environment 

-  Other  DGs 
-  Representative  organisations 
-  Member  State  organisations  (national, 

federal,  regional,  local,...) 

Broad  population  ( > 15 million  SMEs) 

Ana 
lyse 
Environment 

On the one  hand,  the Multi-annual  Programme  was  allocated  limited  resources  in terms of personnel  and budget. 
At the  same  time,  it is confronted  with a complex  and abundant  environment:  many  organisations  or bodies  on  a 
local, national or international  level have a similar  ambit by working, directly or indirectly, on the same  objectives 
as  Directorate-General  XXIII,  and  hence  can contribute  to  the  achievement  of  these  objectives.  This  allows 
Directorate-General  XXIII  to use levers  and to identify  the situations  in which  its intervention  is necessary and 
adds value by addressing a market  failure.  This can be called a ''positive  subsidiarity". 

On the other hand, the objectives  of the Multi-annual  Programme are broad  and extremely  ambitious. 

The  critical  success  factors  which  have  to be taken  into  account  in the conception  and implementation  of each 
measure  can be summarised  in the following  three-step  process,  which  underlines  the primary  importance  to  be 
given to the  environment: 

Before  a measure is launched, has the environment  been observed  and analysed ? 
Were  lessons drawn  from  experience ? 
Have the existing  levers been  identified  and used in the implementation  of the measures ? 

Pilot  projects  can also  be used  to draw  the attention  of SMEs  or direct  them  into  a  particular  area  in which  a 
market  failure  has been  identified.  As these  projects  are meant  to be temporary,  the lead  initiative  is taken by 
Directorate-General  XXIII;  eventually,  the  responsibility  is  passed  to  the  market.  In  addition,  pilot  projects 
generally  provide  Directorate-General  XXIII  with  valuable  information  on the environment on the basis  of which 
corrective  actions or new  initiatives can be undertaken-. 

The methodology  used to evaluate the different  measures of the Multi-annual  Programme  was primarily  based on: 

• 

• 

• 

• 

Analysis of available  documentation; 

Interviews  with  people  most  closely  involved  with  the different  measures  (officials  within  the Commission, 
representatives of different  (national) entities, independent experts); 

Surveys  sent to various entities; 

Use of the  Andersen  InterAct  Process. 

The  individual  measures have been evaluated  according to a set of four  key criteria: 

• 

The conception  of the  measure:  to what  extent  does  the measure  respond  to the objectives  set forth  in  the 
Council  Decision of 14 June  1993; 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG  XXIII 

- 4-

• 

• 

• 

The  implementation  of  the  measure:  what  are  the  strengths  and  weaknesses  of  the  implementation  of  the 
measure (appropriate  operational  methods applied, accurate definition  of target population); 

The  quantitative  and  the  qualitative  impact  of the  measure:  what  is the  actual  impact  of  the  measure  on  the 
environment, mainly on SMEs  looking for growth and  internationalisation; 

The cost-effectiveness  which  allows a comparison  of the results obtained  by the measure  with  the direct  costs 
incurred". 

The various measures have been classified  in one of the different  phases of their "life  cycle": pilot project,  start-up 
phase, development  phase and mature phase. These different  phases may be characterised  as : 

• 

• 

• 

Pilot project:  Involvement  of  Directorate-General  XXIII  in the  specific  measure  is temporary;  the  objective 
is to launch  and test an idea  in the market, which will sometimes take over  responsibility; 

Start-up phase:  The specific  measure has been created recently, not all aspects  have yet been  implemented  or 
covered  and the  impact  is still  limited or too early to be assessed; 

Development phase:  The specific  measure  has been  implemented,  the  impact  is growing  but  has  not  reached 
its full  potential; 

•  Mature phase:  The measure has been  fully  implemented  and its full  impact can be  assessed 

The  score  attributed  to  the  overall  performance  of  each  measure  was  calculated  by  weighing  the  different 
evaluation  criteria  in  function  of  the  life  cycle  phase  of  the  measure.  Pilot  projects  and  measures  in  a  start-up 
phase  received  a  higher  weight  with  respect  to  their  conception  and  implementation,  while  the  focus  for  mature 
projects  lie in their quantitative  and qualitative  impact. 

An  aggregate  score  is  eventually  attributed  to  each  criterion,  measure  and  objective  using  the  weighing  factors 
described  above.  The  scores  on  the  evaluation  scale  used,  varied  on  a  spectrum  from  "Poor",  "Adequate"  and 
"Good" to "Exceed".  The meanings of the different  scores are as follows: 

• 

• 

• 

• 

Poor: The performance  gives rise to serious concern and reservations; 

Adequate: The  performance  is acceptable although there exists considerable room  for  improvement; 

Good: The  performance  is  considered  to  be  good  and  the  evaluator  does  not  need  to  make  significant 
suggestions  for  improvement  on the different  criteria; 

Exceed:  The performance  significantly  exceeds expectations and could  indicate  a high future  potential. 

A  comprehensive  evaluation  of  each  measure  has  been  presented  in  a  long-form  report.  The  present  executive 
summary  conversely  uses  a different  approach,  in the  sense that  it evaluates  the  extent  to which  the  objectives  of 
the  Multi-annual  Programme have been  achieved  by the different  measures. 

In  some  cases,  measures  respond  to  more  than  one  objective.  Although  those  measures  are  presented  under  one 
objective,  the effects  of the measures on the other objectives  were taken  into account  for  the scorings. 

The present executive  summary  is meant to be comprehensive  and  self-supporting. 

"Direct costs" relate  to the  financial  resources  allocated  under the  Multi-annual  Programme. 

Arthur Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG XXIII 

t1 

-5 

CHAPTER  I :  Improvement  of the administrative  and legal environment  of enterprises 
including the area of indirect taxation 

" In particular further  work on administrative  simplification  and promotion  of follow-up  measures  in the Member 
States;  assessment  of  the  impact  of  Community  legislation,  consolidation  of  Community  legislation,  specific 
examination  of  aspects  such  as  the  transfer  and  creation  of  enterprises;  regular  and  thorough  consultation  of 
organisations  representing  SMEs "4 

For  the  purpose  of  the  evaluation  study,  Arthur  Andersen  has  considered  the  objective  to  be  improving  the 
administrative  and  legal environment  existing at the European  level5. 

MEASURES 

• 

• 

• 

Legal and  administrative  environment  of SMEs - administrative  simplification  - business  impact  assessment6 

Recommendation  of December  7,  1994 on the transfer  of SMEs 

Cross-border  access to courts and  arbitrage 

EVALUATION 

Conception 

"Legal  and  administrative  simplification"  pursues  the  improvement  of the  administrative  and  legal  environment  -
including the area of indirect taxation  - at the Commission  level  in a general way. This  includes the assessment of 
the  impact  of  the  proposed  legislation.  The  Recommendation  on  the transfer  of  SMEs8 addresses  the  problem  of 
companies that fail  (and the resulting job  loss) because of problems related to their transfer.  Cross-border  access to 
courts and arbitrage  addresses the problems SMEs encounter when going to court and examines the possibilities of 
alternative  dispute  resolution. 

The  consultation  of  SME  representative  organisations  takes  place  mainly  in the  elaboration  of  Recommendations 
and  in  "legal  and  administrative  simplification";  therefore,  its  evaluation  is  subsumed  in  the  evaluation  of  the 
aforementioned  measures. 

The  two  first  measures  are  regulatory  measures:  they  combine  a very  broad  impact  (the  entire  SME  population) 
with  a  limited  cost  (mainly  DG  XXIII  staff  costs).  Especially  "legal  and  administrative  simplification"  has  an 
enormous  leverage  potential  because  of  its  very  wide  scope:  it  is aimed  at  all  Community  legislation  that  could 
have an impact on the business  environment. 

Alongside  the  leverage  potential,  possibilities  for  synergy  were  identified:  e.g.  the  Recommendation  on  the 
transfer  of  SMEs  will  be  supported  by the  work  performed  by  the Committee  for  Improving  and  Simplifying  the 
Business  Environment,  of  which  one  of  the  themes  should  deal  with  the  same  problem.  For  the  Cross-border 
access to courts and arbitrage measure, DG XXIII works in close co-operation  with other DGs. 

The text  in italic  refers  to Annex  1  of the Multi-annual  Programme. 

Administrative  simplification  - or  improving  the  administrative  and  legal  environment  of business  at the  Member  States  level  - is mainly 
dealt  with  by  the  Committee  for  Improving  and  Simplifying  the  Business  Environment.  However,  this  Committee  was  set  up  pursuant  to 
the  Integrated  Programme  and  is therefore  not part of our evaluation  study  - we mentioned  it for completeness' sake. 

Henceforth  referred  to  as  "legal  and  administrative  simplification":  For  the  purpose  of  this  evaluation,  the  measure  refers  to  the 
interservice  consultation  process  on  legislative  proposals. This  process  is not specifically  linked  to the  Multi-annual  Programme  as such; 
however,  it  is  a key*instrument  in  improving  the  administrative  and  legal  environment  of enterprises  and  thus  in  attaining  the  objectives 
of the  Multi-annual  Programme. 

Indirect  taxation  includes  VAT.  estate  duties  and  gift  taxes.  Article  6  of  the  Recommendation  on  the  transfer  of  SMEs  addresses  the 
problem  of  indirect  taxation  in  the  area  of  transfer  of  business  (estate  duties  and  gift  taxes). The  Recommendation  of  May  12.  1995 on 
payment  periods  in commercial  transactions  addresses the problem  of indirect  taxation  in terms of the effect  on firm liquidity. 

Regarding  the topic  of  "creation  of enterprises", this was the object  of the  first  meeting  of the Committee  for  Improving  and  Simplifying 
the  Business  Environment  (Forum  of  Paris),  which  is part  of the  Integrated  Programme;  therefore,  the  topic  is  not  part  of  the  evaluation 
study. 

Arthur Andersen 
Business  Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG XXIII 

C*> 

The text of the annex  also mentions "consolidation  of Community  legislation".  In this area, no action  was taken  by 
DG  XXIII.  Arthur  Andersen  was  told  that  consolidation  is  being  handled  by  other  DGs  and  the  Secretariat-
General.  Therefore,  for  the  purpose  of  the  evaluation  study,  Arthur  Andersen  can  only  note  that  this  part  of  the 
objective  was not addressed  by  DG XXIII. 

In  view  of  the  "good"  ratings  of  the  different  measures  for  conception  on  a  stand-alone  basis  and  taking  into 
account  the  leverage  and  synergy  potential,  the overall  conception  rating  for  the  strategy  to  achieve  the  objective 
is "good". 

Implementation 

On  a  stand-alone  basis  the  different  measures  were  either  well  or  adequately  implemented;  in  view  of  the 
importance  of  "legal  and  administrative  simplification"  which  was  rated  "adequate",  the  overall  rating  for 
implementation  is "adequate". 

"Legal and administrative  simplification"  was rated "adequate" for  several reasons: 

û 

• 

• 

• 

deadlines  set  by other  DGs are too  often  too tight  - which  has an adverse  effect  on  the  involvement  of  SME 
representative  organisations; 

DG XXIII  is often  involved  at the end and not as of the conception  of the proposal  submitted  for  consultation 
- which  automatically  limits its 'steering'  power; and 

the  evaluation  of  the  impact  of  legislative  proposals  on  SMEs  still  has  room  for  improvement;  e.g.  the 
business  impact  assessment  forms  are  often  considered  a  mere  formality  instead  of  a  tool  to  help  steer  a 
proposal. Moreover, the current  system  is not very sophisticated  . 

The  Recommendation  on  the  transfer  of  SMEs  obtained  a  "good"  rating.  DG  XXIII  went  to  great  lengths  to 
involve  all  relevant  parties  in  the  elaboration:  other  Dgs,  SME  representative  organisations,  Member  States, 
experts,...; there was ample time and sufficient  opportunity  for consultation  and  discussion. 

Cross-border  access  to  courts  and  arbitrage  -  although  currently  at  a  low  level  of  activity  -  is  another  good 
illustration  of working  in close co-operation  with all relevant  parties: DG XXIII  works  in close  collaboration  with 
other  DGs and organisations  active  in the sector. 

Achievement  of the  objective  (Quantitative  and qualitative  impact) 

On  a stand-alone  basis the  impact  of the different  measures was  either rated  "good"  or "adequate";  in  view  of the 
importance  of  "legal  and  administrative  simplification",  the  overall  rating  for  achievement  of  the  objective  is 
"adequate". 

Although  the  Recommendation  on the transfer  of  SMEs  requires  Member  States  to  submit  a progress  report  only 
by  December  31.  1996,  DG  XXIII  has  adopted  a  pro-active  attitude  to  keep  the  momentum  of  the 
Recommendation  going:  interim  progress  reports  are  drafted  and  Member  States  regularly  exhorted  to  follow  up 
on  the  Recommendation.  These  interim  reports  indicate  that  four  Member  States  have  already  taken  steps,  which 
bodes well for  the  future 

. 

For Cross-border  access to courts and arbitrage  it is still too early to evaluate the potential  impact. 

Considering  the number  of parties  involved  in the successive  stages of legislation,  it  is irrelevant  to try  to  measure 
the  impact  of  "legal  and  administrative  simplification" 
at  the  level  of  the  SMEs.  Therefore,  the  impact  was 
measured  through  the  weisht  DG  XXIII  carried  with  the  other  DGs  involved.  In  this  regard,  there  are  a 

It  is foremost  a "collégial"  measure,  i.e. the  way  it is implemented  and  the  impact  DG  XXIII  can  achieve  depends  to  a certain  extent  on 
the  input,  collaboration  and  goodwill  of  other  DGs  involved.  Therefore,  shortcomings  are  not  necessarily  to  be  traced  to  DG  XXIII  but 
might just  as well  be due to  insufficient  involvement  of another  DG. 

DG  XXIII  has  elaborated  a  more  sophisticated  approach  of  impact  assessment  but  this  new  system  has  not  yet  been  adopted  by  the 
Commission. 

"Transfer  of  SMEs"  is also  on  the  agenda  of the  Committee  for  Improving  and  Simplifying  the  Business  Environment;  this  will  provide 
DG XXIII  with  another  occasion  to push  the  Recommendation. 

We refer  to our comments  in footnote  5. 

Arthur  A n d e r s en 
Business  Consulting 

Evaluation  of  the  M u l t i - a n n u al  P r o g r a m me 
to  assist  SMEs  -  DG  XXIII 

a*: 

- 7-

considerable  number  of high-profile  bench-mark  success cases where the business  impact  assessment  system  was 
well  used  and  co-operation  between  DG  XXIII  and  the  responsible  DG  as  of  the  conception  of  the  legislative 
proposal was sterling. 

But, as mentioned  under "implementation",  too often  the  input of DG XXIII  comes at the end, when  deadlines  are 
near and the  important  decisions  have already  been  taken; too often,  the  business  impact  assessment  is considered 
a  formality  rather  than  a  tool  to  help  draft  and  'steer'  proposals.  It  is  obvious  that  working  in  such  conditions 
hampers the possibility  to influence  and thus the  impact. 

This  conclusion  was  borne  out  by  interviews  with  officials  from  other  DGs, members  of the  Article  4  Committee 
and  SME  representative  organisations;  at  the  same  time  it was  acknowledged  that  the  involvement  of  DG  XXIII 
through  this  measure  has  a  "pre-emptive  effect"  on  the  DGs  originating  the  proposals  (meaning  they  more  and 
more spontaneously  take account of the SME dimension). 

Cost-effectiven ess 

For  all  three  measures  listed  here,  the  absolute  cost  is very  low  (mainly  personnel  costs  and  some, organisational 
costs).  At  the  same  time  the  penetration  rate  and  leverage  potential  of  the  measures  is  enormous:  regulatory 
measures apply to all SMEs. Therefore,  the cost-effectiveness  of the different  measures was rated  "exceed". 

CONCLUSION 

Overall,  DG  XXIII  has  done  an "adequate" job  in trying  to  improve  the  administrative  and  legal  environment  of 
enterprises  in the  European  Union. 

What  is most  important  for  the future  is that  DG XXIII has the right tools to work towards the achievement  of this 
objective  in the  long term: the overall rating for conception  (overall  approach  - high  leverage potential)  is good. In 
addition,  the  measures  serving  this  objective  are  to  a  large  extent  based  on  the  exchange  of  best  practices,  the 
advantages  of  which  are:  (1)  it  involves  a  wide  pool  of  experience  (the  Commission,  the  Member  States,  SME 
representative  organisations,  independent  experts,...);  (2)  it  is  in  line  with  the  new  philosophy  of  partnership 
between  the  Commission  and  the  Member  States  and  (3)  it  is  the  most  market-oriented  and  cost-effective 
approach  to a problem. 

As  to  "legal  and  administrative  simplification",  the  implementation  and  the  impact  can  be  improved.  The 
Recommendations  elaborated  by  DG  XXIII  (Late  Payments  and  Transfer  of  business)  and  the  success  stories  of 
"legal  and administrative  simplification"  should be considered  bench-marks  in this regard. 

Regarding  consolidation  of  Community  legislation  - an  important  tool  in  improving  the  legal  environment 
can only note that DG XXIII has not taken  any initiatives. 

we 

(A 

E 
o 
-C 

OVERALL RATING PER  MEASURE 

• 
Legal and administrative 
environment  - administra 
tive simplification - busi 
ness impact  assessment 

• 
Recommendation on the 
transfer ot SMEs 

• 
Cross-border access 
to courts and arbitrage 

Poor 

Adequate 

Good 

Exceed 

Overall  performance 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG XXIII 

1 

RECOMMENDATIONS 

Discussions  with  officials  from  DG  XXIII,  other  DGs,  SME  representative  organisations  and  the  members  of  the 
Article  4  Committee  all  point  in  the  same  direction:  the  objective  of  improving  the  administrative  and  legal 
environment  for  enterprise  should be of paramount  importance  for  DG XXIII: 

• 

• 

Any  improvement  in this  area  potentially  benefits  all  SMEs; concentrating  on this  objective  thus  has  a very 
high  leverage potential. 

Another  advantage  is that  it automatically  benefits  all  SMEs; automatically  because  SMEs  don't  have  to 
go  through  special  procedures  or  incur  information  costs  to  benefit:  the  new  administrative  and  legal 
framework  will apply automatically.  All SMEs because a regulatory  framework  applies to all. 

To improve "legal  and administrative  simplification",  the following  recommendations  can be made: 

• 

• 

• 

Regarding  Green  Papers  and  Action  Plans,  DG XXIII  should  be systematically  and  up-front  involved  in 
their  elaboration. 

Regarding the  legislative  proposals, an  involvement  of DG XXIII  in the conception  stage of each  legislative 
proposal  would  considerably  enhance  its ability  to  steer  the proposal  and  provide  ample  time  for  consulting 
SME representative  organisations.  It would  be up to DG XXIII to judge  in a later stage whether  the  proposal 
is likely to  impact on the business environment  and thus  'tailor'  its involvement  accordingly. 

Regarding  the  assessment  of  the  impact  of  Community  legislation,  DG  XXIII  has  done  creative  work  to 
improve  the  system  and  in the  process  has  come  up  with  a  more  powerful  and  sophisticated  system,  i.e.  a 
Modular  Approach  to  Cost  Effectiveness  or  Cost  Benefit  Analysis  for  Assessing  the  Impact  of  Proposed 
Community  Legislation. To date, this system has not yet been adopted  by the Commission.  DG XXIII  should 
continue  to  promote  the  system  for  its  adoption  would  facilitate  a more  active  and  material  involvement  of 
DG XXIII  in the assessment  of the  impact of Community  legislation. This would  put DG XXIII  in a position 
to ensure that the system  is properly  used as a tool for conception  rather than as a mere  formality. 

Arthur  Andersen 
Business Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG XXIII 

O  ") 

CHAPTER  II  :  BETTER ACCESS TO COMMUNITY INFORMATION FOR ENTERPRISES 

"Qualitative  development,  improved  operation  and  adaptation  of  the  Euro  Info  Centre  network  to  the  new 
requirements  of SMEs,  including  advice  to companies  likely to take part  in Community programmes  (such as, for 
example,  research, public  contracts,  improved  environmental practices);  stabilisation  of funding,  in particular  by 
concentrating  efforts  and developments  on the existing network; extension  of the network  of liaison  centres  to the 
European  Economic  Area  (EEA)  and  to  the  countries  of central  and  eastern  Europe  (CCEE),  as  well  as  to  the 
Mediterranean  countries,  in particular  the  Maghreb  countries,  in the context  of specific  measures  to  help  those 
countries. " 

Although  the  annex  to  the  Council  Decision  only  refers  to  EICs,  Arthur  Andersen  considered  that  the  measures 
that  are closely  related to the  Euro  Info  Centres  such  as promotion  and the other  measures  on the  improvement  of 
information  provided to enterprises  - especially  SMEs - also belong under this  objective. 

MEASURES 

The following  measures are bundled  in this objective : 

Euro  Info  Centres (EICs) 

Subsidies to SME representative  and other  organisations 

Stands &  Expositions 

Information/Publication 

Promotion  by the  Commission 

Conception 

The  different  measures  correspond  well  with the objective  and take each other  into consideration.  This  leads to a 
scoring "good" on  conception. 

The  EIC-network  is  at  the  centre  of  the  Community's  enterprise  policy  and  is  its  main  instrument  to  improve 
SMEs'  access  to  Community 
information.  Almost  a  third  of  the  enterprise  policy's  budget  is  allocated  to  the 
single  measure  of EICs.  The  EIC-network  comes  in addition  to 53 other networks  supported  by the  Commission. 
Although  DG  XXIII  is  aware  of  the  need  to  improve  the  co-ordination  between  the  different  enterprise  policy 
networks, it has not yet achieved  sufficient  synergies between  them. 

With  the  EIC-network,  DG  XXIII  wants  to  exploit  different  synergies  offered  by  a network.  The  network's  main 
focus  is  to  provide  information  and  advice  on  Community  topics  for  enterprises,  in  particular  SMEs,  while 
allowing  DG  XXIII  to  leverage  the  EICs  in  its effort  to raise  awareness  of Community  topics  with  SMEs.  It  also 
wishes  to  use  EICs  as  'antennae'  in the  business  environment.  By  integrating  the  EICs  into national,  regional  or 
local  'host  structures',  the  network  tries  to  build  on  existing  business  networks.  This  approach  should  allow  the 
Commission  to  obtain  a  deep  penetration  in  the  SME  business  environment  -  both  geographically  and 
organisationally  - and to run a network  at minimal cost by sharing a part of the financial  and administrative  burden 
with the host  organisations. 

By  subsidising  seminars,  colloquia,  etc.  organised  by  SME  representative  and  other  organisations,  the 
Commission  also  wants  to  influence  SMEs  directly.  These  organisations  have  a dense  network  of  contacts  with 
SMEs which  DG XXIII uses as a second  platform  to provide  information.  The idea of targeting  SMEs through  two 
different  but  complementary  platforms  is  legitimate:  it  enables  the  Commission  to  disseminate  information  at  a 
larger  scale  while  leveraging  its costs  maximally  by  working  through  existing  structures.  However,  the  possible 
synergies between  both platforms  have not been  fully  exploited. 

Implementation 

The overall  rating for  implementation  is "adequate". This is in line with the ratings  given to the different  measures 
on a stand-alone basis. 

The  EIC-network's  growth  is basically  historical. No optimal  geographical  implementation  strategy  was  followed. 
Therefore,  the geographical  implementation  of the network  is currently  not satisfactory  and  not  adapted  to  address 

Arthur Andersen 
Business Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG XXIII 

I l> 

-  10-

the  needs  of  its  (future)  clients.  There  exists  a discrepancy  factor  of  2513  in the  number  of  target  SMEs  per-€IC. 
Although  we did  not  make  an analysis  of what the right span of SMEs should  be, the discrepancy  is considered  to 
be too  high  and  cannot  be justified  by  differences  in the economic  structures.  However,  we  understand  that  other 
than  economic  factors  (such  as  social  and  regional  policy  and  the  economic  and  social  cohesion  of  the  Union) 
influence  the  implantation  of the network. 

The  EICs'  host  structures  consist  mainly  of  organisations  such  as  chambers  of  commerce,  professional 
organisations,  regional  and  national  institutions,  etc.  Some  commercial  organisations  as  banks  and  accountants, 
which  are  often  a  first  source  of  information  and  advice  for  SMEs, are poorly  represented  in the  host  structures. 
For example, banks represent no more than  5 % of the host structures and are represented  in only  four  countries of 
the  European  Union.  Considering  the  greater  capillarity  of  this  host  structure  type  compared  to  other  host 
structures types, it is not sufficiently  represented  in the network 

The  central  structure  of  the  EIC-network  provides  support  services  to  EICs  in  the  areas  of  information, 
promotion,  training  and  information  technology,...  The  EICs  consider  the  support  provided  by  the 
information 
officers  as  adequate,  although  the  response  time  is  perceived  too  long.  They  rated  the  training  and  technical 
assistance  provided  by  the  central  structure  for  the  most  part  satisfactory.  However,  the  current  version  of  the 
ERIC-workstation  is  not  considered  to  be  of  significant  use  to  the  EICs.  With  the  notable  exception  of  the 
conference  functionality  of  the  VANs  network,  its  e-mail  functionality  is  well  appreciated  by  a  majority  of  the 
EICs. 

The  existing  quarterly  evaluation  reports  of  the  EIC-network  do  not  allow  the  central  structure  to  monitor 
effectively 
the  quantitative  and  qualitative  development  of  the  network.  A  comprehensive  performance 
measurement  system  allowing to manage the development of the network and the central structure  is not in place. 

The  subsidies  granted  to  representative  and  other  organisations  and  allocated  to  conferences,  seminars,  etc.  are 
divided  over  the  different  organisations  and  Member  States.  The  'selected  topics'  of  these  events  supplement 
adequately  the  other  information  efforts  of  the  Commission.  However,  the  co-operation  with  different  parties 
such  as  EICs  and  Representative  Organisations  remains  minimal,  although  some  recent  improvement  is  noted  by 
our survey and  interview  respondents. 

There  is  insufficient  continuous  promotion  on  a  co-ordinated  basis  between  DG  XXIII  and  the  EICs:  the 
promotion  budget  is  mainly  dedicated  to  a  single  media  campaign  a  year  and  uses  only  one  communication 
medium;  moreover,  this  campaign  is  too  isolated  from  the  on-going  promotional  actions  by  the  EICs  and  other 
promotional  platforms  of  DG  XXIII,  e.g. 
'Stands  &  Expositions'.  Especially  with  respect  to  a  timely 
communication  of  the  campaigns,  do  the  EICs  consider  the  co-ordination  of  the  promotional  activities  of  DG 
XXIII  as  poor.  Regarding  the  choice  of  the  theme  for  these  campaigns,  the  EICs judge  that  there  has  been  a 
significant  improvement  between  1993 and  1995. Another weak  point  is that the annual  promotional  campaign  of 
the  Commission  is  too  homogeneous  and  does  not  take  account  of  the  specific,  local  ways  in  which  (SME) 
enterprises  are targeted  in the different  Member  States.  Realising that  its promotional  campaigns  had  little  impact, 
DG XXIII  has drastically  changed  its strategy  in  1995.  The main philosophy  behind the new approach  consists  of 
a  decentralised  implementation  and  a larger  involvement  of the EIC-network  in the  campaign.  Responsibility  for 
the  global  strategy,  co-ordination  and  choice  of themes  still  remains  with  DG  XXIII,  but  in consultation  and  co 
operation  with the EICs. 

Achievement  of objective  (quantitative  and  qualitative  impact) 

On a stand-alone  basis the  impact of the different  measures was either rated "good", "adequate" or "poor".  In view 
of the  importance  of the EICs - which  was rated "adequate" -, the overall rating for  achievement  of the objective  is 
"adequate". 

Due to the  lack  of an adequate  performance  measurement  system, there are  insufficient  reliable  statistics  available 
to assess the  quantitative  and  qualitative  impact  in terms of visibility  and  support  to  SMEs.  Interviews  with  SME 
representative  organisations,  members  of  the  Article  4  Committee,  EICs  and  their  host  structures  have  indicated 
that  the  ElC-'network  has  not  achieved  a  material  impact  in  the  business  community.  In  addition,  the  quality  of 
services throughout  the EIC-network  is not sufficiently  of a uniform  high  standard. 

The discrepancy  factor  is obtained  by  dividing  the average  number of SMEs that  are potential  clients  for  an  EIC  per Member  States; the 
figure  of 25 was obtained  by dividing  the number of target SMEs  in Germany  per EIC by the number  of target SMEs  per  EIC in Greece. 

Arthur Andersen 
Business Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG XXIII 

l «t 

The EICs  answer  an  increasing  number  of  inquiries. The  increase  since  the beginning  of the  second  Multi-annual 
Programme  and  the  end  of  1995  is estimated  at 35%.  In  1994, approximately  278,000  questions  were  processed 
by  EICs  of  which  an  estimated  214,000  came  from  SMEs14.  In  1995, the  figures  are  estimated  at  350,000  and 
265,000  respectively.  While  acknowledging  the  positive  trend  in  the  number  of  questions,  this  activity  remains 
relatively  low  compared  with  an  estimated  client  base  of  1.5  million  SMEs  on  an  estimated  total  of  15  million 
SMEs  in  the  European  Community.  This  could  indicate  that  either  Community  topics  are  of  limited  concern  to 
SMEs;  or  that  SMEs  do  not  know  about  EICs;  or  that  SMEs  do  not  consult  EICs.  The  conclusion  of  our 
interviews  and  analyses  are  confirmed  by  a poll  conducted  by  Gallup  for  the  Commission  in the  Spring  of  1995. 
The poll  indicated  that,  although  the passive  recognition  of EICs  is fairly  good,  the  active  recognition  of  EICs by 
SMEs remains  low. 

Since  1993, the  Commission  has  opened  20  EIC  correspondence  centres  in the  countries  of  the  EEA,  CCEE  and 
the  Mediterranean15.  As  most  of  these  offices  have  been  set  up  in  the  last  two  years,  it  is  premature  to  give  an 
opinion on the  impact that these offices  have generated. 

Compared  to EICs, the number  of SMEs directly reached  by the other  information  measures  is much  smaller.  The 
events  organised  by  representative  and  other  organisations 
from  subsidies  reach  directly 
approximately  10,000-13,000  SMEs  p.a.  Through  the  monthly  Euro-Info  Journal,  the  Commission  directly 
reaches  on  a  continuous  basis  an  additional  12,000  subscribing  SMEs.  As  the  EICs,  consultants,  representative 
organisations,  ... also distribute the Euro-Info  Journal, the number of SMEs that receive  the journal  occasionally  is 
probably  higher.  In the absence  of quality  performance  measures,  it is difficult  to  assess the qualitative  impact  of 
the Journal.  Based  on our  interviews and questionnaires, the content  of the Euro-Info  Journal  is perceived  well but 
gets a poor scoring  for timeliness of publication. 

that  benefit 

The  impact  of  the  promotional  campaigns  and  efforts  of  the  EICs  and  the  Commission  until  1994  remained  low 
and  SMEs'  awareness  of  different  Community  enterprise  products,  whether  it  be  EICs,  BRE,  BC-Net,  ...  or 
Community  topics  is  still  unsatisfactory.  As  mentioned  above,  DG  XXIII  has  to  receive  credit  for  changing  its 
promotion  strategy.  Unfortunately,  the  implementation  of the  new  strategy  only  started  in the  Fall  of  1995.  It is 
too early to assess  its impact on the SME business  environment. 

Cost-effectiveness 

The overall  rating  of  cost-effectiveness  is "adequate",  which  is line  with  the  rating  of the  different  measures  on a 
stand-alone basis. 

The  cost-effectiveness  of  the  EIC-network  is  extremely  difficult  to  assess  due  to  the  lack  of  a  comprehensive 
performance  measurement  system.  Interviews  with  SME  representative  organisations,  members  of  the  Article  4 
Committee,  EICs  and host structures  have  indicated that - at the current  level of resources  employed  - the  network 
should  be  able  to  achieve  a greater  qualitative  and  quantitative  impact  within  the  business  community  (especially 
with  SMEs).  Cost-effectiveness  can  hence  be  increased.  On the  other  hand,  the  current  financing  structure  of  the 
network  considerable  leverages  DG XXIII's  resources.  Therefore,  the  cost-effectiveness  of  the  EIC-network  is 
rated "adequate". 

The  measures  other  than  EICs  have  received  a rating  "adequate"  , except  for  the  promotion  campaign  where  the 
cost-effectiveness  - especially the media campaign  of DG XXIII - is too low. 

The  figures  are  only  indicative  and  based  upon  compilation  of  the  evaluation  reports  that  the  EICs  have  to  submit  on  a quarterly  basis. 
Arthur Andersen  estimated  that  75% of the questions come directly  or  indirectly  from  enterprises  (SMEs)  and extrapolated  the  figures  on 
the  total  number  of  questions  reported.  Based  on  our  interviews,  we  acknowledge  that  these  figures  are  biased  in  two  opposite 
directions:  small  questions  are not  always  registered  and  lead  to an  underestimation  of the  figure.  Follow-up  or  more  detailed  questions 
on the same  base  question  inflate  the  figures  when  they are registered  as different  questions. 

Since  1994, correspondence  centres  in the  EEA have become  full-fledged  EICs. 

Arthur  A n d e r s en 
Business  Consulting 

Evaluation  of  the  M u l t i - a n n u al  P r o g r a m me 

to  assist  SMEs  -  DG  XXIII 

-  12 

CONCLUSION 

The  overall  rating  for  the  strategy  to  achieve  the  objective  of  a  better  access  to  Community  information  for 
enterprises  is "adequate".  This  is due to the  lower  implementation  and  achievement  of the objective  ratings  of the 
different  measures (especially  of the EICs). 

The  EIC-network  was  created  in  1987  to  assist  enterprises  (in  particular  SMEs)  that  want  to  grow  and 
internationalise.  Its  basic  service  is  information  and  advice  on  Community  topics  in  a  cost-efficient  way  (the 
network  is designed  to maximally  leverage  DG XXIII's  financial  resources). Meanwhile, the network" has  reached 
a  mature  phase:  over  the  last three  years, the  number  of  EICs  and  their  funding  has  stabilised;  and  in  accordance 
with the annex  to the Council  Decision, the EIC correspondence  offices  in the EEA, the CCEE and  Mediterranean 
have been  created. 

This  implies that  the network  should  be able to create an  impact  in the  SME business community.  However  - and 
although  the  idea  of  the  EIC-network  should  not  be  questioned,  the  evaluation  has  revealed  a  number  of 
weaknesses  in  the  implementation  which  limit  its  impact.  And  despite  efforts  have  been  made  to  improve  its 
promotion,  geographical  segmentation  and  implantation  in  local  business  networks,  the  total  impact  of  the 
network  in the overall  SME business community  remains limited. 

_ 

In  the  absence  of  appropriate  measurement  systems,  DG  XXIII  cannot  manage  the  EIC-network  effectively  and 
concentrate  on  its  qualitative  and  quantitative  development.  E.g.  there  is  not  enough  focus  on  the  EICs  that  do 
generate  an  impact  in the SMEs business  environment. 

The  choice  of  local  host  structures  being  subordinated  to  the  geographical  implantation  of  the  network,  has  too 
often  resulted  in a poor  integration  into the local business  environment. 

The  promotional  efforts  of  DG  XXIII  and  the  EICs  also  have  not  helped  to  increase  awareness  among  SMEs  of 
EICs  and  other  Community  measures.  The  main  problems  are  too  much  emphasis  on  a  'one-shot'  media 
campaign,  too  little  on-going  promotional  support  and  little  integration  between  the  promotion  of  DG  XXIII  and 
the  EICs.  Aware  of  the  limited  impact,  the  Commission  is  re-orienting  its  promotional  action  for  1995  and 
addressing  most  of  the  weaknesses.  As  promotion  is  a  mature  measure,  the  criteria  "quantitative  and  qualitative 
impact"  outweigh  the fact  that  DG XXIII  is undertaking remedial  action  of which  the outcome  remains  unknown. 
This resulted  in a "poor" rating for the measure  Promotion. 

The  importance  to SMEs of a Community  information  network  remains beyond  any doubt: the EIC-network  effect 
cannot  be  exactly  measured  but  is  important  in view  of  the  considerable  information  requests  that  are  formally  -
and  informally  - dispatched  through  the  network.  Its importance  is further  enhanced  by the specialisation  of  EICs 
in  different  areas.  However,  its  success  depends  largely  on  the  right  choice  of  local  partners  with  whom  EICs 
affiliate  and the maximal  exploitation  of the distribution and promotion  channels of these  affiliates. 

The  other  platforms  DG  XXIII  uses  to  reach  SMEs  interested  in  growth  and  internationalisation  (representative 
organisations,  Euro-Info  Journal,  presence  at  fairs  and  exhibitions,...)  are  too  isolated  from  the  EIC-network  and 
synergies  are not fully  exploited.  E.g. the  SME representative  organisations, which  represent organisations  that are 
among  the  SMEs'  most  trusted  business  advisors,  are  not  sufficiently 
integrated  in  the  network.  Or  the 
representation  of  the  Community  at  fairs  and  exhibitions  could  always  be  handled  in  collaboration  with  the  local 
EIC whereas this  is nowadays  done by officials  of DG XXIII, other DGs and sometimes  EICs. 

OVERALL RATING PER MEASURE 

• 
Promotion 

• 

Euro  Info  Centres 
Information/Publication 
Stands  &  Expositions 
Subsidies 

Poor 

Adequate 

Good 

Exceed 

Overall  performance 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG XXIII 

13-

RECOMMENDATIONS 

The measure  of subsidies to representative  organisations  has been  useful  as it has contributed  to share  experiences 
between  SMEs  on  a  pan-European  scale.  It  also  allowed  the  Commission  to  strengthen  its  relations  with  a  wide 
spectrum  of  organisations  that  represent  enterprises,  in  particular  SMEs.  The  financial  support  to  representative 
organisations  was  therefore  very  useful  but  the  question  of  whether  or  not  DG XXIII  should  continue  to 
financially  support these organisations  in the long run  is legitimate. 

The  main  concern  of  today's  EIC-network  is  that  it  has  not  generated  sufficient  impact  within  the  business 
community.  The  principal  focus  of the  network's  future  development  should  be the  amplification  of  its  impact  in 
the  business  community  and  an  investment  in  its  qualitative  and  quantitative  development.  To  achieve  these 
objectives,  a  number  of  recommendations  were  elaborated  which  will  allow  the  network  to  improve  its 
functioning  within the existing organisational  framework. 

The  biggest  challenge,  increasing  the  impact  within  the  business  community,  can  be  most  effectively  addressed 
through  actions  in the area of promotion,  increased and better networking with more effective  business  community 
partners and the development-of the network's value added services. 

The  challenge  of  the  quantitative  and  qualitative  development  of  the  EIC-network  requires  urgently  the 
development  of  a  comprehensive  performance  measurement  system.  It  would  allow  DG  XXIII  to  monitor  the 
current  status of the network  and  its central  structure, the effect  of initiatives taken  and would  facilitate  the  further 
development  of the network.  Such system  should answer three main  objectives: 

to allow to monitor the impact on the business community,  in particular on SMEs; 
to permit the follow-up  of the qualitative development; and 
to  install a tool to manage the  cost-effectiveness. 

A  comprehensive  performance  measurement  system  would  contain  performance  indicators  that  go  beyond  those 
offered  by  the  existing  quarterly  evaluation  system  which  is not  client-centred.  The  system  would  add  indicators 
on  the  full  cost  per  question,  the  cycle time to  respond  to a client  enquiry,  the  complexity  of client  enquiries,  the 
nature  of the  enquiring  company,...  and  should  supply  the central  structure  with  more  timely,  accurate  and  useful 
information  than  is  the  case  today.  The  implementation  of  a  performance  measurement  system  would  not  only 
allow  the  central  structure  to  monitor  more  closely  the  operation  of the  network,  but  also  to  identify  pro-actively 
existing  best  practices  within  the  network.  These  best  practices  should  be  shared  throughout  the  network,  hence 
increasing  its quality and  impact. 

The  current  promotional  efforts  have  not  generated  sufficient  visibility  of  the  EIC-network  within  the  business 
community.  To address this problem,  DG XXIII  should first of all reinforce  its co-operation  with the  EIC-network 
and  focus  primarily  on  enterprises  looking  for  growth  and  internationalisation.  The  new  structure  DG  XXIII 
wants to adopt - i.e. central co-ordination  and national  implementation  in collaboration  with  EICs - seems the most 
appropriate.  For an effective  implementation,  DG XXIII  should  provide the EICs with  marketing  and  promotional 
support  as their own marketing and promotional  skills are  limited. 

Second,  the  current  promotional  efforts  should  be  complemented  by  on-going  and  revolving  awareness  raising 
campaigns  encouraging  SMEs  to  internationalise  and  making  them  aware  of  the  Community's  SME  support 
measures.  Attention  should  be  given  to  an  appropriate  media  mix  for  each  Member  State  and/or  region  to 
guarantee  a maximum  impact. Journalists accredited  by the Commission  should be involved  as well, as they  are an 
excellent platform  to spread  information  at relative  low cost to DG XXIII. 

To create a bigger  impact  in the business community, the most effective  channels which  are used  by SMEs  in their 
efforts  to  internationalise  should  be  identified.  An  active  co-operation  with  these  'most  trusted  business  advisors' 
should  then  be developed,  by integrating them  into existing  EICs or by creating new  EICs where  necessary. 

The  'first-stop-shop'  and  'one-stop-shop'  approach  as  currently  promoted  by  DG  XXIII  combined  with  on-line 
access to  information  should add further  value to the network  and over time  increase  its impact. 

The  first-stop-shop  concept  formally  confirms  the  EIC-network  as  the  Commission's  primary  enterprise  policy 
network.  It will  increase the synergy  between  the different  enterprise  policy  networks and consequently  add  value 
to the  EIC-network. 

The  one-stop-shop  concept  stresses  the  need  for  a  comprehensive  service  to  SMEs  and  their  business  advisors 
based  on  the  specialisation  that  EICs  have  developed  in Community  topics.  The  concept  will  not  only  allow  the 

Arthur Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist SMEs - DG XXIII 

7> 

-  14-

broadening  of  the  scope  of  expertise  offered  by  the  network  but  also  deepen  the  expertise  in  existing  areas  of 
specialisation. 

The  creation  of  a  technological  environment  allowing  on-line  access  to  and  sharing  of  information  of  interest  to 
SMEs should  be continued  (e.g. currently  DG XXIII  and a small  number of EICs are present  on the  Internet). On 
line  access  not  only  improves  the  access  to  information  but  also  the  impact  of  the  network  in  the  business 
community.  The  role  and  relevance  of  new  technology  and  computerised  information  to  the  EICs  should  be 
urgently  explored.  More  fora  of  greater  content  and  value  should  also  be  added.  The  presence  of  EICs  on  other 
information  networks  is also highly  recommended. 

The  recommendations  proposed  so  far  focus  on  improving  the  impact  and  qualitative  development  of  the  EIC-
network  in  its current  organisational  framework.  To obtain a dramatic  increase of  impact however,  the question  of 
whether  or  not  a  different  organisational  framework  becomes  necessary  is  legitimate.  This  question  removes  the 
boundaries  of  reasoning  we  have  imposed  ourselves  so  far  by  accepting  the  basic  principles  on  which  the  EIC-
network  has  been  built.  In  the  following  three  paragraphs,  an  alternative  scenario  will  be  developed  that 
challenges  the  basic  framework  of  how  the  EIC-network  operates  today.  All  the  individual  recommendations 
developed  above  remain  of  course  valid  in  the  scenario  below,  which  should  be  considered  as  one  possible 
scenario within  a range of alternatives. 

The existing  network  would  be replaced  by a new network  fully  operated and financed  by DG XXIII.  It would  be 
implemented  on  a  regional  basis  where  a region  should  be  interpreted  as  a  large  geographical  area  of  significant 
economic  and  political  cohesion.  The  number  of EICs would  significantly  be reduced;  their size, however,  would 
be considerably  greater  in terms of knowledge and full-time  equivalents per EIC. 

The primary objective  of this network would  be to become the enterprise  policy network  of the Commission  (first-
stop-shop)  organised  in  genuine  competence  centres  informed  about  the  full  range  of  Community  topics  (one-
stop-shop).  The  network  would  act as a supporting  and  supplying  platform  to the "most  trusted  business  advisors 
In  a  first  stage,  the  direct  contact  of  the  EICs  with  SMEs  would  be  through  on-line 
of  (SME)  enterprises". 
networks  and  promotional  and  educational  initiatives jointly  organised  with  the  trusted  business  advisors.  Over 
time  as  the  brand  awareness  of  the  new  EICs  becomes  established  with  its  key  constituents  of  growing  and 
internationalising  SMEs, other  forms  of direct  contact will develop. This  scenario  should  allow  to achieve  a more 
homogeneous  quality  level  within  the  network,  the  delivery  of  a  consistent  and  full  service  to  SMEs  and  their 
business advisors on the full  range of Community topics, and over time dramatically  increase its impact. 

As  to  the  required  resources:  what  is  certain  is  that  the  transformation  of  the  network  will  require  investments. 
What  remains  uncertain  is whether  the  operation  of such  a network  will  be  significantly  more  expensive  than  the 
current  network.  However,  in  terms  of  value  for  money  and  dramatically  increased  impact,  the  new  network 
should  be  more  cost-effective  and  provide  more  value  for  money  than  the  existing  network.  This  issue  should  be 
further  investigated. 

Arthur  Andersen 
Business Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG XXIII 

^1% 

15-

CHAPTER  III :  IMPROVING THE BUSINESS - PARTNER - SEARCH NETWORK 

"Qualitative  improvement  and gradual  adaptation of the system of charges for  the confidential  business - partner  -
search  network  (BC-Net)  with  the  aim  of  making  the  network  self-financing,  as far  as  possible;  qualitative 
development  of the non-confidential partner  - search network (BCQ1  " 

EVALUATION 

Conception 

Both networks predate the Multi-annual  Programme: BC-Net was created  in  1988 and BRE in  1973. Both were set 
up to assist  SMEs  in finding  business partners at the local, regional  or transnational  level. Though they function  in 
different  ways17, there are a several parallels between both networks: 

•  The  correspondents  of  both  networks  (though  less  for  BRE)  can  offer  additional  services  to  participating  or 
interested  companies,  ranging  from  analysing  the  company's  needs  for  a  business  partner  to  assisting  and 
advising the company during the co-operation negotiations." 

•  Both networks are open to all companies, irrespective of the sector of activity and the type ofco-operation  they 

want to establish. 

•  Both networks have an excellent geographical  coverage (all of the EU and for  BRE also major  business  centres 
in  the  rest  of  the  world)  and  are  comparable  in  size:  BC-Net  has  approximately  400  correspondents  whereas 
BRE has 470. 

The  success  of the  networks  depends  on the number  of co-operation  profiles  introduced  and  hence  on  the  "brand 
awareness  and  recognition".  To  raise  the  "brand  awareness  and  recognition",  DG  XXIII  expects  the 
correspondents  to  raise  their  profile  through  active  promotion  and  to  try  to  create  synergy  effects  through  co 
operation with other networks or events, such as Europartenariat,  Interprise, EICs,.... 

In view of the "good"  ratings  of both measures  for conception  on a stand-alone  basis and taking  into account  their 
broad approach  and the potential  for  synergy with other  DG XXIII measures, the overall  conception  rating  for  the 
strategy to achieve the objective  is "good". 

Implementation 

In  view  of the  "adequate"  ratings  of  both  measures  on  a stand-alone  basis  for  implementation,  the  overall  rating 
for  implementation  is "adequate". 

To  improve  the  quality  of  BC-Net,  DG  XXIII  started  with  a quality  assessment  of  the  correspondents  (focus  on 
active  and  productive  correspondents),  resulting  in a 25% drop  in the  number  of  correspondents.  The  remaining 
correspondents  now  support  companies  more actively  in their search  for  a business partner  in order to  increase the 
chances  of  success.  Nonetheless,  some  weak  points  were  insufficiently  addressed:  the  software  currently  used  is 
not  very  user-friendly,  the  IT  infrastructure  is outdated  and  the  current  nomenclatures  used  for  encoding  the  co 
operation  profiles  are not precise enough. To make BC-Net self-financing,  a system of charges was  introduced. 

For  BRE,  DG  XXIII  embarked  on  a similar  quality  assessment  of the correspondents.  Compared  to  BC-Net,  it is 
easier  to  use  and  more  informal  and  flexible.  However,  also  for  BRE  some  serious  flaws  went  unaddressed:  the 
long delays  in the translation  and transmission  of the co-operation  profiles  by the Central  Unit  and the  insufficient 
computerisation  of the network (although  some remedial steps were taken (VANs and CRS). 

The impact of both networks depends on their visibility and the participation  of a large pool of potential  business -
partners  (hence  the  importance  of  synergies  with  other  networks).  Although  the  Central  Unit  makes  some 

16 

Instead  of  BCC, the  acronym  BRE  is used  in the present  document. 

17  BC-NET  operates  through  a network  of  correspondents  (private  or  public  sector  bodies)  linked  through  a computer  network  to a  Central 
Unit  located  with  DG  XXIII  in  Brussels.  The  correspondents  transmit  encoded  co-operation  profiles  of companies  searching  for  business 
partners  to  the  Central  Unit  operating  the  network  and  the  matching  system.  Participating  companies  can  opt  for  a confidential  partner  -
search  (part  of  the  data  are  veiled).  BRE  also  operates  through  a Central  Unit  (located  with  DG  XXIII  in  Brussels)  which  receives  co 
operation  profiles  directly  from  companies  looking  for  a business  -  partner  or  through  a  decentralised  network  of  correspondents.  The 
Central  Unit  handles  the  translation  of the  profiles  and  then  transmits  them  to the  correspondents  in the  requested  geographic  area.  These 
correspondents  are  in  charge  of  advertising  the  co-operation  profiles  in the  appropriate  media  at their  own  expense. 

A r t h ur  A n d e r s en 
Business  Consulting 

Evaluation  of  the  M u l t i - a n n u al  P r o g r a m me 

to  assist  SMEs  -  DG  XXIII 

^e, 

-  16-

promotion  for  both  networks (Stands & Expositions,  Euro-Info  Journal), the chief  responsibility  in this regard  lies 
with the correspondents. Through  the half-yearly  activity  reports (which  are also  used  in the annual  evaluation  on 
whether or not to extend their contract) they have to submit,  DG XXIII monitors these efforts.  The reports are also 
used 
Interprise, 
Europartenariat,... 

to  encourage  and  monitor  synergy  effects  with  other  DG  XXIII  programmes,  e.g. 

As to the  creation  of  synergy  effects,  around  10% of  BC-Net  and  BRE  correspondents  are  also  part  of  the  EIC -
network.  There  is  also  a  good  participation  of  BC-Net  and  BRE  correspondents  in  the  Europartenariat  and 
Interprise events (about  1/3 of these events is co-organised  with  BC  - NET and BRE correspondents).  In addition, 
most  BC-Net  and  BRE correspondents  use other non-Community  sponsored  channels  to conduct  business  partner 
- searches (Commercial  attachés, national networks). 

Regarding  the  self-financing  of  BC-Net,  the  total  operating  charges  (excluding  payroll  costs)  are  approximately 
ECU  500,000  per  year.  They  are  recovered  in  1994  and  1995  (provisional)  for  about  60%  by  the  user  and 
subscription  fees paid by the correspondents. 

Achievement  of  objective  (quantitative  and qualitative  impact) 

The achievement  of the objective  consists  in the effective  use made of both networks by SMEs  looking  for  growth 
and  internationalisation  and on the impact of the networks on SMEs. 

The  effective  use  of  both  networks  can  be  measured  by  the  number  of  co-operation  profiles  introduced  in  both 
systems.  For  BC-Net,  approximately  10,000  profiles  were  introduced  in  1993  and  1994  each.  For  BRE,  over 
6,600  co-operation  profiles  were  introduced  in  1993  and  7,700  in  1994.  In  view  of  the  fact  that  only  a  small 
percentage  of  SMEs  have  the  ambition  to  grow  and  internationalise18,  the  number  of  co-operation  profiles 
introduced  indicates  that  only  1.1%  of  SMEs  did  effectively  make  use  of  the  services  offered  by  BC-Net19  in 
1994, and 0.8% of those offered  by BRE. 

These results are poor. 

We should nevertheless take into account: 

• 

• 

the  flash  profiles  and  additional  network  effect,  by  means  of  which  partners  are  found  thanks  to  personal 
contacts between  network  correspondents; 
other analysis, which show slightly better results than our estimate based on co-operation  profiles.20 

With  respect  to  the  'matches'  (exchange  of  addresses  or  establishing  of  contacts),  the  results  are  not  very 
promising either.  There has been a 25% drop in the number of'matches'  realised  for  BC-Net  in  1994 compared  to 
1993 (approximately  11,000 matches  in  1993 vs. 7,700  in  1994). For BRE, on the  contrary,  there has been  a  10% 
increase  in the number of co-operation profiles  introduced on an annual basis over the period  1993 -  1995. 

The  poor  results  can  partially  be  explained  by  the  low  'brand  recognition'  both  networks  suffer  from  and  the 
quality  of  'matches'.  The  low  'brand  recognition'  as  identified  by  Arthur  Andersen  analysis  based  on 
questionnaires,  is  confirmed  by  the  Gallup  poll  conducted  in  April  1995: only  10.3%  of  SMEs  recognised  BRE 
prompted;  for  BC-Net  the  prompted  recognition  rate  was  13.6%.  Moreover,  analysis  showed  that  professional 
organisations,  chambers  of  commerce  and  financial  institutions  are the  first  (and  natural)  interlocutors  for  SMEs 
looking for business partners. 

Regarding the quality  of matches, contacts are often  not fruitful.  For both networks, in about 25 - 30% of the cases 
in  which  there  was  a  match,  a  co-operation  attempt  took  place.  BC  -  Net  correspondents  estimated  that 

only  5 to 6% according  to the "Integrated  Programme  in favour  of SMEs and the Craft  sector". 

i.e.,  10,000 co-operation  profiles  divided  by the number of potential  SME clients (900,000). 

The Gallup  poll, conducted  in April  1995 - based on the totality  of SME directors  interviewed  - indicated  that 0.41% of total  SMEs  made 
use  of  BRE  and  0.7%  of  BC-Net.  If  these  figures  are  related  to  the  potential  SME  client  base  (900,000  SMEs),  the  results  for  both 
networks  would  be slightly  better. 

This was also confirmed  by the Gallup poll  of April  1995. 

A r t h ur  A n d e r s en 
Business  Consulting 

E v a l u a t i on  of  the  M u l t i - a n n u al  P r o g r a m me 
to  assist  SMEs  -  DG  XXIII 

- \ £> 

17 

approximately  6%  of  the  matches  lead  to  an  actual  co-operation  agreement.  For  BRE,  the corresponding  score  is 
12%22. 

As to the qualitative  improvement,  DG XXIII has shaken  up both networks of correspondents, which  have  become 
more  effective.  However,  as  mentioned  above,  both  networks  continue  to  suffer  from  serious  qualitative  flaws, 
particularly  unwieldy  communication  channels,  outdated  (or  insufficient)  information  technology,  delays  in 
translating  and transmitting  co-operation  profiles,  nomenclatures that are too vague (which  leads to mismatches  of 
potential  business-partners)  and  insufficient  central promotional  campaigns. 

Cost-effectiveness 

The  total  annual  budget  for  the  support  of both  networks  is approximately  800,000  ECU  (65% of  this  amount  is 
allocated to BC-Net; 35% to BRE). Measured  against the size of the networks, this amount as such  is low. The low 
'brand  recognition'  of  both  networks  also  takes  on  another  meaning,  as  DG  XXIII  does  not  have  the  means  to 
organise a central  promotional  campaign  to improve the situation. 

Taking  into  account  the  number  of  co-operation  agreements  both  networks  give  rise to,  it would  cost  DG  XXIII 
approximately  300  ECU  to bring  about a co-operation  agreement  with  BRE and  1,000  ECU with  BC - Net.  If the 
subscription  and  user fees  of BC - Net correspondents  are taken  into consideration,  the cost  for-BC  - Net  is around 
400  ECU per co-operation  agreement. 

In view of the means deployed, the overall rating for cost-effectiveness  is "good". 

CONCLUSION 

BC  -  Net  and  BRE  have  their  merits:  their  conception  is  "good",  as  they  contribute  to  the  realisation  of  Cross-
border  co-operation  and  hence  to the  development  of the  Internal  Market; they  are not  expensive  to  run;  they  are 
unique after  a fashion  and have a good geographical  coverage. 

However,  both  networks  do  not  achieve  the  objective  completely  as  there  has  been  insufficient  qualitative 
improvement,  in  particular  outdated  (or  insufficient)  information  technology,  delays  in  transmitting  co-operation 
profiles,  nomenclatures  that  are  too  vague, ...  In  view  of  the  limited  number  of  SMEs  looking  for  growth  and 
internationalisation,  which  made  use  of  both  co-operation  networks,  they  can  only  be  considered  a  moderate 
success with respect  to their quantitative  impact. 

In light of this situation, the overall rating given to both networks  is "adequate". 

OVERALL RATING PER MEASURE 

• 
BC - NET 
BRE 

Poor 

Adequate 

Good 

Exceed 

Overall  performance 

RECOMMENDATIONS 

To improve both  networks  in the short run, the following  recommendations  are made: 

• 

• 

• 

Introduction  of better and more user-friendly  information  technology  for  both  BC-Net and  BRE; 

Introduction  of  better  nomenclatures  for  encoding  the  co-operation  profiles  of  BC-Net,  e.g.  based  on  more 
detailed  NACE  codes; 

Reduction  of delays  in the translation  and distribution  of the co-operation  profiles  for  BRE. A solution  in this 
respect  can  be to have the translation  carried out by the correspondents themselves. 

22  The difference  is probably  due to the  fact  that  BRE is more  flexible  and that  it distributes co-operation  profiles  on a wider scale. 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the Multi-annual  Programme 
to assist SMEs - DG XXIII 

A  merger  of  the  databases  of  both  networks  with  the  databases  of  other  Commission  initiatives  (e.g. 
Interprise,  Europartenariat,  the  EICs) should  be envisaged  as  it would  create  a greater  pool  for  new  matches. 
This  should  have  a  positive  impact  on  the  number  of  successful  co-operation  agreements.  Our  analysis 
indicated that some correspondents  have already developed  such a database out of their own  initiative. 

Inclusion  in the networks  of some  'trusted  business  advisors'  of  SMEs  (financial  institutions,  commercial  or 
public  institutions, etc.), which dispose of a broad capillarity, and promotion  of potential  synergies with  these 
entities. Interviews  held with officials  within  DG XXIII showed a positive feed-back  on this  subject. 

One  could  raise  the  question  as  to  the  involvement  of  DG  XXIII  in  this  area.  In  view  of  the  fact  that  the 
Internal  Market  is  not  fully  operating  and  that  both  networks  offer  a  public  service  in  some  regions  of  the 
Union,  we  believe  that  DG  XXIII's  intervention  in this  area  continues  to  be  legitimate.  It  is  recommended 
however  that the policy  of charging  for  services  for  both  networks  be continued  in order to make  them  self-
financing  as  much  as  possible.  This  will  allow  DG  XXIII  to  shift  a  part  of  its  financial  resources  to  other 
measures. 

Arthur Andersen 
Business Consulting 

Evaluation  of the Multi-annual  Programme 
to assist SMEs - DG XXIII 

19-

CHAPTERIV :  CONTINUED DEVELOPMENT OF INSTRUMENTS PERMITTING  DIRECT 
CONTACT BETWEEN ENTREPRENEURS  AND AIMED AT PROMOTING  TRANSNATIONAL 
SUBCONTRACTING 

"In  particular  by  improving  the  preparation,  implementation  and follow-up  of  actions  carried  out  under  the 
Europartenariat  and  Interprise  programmes;  improving  knowledge  of  subcontracting  markets,  promotion  of 
harmonised  certification  and standardisation  procedures  and  encouragement  of co-operation  between  large and 
small enterprises ". 

MEASURES 

To address the different  aspects of the objective, the following  measures were taken: 

• 

• 

• 

• 

Europartenariat  and  Interprise:  the  organisation  of  events  providing  face  to  face  meetings  between 
companies. 

Improving  knowledge  of  subcontracting  markets:  the  development  of  statistical  data  on  subcontracting, 
the  organisation  of  a  pan-European  conference  on  subcontracting  and  a  fact-finding~mission  to  Japan 
(hereafter  "group  1"). 

Promotion  of  harmonised  certification  and  standardisation  procedures:  the  development  of  a  practical 
guide  to  the  legal  aspects  of  industrial  subcontracting,  of  multilingual  sectorial  terminologies  and  of  a 
directory  of intermediary  subcontracting  bodies (hereafter  "group 2"). 

Encouraging  co-operation  between  large and small enterprises: a consumer  electronics  pilot  programme, 
a  human  resources  training  programme  and  different  purchasers  exhibitions  ("reverse  salons")  were 
organised  (hereafter  "group 4"). 

In  addition,  a  pilot  action  to  improve  subcontracting  across  Europe  was  set  up,  the  so-called  Subcontracting 
Assistance Network  (SCAN) (hereafter  "group  3"). 

EVALUATION 

Conception 

The different  measures contain three different  types of levers, which should contribute  to a maximum  achievement 
of the  objective: 

• 

• 

• 

Operate  through  networks  and  partners  which  can  provide  valuable  feed-back  to  improve  the 
initiatives: to  improve  Europartenariat  and  Interprise,  DG XXIII tries to obtain  feedback  through  a close  co 
operation  with  the  parties  involved  in  the  organisation:  e.g.  chambers  of  commerce,  craft  organisations, 
public  authorities  (local  - regional  - national),  private  consultants  and  the  so-called  "partners"  (members  of 
the  EIC/BC-Net/BRE  networks);  for  subcontracting,  DG XXIII  tries  to  improve  its  initiatives  through  close 
co-operation  with  subcontracting  bodies and through  SCAN. 

Operate  through  other  Community  initiatives:  the  Europartenariat  and  Interprise  events  are  promoted 
through  the Euro-Info journal, the Practical Guide for  SMEs and through  Stands and  Expositions. 

Leverage  financial  resources:  Europartenariat  and  Interprise  events  are  co-financed  (to  different  degrees) 
by  host  local  authorities  and  companies.  DG XXIII  also obtains  leverage  by  organising  Europartenariat  with 
DG XVI  in the framework  of the Structural  Funds. 

Synergy  effects  were  also  identified  between  the  different  measures:  e.g.  the  majority  of  the  measures  on 
subcontracting  can  trace  their  origin  to  the  pan-European  conference  of  1992  in  Madrid  (group  1).  The  fact 
finding  mission  to Japan  (group  1) lead to the human  resources training  programme  and  the consumer  electronics 
pilot  programme  (both  group 4). More than  one third  of Europartenariat  and  Interprise  events are organised  in co 
operation  with the so-called  "partners" (members of the EIC, BC-Net  and  BRE network). 

23  Europartenariat  and  Interprise  are co-organised  by a main organiser (chambers of commerce, consultants, associations or 

public authorities) and several partners. 

Arthur Andersen 
Business  Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG XXIII 

V 

20 

In  view  of  the  "good"  ratings  for  conception  of  the  different  measures  on  a  stand-alone  basis  and  taking  into 
account  the  leverage  and  synergy  potential,  the overall  conception  rating  for  the  strategy  to achieve  the  objective 
is "good". 

Implementation 

The overall  rating given to implementation  of the different  measures  is "adequate", which  is in line with the  rating 
of the different  measures on a stand-alone basis. 

To  improve  the  Europartenariat  and  Interprise  events,  DG  XXIII  introduced  a quota  policy  to reduce  the  number 
of  Mediterranean  and  Central  and  Eastern  European  countries  participating:  more  emphasis  was  put  on  bringing 
together  companies  of  countries  with  similar  industrial  traditions.  A  standardised  computer  system  to  make 
appointments  between  visiting  companies  was  introduced  to  improve  the  quality  of  the  pre-arranged  meetings 
through  a  better  matching.  In  spite  of  these  improvements,  a  lot  of  participating  (host  and  visiting)  companies 
continue  to  complain  about  badly  matched  meetings.  Other  weak  points  are that  the  description  of  the  profile  of 
the  host  companies  in the  catalogue  4  is too  imprecise  and  that  the  organisers  of  the  events  can  not  provide  DG 
XXIII  with  reliable  information  about  the  agreements  concluded  (exact  number,  quality,  type  of  agreement, 
benefits  in  terms  of  jobs  generated,....)  which  leaves  DG  XXIII  with  a  follow-up  problem;  in  addition  the 
questionnaires  used  for  the  follow-up  are  not  standardised  -  which  leads  to  problems  of  comparability.  For 
Interprise,  the  events  are  insufficiently  focused  on  sectors"  and  are  not  supported  by  a  standardised  computer 
system  to make appointments between  visiting companies. 

The  success  of  Europartenariat  and  Interprise  events  depends  on  the  promotional  efforts  of  the  National 
Counsellors  in  charge  of  promoting  the  events  in  their  respective  countries.  In  this  respect,  Europartenariat 
benefits  from  the  fact  that  its National  Counsellors  are  linked  through  an  informal  network  where  knowledge  and 
experience  in organising the events are exchanged.  Interprise does not benefit  from  such a network. 

To  improve  the  knowledge  of  subcontracting  markets,  DG  XXIII  tries  to  ensure  a  wide  distribution  of  the 
subcontracting  statistics developed by working through subcontracting  bodies. It also changed  its selection  process 
for  supporting  projects: they have to be proposed  by the market and fit within  a certain  framework.  However,  DG 
XXIII  still  does  not  succeed  in  setting  priorities:  there  is  no  common  line  between  the  different  measures  (as 
illustrated  by the regrouping  conducted). 

Achievement  of objective  (Quantitative  and  qualitative  impact) 

The  first  element  of  the  objective  was  to  improve  the  Europartenariat  and  Interprise  events.  In  this  respect,  an 
important  step  in  the  right  direction  was  taken:  whereas  in  1988,  the  number  of  host  companies  per 
Europartenariat  event  was  120,  the  average  number  in  1995  had  risen  to  400.  The  total  number  of  visiting 
companies  has risen correspondingly:  from  200 per event in  1988 to more than 2000  in  1995. Since  1988 a total of 
66,000  meetings  have  taken  place.  The  success  ratio"  of  the  events  is  approximately  30%.  For  Interprise,  the 
average  number  of  participating  companies  per  event  is  100  (an  average  of  45  events  are  organised  each  year). 
The success  ratio of the events is approximately  13%  . 

However,  in  spite  of  the  focus  on  countries  with  a  similar  industrial  background  and  the  introduction  of  the 
standardised  computer  system  in  order  to  make  better  matched  appointments  (for  Europartenariat),  the  rate  of 
to  the  number  of  meetings  remains  low  for  both  events"  ;  regarding  the 
agreements  concluded  compared 
improvement  of the follow-up,  some work remains to be done. 

24  The catalogue helps visiting companies to select the host companies they want to meet. 

2'  Experience has shown that a strong sectorial focus leads to a higher rate of agreements concluded. 

26  Expressed  by the ratio number of agreements / number of host companies. However, as mentioned  under implementation, 

there is a problem with the follow-up (incomplete information, questionnaires that are not standardised,...) 

See the previous footnote. 

2*  This  is  in  line  with  the  fact  that  a lot  of  participating  (host  and  visiting)  companies  complain  that  meetings  are badly 

matched. 

Arthur  Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG  XXIII 

3^ 

-21 

As  for  subcontracting,  the  effectiveness  of  the  different  measures  has  been  improved  by  leaving  as  much  as 
possible to the  initiative of the market.  DG XXIII has also succeeded  in banning less qualitative  events, which  lead 
to  an  improved  efficiency  of  the  programme.  However,  as  mentioned  under  implementation  and  in  spite  of  the 
synergy  effects  which  were  listed,  DG  XXIII  does  not  completely  succeed  in  developing  a  coherent  set  of 
measures; this  reduces  the efficiency  of the  programme.  For group  1 and  2, DG XXIII  obtains  a high  quantitative 
impact:  the  publications  that  were  developed  are  widely  distributed.  However,  too  many  measures  (group  4)  are 
narrowly  focused  and  thus  involve  a  very  limited  number  of  SMEs;  in  addition,  analysis  shows  that  the 
distribution  on  a  larger  scale  of  the  findings  of  the  consumer  electronics  pilot  project  seems  to  have  been 
unsuccessful.  As to the quality of the different  measures, customer satisfaction  is generally  high. 

The  overall  rating  given  to  the  achievement  of  the  objective  is  "good";  this  is  in  line  with  the  ratings  of  the 
different  measures on a stand-alone basis. 

Cost-effectiveness 

The average  cost  of an Europartenariat  event  is 3,000,000  ECU of which  1/3  is financed  by  DG XXIII,  1/3  by DG 
XVI and  1/3  by the organisers and host companies. For Interprise, the average cost  is  176,000  ECU of which 27% 
is financed  on  average  by  DG XXIII  - the remainder  of the tab  is for  the  organisers  and  the  hgst  companies.  The 
final reports  also show that the sum of the amounts  of the contracts  generated  by the Europartenariat  events  is - on 
average  - higher than  the average cost of organising the events 
. In view  of these elements, the  cost-effectiveness 
for both events  is rated  "good". 

For  subcontracting,  the  different  groups  of  measures  in  general  achieve  a  good  cost-effectiveness:  with  limited 
budgets  a  good  return  was  achieved.  Some  measures  combine  a  narrow  focus  (and  thus  small  number  of  SMEs 
involved)  with  a high  cost  (e.g.  human  resources  training,  consumer  electronics);  but  in  view  of  the  fact  that  the 
results obtained  are very good, they are also rated  cost-effective. 

In  view  of  the  overall  good  cost-effectiveness 
subcontracting  measures, the overall cost-effectiveness  rating for the objective  is "good". 

for  Europartenariat  and  Interprise  and  for  the  different 

CONCLUSION 

Overall  DG XXIII's  strategy to achieve the objective  is properly targeted. The concept  behind  Europartenariat  and 
Interprise  is  sound  and  the  results  achieved  are  good;  the  events  that  were  organised  all  over  Europe  continue  to 
gain  in popularity  and  are  well  perceived.  Both  measures  have  a considerable  leverage  (through  the  involvement 
of public authorities, chambers of commerce, representative organisations,...)  and achieve synergy  effects  (through 
the other DG XXIII networks,...). Some  implementation  and follow-up  problems remain to be  addressed. 

The fact  that  DG  XXIII  has succeeded  in removing  less qualitative  events  from  its subcontracting  programme  and 
so  improved  the  global  efficiency  of the  different  measures, considerably  enhanced  its stature. Nevertheless  there 
are  still  an  excessive  number  of  initiatives  which  are  organised,  supported  or  co-ordinated  by  DG  XXIII  which 
limits  the  possible  results  of  each  of  them.  E.g.  Group  4  has  received  a "poor"  evaluation  as  the  initiatives  are 
taken  without  rigorous  preliminary  studies  in  order  to  ascertain  whether  they  deal  with  real  subcontracting 
problems  on  a  European  level  which  fit  into  the  priority  areas  of  the  general  strategy  of  DG  XXIII  regarding 
subcontracting.  Group  3  is  rated  "exceed"  as  the  measure  responds  to  SME  needs  across  Europe  and  is  easy  to 
implement with a limited  budget. 

2''  Within the year of the event, the main organiser has to submit a report containing the number and details of co-operation 
agreements  concluded.  However,  as  already  mentioned,  some  qualifications  are  in  order  about  the  reliability  and 
completeness of these reports. 

Arthur  Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG XXIII 

22 

OVERALL RATING PER MEASURE 

• 
Group 2 

• 
Europartenariat 
Interpnse 

3 
W 
o> 
E 
o 
x: 

(A 
3 
« 

• * •> 

CO 

• 
Group 4 

• 
Group 1 

Poor 

Adequate 

Good 

Exceed 

• 
Group 3 

RECOMMENDATIONS 

DG  XXIII  officials,  SME  representative  organisations  and  members  of the  Article  4  Committee  all  agree  that  the 
different  measures  promote  the  economic  and  social  cohesion  of  the  Union  and  are  an  important  tool  to  help 
SMEs. 

To  improve the achievement  of the objective, the following  short run recommendations  can be made: 

• 

• 

• 

• 

• 

• 

Encourage  a  better  use  of  the  BC-Net,  BRE  and  EIC-network  by  the  National  Counsellors  and  partners 
responsible  for the organisation  of Interprise  and Europartenariat; this should  enable them  to better match  the 
profiles  of the participating  companies before  the event and thus improve the quality of the meetings. 

Introduce  a first selection  of visiting companies and focus  on those with  a stronger co-operation  project. 

Improve  the  monitoring  by  DG  XXIII  of the promotional  activities  for  Europartenariat  events  to guarantee a 
better  brand  recognition. 

Develop  an  informal  network  for  the  organisers  of  the  Interprise  events,  modelled  upon  what  exists  in 
Europartenariat. 

Provide  assistance  after  the  (Europartenariat/Interprise)  event  to  potential  associates  to  increase  the  number 
of co-operation  agreements. This would also solve some follow-up  problems. 

Develop  a more  coherent  strategy  for  selecting  measures  under subcontracting  by  focusing  on measures  with 
a  high  potential  quantitative  impact  and  dropping  the  remaining  actions  which  reach  a  very  limited  number 
of SMEs and  by developing  a list of priorities where actions should  be taken. 

For  the  longer  term,  DG  XXIII  should  try  to  involve  more  the  DGs  responsible  for  the  environment,  high 
technology  and  R & D,  international  relations,...  in  the  different  Europartenariat  and  Interprise  events  and  the 
subcontracting  measures.  This  should  lead  to  more  synergy  effects  and  a  higher  leverage  through  possible  co-
fipn'i<  in» 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG XXIII 

3£ 

-23 

CHAPTER  V :  ENSURING  CONSIDERATION  OF SME  INTERESTS  IN THE  VARIOUS 
COMMUNITY  INITIATIVES  AND  POLICIES 

"Promotion  of  Community 
programmes, 
programmes 
the  procedures 

involved.  " 

including 

instruments  which  enable  SMEs 

to  participate 

fully 

instruments, 
to  develop  technological  potential,  making  it easier  for  SMEs  to participate, 

the  Structural  Funds, 

enterprise-policy 

in  all  Community  actions  and 
and 
programmes 
inter  alia,  by  simplifying 

research 

The  objective  to  be  achieved  is essentially  an  internal  one  in  the  sense  that  the  goal  is  to  make  it  easier  for  SMEs 
to  participate  in  all  the  Community's  programmes. 

MEASURES: 

• 

• 

• 

• 

Programme  consultationsJ 

Report  on  the  co-ordination  of  activities  in  favour  of  SMEs  and  the  craft  sector'1 

Definition  of  SMEs 

Euromanagement  Research  and  Technological  Development  II 

EVALUATION 

Conception 

The  different  measures  taken  together  constitute  a broad  approach  to the  different  aspects  of  the  objective. 

Programme  consultations  address  the  objective  in  a  general  way:  through  these  consultations  DG  XXIII  tries  to 
ensure  effective  participation  by  SMEs  in  the  different  Community  actions  and  programmes. 

The  report  on  co-ordination  is  also  a  general  measure.  It  should  provide  an  overview  of  the  different  Community 
actions  and  programmes  that  might  interest  SMEs  (including  the  Multi-annual  Programme)  and  a  description  of 
the  co-ordination  between  these  different  programmes  with  the  Multi-annual  Programme.  It  was  drafted  by  DG 
XXIII  in  1995. 

The  development  of  specific  SME  programmes  and  policies  by  the  different  DGs  and  the  Member  States  has  led 
to  a  multiplicity  of  SME  definitions.  DG  XXIII  started  working  on  a  harmonisation  of  the  different  definitions 
used.  It  should  provide  for  a common  definition  to  be  used  within  the  Commission.  Moreover,  it  is the  intention  to 
address  the  Member  States  through  a  Recommendation  and  urge  them  to  adopt  the  same  definition.  A  common 
definition  should  make  it  easier  for  SMEs  to  take  part  in  the  different  Community  actions  and  programmes  and 
would  facilitate  co-ordination  within  the  Commission. 

"Euromanagement  Research  and  Technological  Development  II"J 
is  focused  on  increasing  the  number  and  the 
quality  of  proposals  SMEs  submit  to  Community-funded  R&TD  programmes;  47  selected  consultants  assisted  927 
SMEs  to  assess  their  technology  and  innovation  profile  and  improve  the  quality  of  their  proposals  for  participation 
in  Community  programmes.  The  EU  R&TD  programmes  had  a  track  record  of  low  SME  participation  and  a  high 
failure  rate  (especially  of  SMEs).  This  was  traced  to  the  fact  that  SMEs  either  lacked  long-term  vision  on  their 
R&TD  evolution  or  because  -  due  to  insufficient  information  -  they  simply  did  not  apply  or  applied  to  the  wrong 
programme.  In  addition,  the  burden  in  terms  of  time  and  opportunity  costs  to  participate  is  relatively  higher  for 
SMEs  than  for  larger  enterprises. 

All  the  measures  listed  here  have  a  high  leverage  potential:  their  ambitious  goal  is  to  ensure  an  effective 
participation  of  SMEs  in the  entire  gamut  of  Community  programmes  that  might  be  of  interest  to  SMEs.  Given  the 

1 he role of  DG  XXIII  in the elaboration  of the Community's  actions and programmes through  programme  consultations  is 
\ . i\  limited.  Programme  consultations  are  also  not  specifically  linked  to  the  Multi-annual  Programme  as  such;  however, 
Uiev are a key  instrument  in ensuring  the consideration  of  SME  interests  in the Community's  policies  and  thus  in  attaining 
the  >  bieetives of the  Multi-annual  Programme. 

'''  Hencetorth  the report  on co-ordination. Our evaluation only concerned the Report COM (95) 362 final of September 8. 1995. 

"  Henceforth  "R&TD". 

Arthur  Andersen 
Business  Consulting 

Evaluation  of  the  Multi-annual  Programme 
to  assist  SMEs  -  DG  XXIII 

i> 

- 2 4-

enormous  budgets  managed  under  these  programmes,  even  a  small  overall  improvement  in  the  participation  of 
SMEs would  represent  an  important  achievement. 

Opportunities  for  synergy  exist  between  the  different  measures.  E.g.  the  consultation  and  co-ordination  between 
DG XXIII  and the other  DGs to ensure  the consideration  of  SMEs'  interests  in the other Community  programmes 
and  actions  should  help  DG XXIII  to draft  a high-quality  Report  on  Co-ordination.  Vice  versa,  the  Report  should 
be a useful  management  tool for  DG XXIII and the other DGs to co-ordinate their future  activities. 

A potential  synergy  will  be  worked  out  between  the  R&TD  and  the  EIC  network:  the  EICs'  specialised  group  in 
R&TD  matters  will  be  invited  to  participate  at  training  sessions  meant  to  familiarise  them  with  the  different 
Community  R&TD programmes  and the Euromanagement  methodology. 

In view of the rating of the different  measures on a stand-alone basis and taking  into account the potential  leverage 
and synergy  effects,  the overall rating for conception  of the strategy  is "good". 

Implementation 

In view of the scorings of the individual  measures, the overall scoring for  implementation  is "adequate". 

Regarding  the  programme  consultations,  there  are  so  many  Community  programmes  which  all  produce  a  lot  of 
requests  for  interservice  consultations  - with  documents  attached  in all official  Union  languages  - and  meetings  of 
monitoring  committees, that they overwhelm  the limited number of responsible  officials. 

With  respect  to the  Report on Co-ordination,  DG XXIII  had some difficulties  to obtain  the necessary  information 
to  elaborate  the  report.  This  is  mainly  due  to  the  limited  (legal)  authority  of  DG  XXIII.  However,  interviews 
indicated  that  the  information  deficit  in  itself  is an  indication  that  insufficient  co-ordination  between  the  different 
programmes  took  place prior to the drafting  of the Report.  In view  of the  insufficient  co-ordination  in drafting  the 
Report, the measure  was rated "adequate". 

"Definition  of  SMEs"  has  been  delayed  by  the  complexity  of  having  to  reconcile  differing  national  economic 
situations and traditions and vested  interests. Nevertheless, considerable  progress  has been achieved  by DG XXIII. 
Prior to the drafting  of the definition,  extensive research  was undertaken to compare the criteria  for  defining  SMEs 
in the different  Member  States  and  the  Community  programmes  and  initiatives; a consultation  process  took  place 
in  which  the  opinions  of  all  relevant  parties  (the  Commission,  SME  representative  organisations,  Member 
States,...)  was  sought.  A  negative  point  however,  is that  DG  XXIII  did  not  take  up  the  initiative  itself  earlier  to 
work  on  a common  definition  of  SMEs  and  push  harder  for  its adoption.  Therefore,  the  implementation  rating  is 
"adequate". 

The  implementation  of  R&TD  is  rated  "exceed":  it  has  been  very  well  implemented  from  a  pilot  project 
perspective.  It  was  well  organised,  clearly  structured  and  provided  for  feed-back  and  experience  to  be  used  for 
corrective  and  future  action.  During the first phase the consultants  and the co-ordinator  were selected  and  trained; 
in  a  second  phase,  927  interested  SMEs  were  selected  and  audited  to  define  their  technology  and  innovation 
profile;  upon  which  an  action  plan  was  elaborated  and  assistance  provided  in  the  preparation  of  a  proposal. 
Although  R&TD  was  implemented  under  strict  time  constraints,  the  selection  of  consultants  and  assistance  of 
SMEs was good.  The  last phase - an evaluation  and follow-up  conclusions  - is currently  taking place. 

Achievement  of objective  (quantitative  and  qualitative  impact): 

In  line with  the  ratings  of the  different  measures  on a stand-alone  basis, the overall  rating  for  achievement  of  the 
objective  is "adequate". 

Regarding  the  success  of DG XXIII  through  programme  consultations  in facilitating  SMEs'  access to  Community 
programmes  and  actions,  it  is very  difficult  to measure  the  impact  at the  level  of  SME  funding  actually  obtained. 
There  are  simply  too  many  parties  involved  and  to  date  the  role  of  DG  XXIII  in  the  conception  and  the 
implementation  of  the  programmes  and  actions  is very  limited.  Therefore,  the  impact  was  measured  through  the 
weight  DG XXIII  carried  with the other  DGs involved: the impact was rated "adequate". 

In view of the number  of different  Community  programmes  and actions  in favour  of SMEs, a report  detailing  their 
co-ordination  is  an  indispensable  management  and  policy  tool.  But  although  the  report  is  complete,  concise  and 
provides  an  overview  of the status of the different  measures,  it has a major  flaw:  the  report  in  its current  format  is 
an activity  report  rather  than  a report  on  co-ordination.  Although  there  are a number  of  references  to  examples  of 
co-operation,  the  references  to  procedures,  synergies  and  changes  introduced  are  cursory  or  absent.  As  also 

Arthur Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG XXIII 

<o  <• 

- 2 5-

mentioned  under  programme  consultations,  this  is not  really  surprising  given the  panoply  of  programmes  arrayed 
against the limited  resources  DG XXIII can deploy. The achievement was rated  "poor". 

"Definition  of  SMEs"  is still  in  a development  phase; therefore,  it  is still too  early  to make  a statement  about  the 
impact  of  the  measure.  However,  the  fact  that  a majority  of  the  Member  States  have  endorsed  the  principle  of  a 
common definition  (12 out of  15) and a Recommendation  (8 out of  15) in the Article 4 Committee,  bodes well  for 
the  future. 

R&TD helped  over  900  SMEs to become more familiar  with  European  R&TD programmes. As to the success  rate 
of  the  proposals  that  were  submitted,  it  is  still  too  early  to  make  any  conclusion  because  a considerable  number 
still has to be filed. 

Cost-effectiven ess 

In  view  of  the  high  potential  leverage  of  the  different  measures  and  although  it  is  still  too  early  to  assess  the 
impact of "Definition  of SMEs" and R&TD, the overall rating for cost-effectiveness  is "good". 

All  the  measures  combine  a  broad  potential'impact  with  a  low  cost  (mainly  personnel  costs);  this  also  explains 
why  the  poor  achievement  of  the  Report  on  co-ordination  did  not  impact  adversely  on  its_ cost-effectiveness 
(which was rated "good"). R&TD was more expensive (2,000  ECU per SME involved), but  in view  of the  number 
of  SMEs  reached  (the  original  target  was  exceeded)  and  the  good  level  of  service  provided  to  them,  the  cost-
effectiveness  was rated  "good". 

CONCLUSION 

Ensuring the consideration  of SME  interests  in the Community's  actions and programmes  is not an objective  to be 
easily achieved:  it is a complex field with a lot of different  actors, with different  priorities and interests. 

DG XXIII's  strategy  to  meet  the objective  is good: the different  measures  have  a considerable  leverage  potential, 
synergy  effects  and  address  priorities.  However,  in  the  implementation  and  achievement  of  the  objective,  the 
different  measures underperform.  Therefore,  the overall rating for this objective  is "adequate". 

The  involvement  of  DG  XXIII  through  programmes  consultation  in  the  conception  and  implementation  of  the 
programmes  of  other  DGs  is  limited.  So  is  its  presence  in  the  monitoring  committees.  This  has  negative 
repercussions  on the achievement  of the objective; therefore  the rating  is "adequate". 

The  Report  on  co-ordination,  although  an  indispensable  tool  for  an  effective  co-ordination,  is  in  fact  an  activity 
report.  Its overall  rating  is "poor". 

A common  definition  of SMEs is a prerequisite  for an effective  co-ordination  of the Community  initiatives  and the 
achievement  of  the  objective  of  ensuring  consideration  of  SMEs'  interest  in  Community  policies  and  initiatives. 
The previous Communication  of the Commission  in this regard  had  lead to  insufficient  convergence;  DG XXIII  is 
aware  that  a  common  definition  on  SMEs  should  be  one  of  its  priorities:  as  mentioned  above,  the  fact  that  no 
common  definition  has been  adopted yet,  is not for want of efforts  made by DG XXIII. But the fact  that  more than 
2  years  elapsed  between  the  previous  Communication  and  the  start-up  of  the  new  definition  leads  to  an  overall 
rating "adequate". 

R&TD  was  given  an  overall  rating  of  "exceed"  because  of  its overall  quality  and  good  management,  the  number 
of  SMEs  involved  and  the  measures  taken  to  ensure  a  follow-up  -  vital  for  the  long-term  success  of  a  pilot 
programme. 

Arthur Andersen 
Business Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG  XXIII 

37 

26-

OVERALL RATING PER  MEASURE 

• 
Report on  co-ordination 

• 
Programme  constations 

• 
Definition ot SMEs 

• 

Euromanagement  R&TD 

Poor 

Adequate 

Good 

Exceed 

Overall  performance 

3 
</> 
re 
a> 
E 
0) 

V) 
3 
4-1 

re 

4-1 
CO 

RECOMMENDATIONS 

By ensuring that  SME interests are considered  in the Community's  initiatives and policies, DG XXIII  can  leverage 
its  limited  means  enormously.  Therefore,  this  objective  should  be  one  of  the  top  priorities  of  the  Multi-annual 
Programme  and become a fundamental  goal of DG XXIII's  future  activities. 

The  key  priority  for  DG  XXIII  in  this  area  should  be  to  have  the  common  definition  of  SMEs  adopted  by  the 
Commission  and by the  Member  States. This  is the only way to get all policy  makers on one  line and guarantee an 
effective  co-ordination  between  the  different  policies  and  programmes.  Once  the  definition  adopted,  DG  XXIII 
should  watch over  its effective  use. 

To  improve  the  working  of the programme  consultations  and  the  Report  on co-ordination,  more  human  resources 
should  be allocated. The extra resources should enable DG XXIII to take a pro-active  attitude; to be involved  as of 
the conception  of the different  actions and programmes of the Community,  thus making sure that they  are not only 
accessible  to  SMEs  but  also tailored  to  meet  their  needs.  It would  also  make  it possible  to consult  effectively  and 
involve  SME  representative  and  professional  organisations.  The  upgrade  of  the  Report  on  co-ordination  from  a 
mere  activity  report  to  a  genuine  report  on  co-ordination  is  linked  to  a  transformation  of  the  programme 
consultations.  Only  real  and  dynamic  involvement  of  DG  XXIII  in  the  different  Community  policies  and 
programmes  can guarantee that there  is real co-ordination  - a prerequisite  for a Report on  co-ordination. 

As  a pilot  programme,  R&TD  can  be  considered  a success.  To guarantee  its  long-term  impact,  DG  XXIII  should 
continue  an effective  dissemination  of the experience  gained to the wider SME population, to its own  EIC network 
and to the DGs involved  in R&TD to make them aware of the problems encountered  by SMEs. 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs-DG  XXIII 

-27 

C H A P T ER  VI  :  E N C O U R A G I NG  S M Es  TO ADAPT TO  S T R U C T U R AL  CHANGES AND TO 
CHANGES BROUGHT ABOUT BY THE INTERNAL MARKET 

"Identification  of the needs  of SMEs  and  the development  of projects,  inter alia,  on the basis of pilot-projects  for 
enterprises,  including  small  business and  craft-industry  enterprises, enterprises  in commerce  and  the  distributive 
trades, co-operatives,  mutual societies and associations and foundations,  as well as enterprise creators and young 
entrepreneurs,  enabling  them  to  adapt  to  structural  changes,  to  have  a  better  perception  of  the  European 
dimension  of their markets and to benefit from the opportunities offered by the internal market, in particular  in the 
field  of standardisation,  certification and public  contracts. " 

MEASURES 

The wide  range  of measures  launched  by the Commission  in accordance  with the Annex  to the Council  Decision, 
can  be grouped  in three  broad categories: 

• 

actions  and  measures  which  relate  to  European  policy  and  political  issues: Green  Paper  on  the  practical 
arrangements  for  the  introduction  of  the  single  currency  ("questions  related  to  the  ECU"),  public 
procurement  initiatives,  a pilot project  to train  apprentices  from  the peripheral  areas  in the~Community  for a 
three year sandwich  course to the Federal  Republic of Germany. 

•  measures,  including  pilot-projects,  which  aim  to  stimulate  the  exchange  of  knowledge  and  best 
practices  between  enterprises  in  the  Union:  Commerce  2000,  Transnational  Co-operation,  Cross-border 
Offices,  REGIE. 

• 

measures,  including  pilot  projects,  which  aim  to  develop  methodologies  and  audit  tools  to  help 
enterprises  better  assess 
topics:  Auto-audit  and  Euromanagement 
'Normalisation'. 

their  position  on  different 

It  should  be  noted  that  a  lot  of  measures  which  were  listed  under  other  objectives  indirectly  contribute  to  the 
achievement  of this  objective. 

EVALUATION 

Conception 

The  Commission  has  opted  for  an  approach  that  includes  both  specific  measures  to  meet  the  needs  of  SMEs  and 
craft  industry  enterprises  in the  context  of  the  completion  of  the  Internal  Market,J>  and  measures  considering  the 
SME dimension  in broad  aspects of the  Internal  Market.  All the measures  developed  respond  to the objective.  In 
view  of the "good"  ratings  for  conception  of the different  measures on a stand-alone  basis and taking  into  account 
the broad  approach  to the objective,  the overall rating for conception  is "good". 

However,  this  broad  approach  of tackling  a wide  range  of  problems  SMEs that  want  to  grow  and  internationalise 
are confronted  with,  is not without  its downside.  Too  many  initiatives  have  been  started  without  the  allocation  of 
sufficient  financial  and  human  resources.  Because  the  different  measures  address  such  divergent  problems,  it  is 
also difficult  to create synergy effects  between them. As such, a critical  mass for  the  individual  measures  is not yet 
attained.  And although  DG XXIII tries to compensate  by  leveraging  its human  and financial  resources through  co 
operation  and  co-ordination  with  other  DGs  in  the  design  and  implementation  of  pilot  projects,  there  is  no 
substitute  for  a policy  setting areas for priority  action. 

Implementation 

The  overall  rating  for  the  implementation  of the  strategy  to  meet  the objective  is "adequate".  This  is  in  line  with 
the "good" and "adequate" ratings of the different  measures on a stand-alone basis. 

In  most  cases,  the  measures  are  co-ordinated  by  outside  consultants  whereas  the  Commission  monitors  the  status 
of  the  measures  through  adequate  follow-up  procedures.  Most  of  these  measures  are  either  pilot  projects  or 
projects  in their  development  phase.  Pilot  projects  allow  DG XXIII  to test-market  a concept  or  idea  and  to  obtain 
empirical  knowledge  on  specific  problems  and  issues  that  enterprises  -  especially  SMEs  -  face  in  the  Internal 

"  The need for some measures was identified  at the Conference of Avignon in 1990. 

Arthur Andersen 
Business Consulting 

Evaluation  of the Multi-annual  Programme 
to assist SMEs - DG XXIII 

-28 

Market.  DG  XXIII  then  tries to  leverage  the  pilot  project  e.g.  by disseminating  the experience  gained  and  lessons 
learnt  to  a  wider  range  of  enterprises  (and  in  particular  SMEs)  through  publications  or  'exchange  of  best 
practices'.  A  lot  of  the  measures  are  still  in  the  implementation  phase:  e.g.  Cross-border  Offices,  Transnational 
Co-operation,  Public  Procurement,  Questions  related  to  the  ECU  and  REGIE  and  Commerce  2000  to  a  certain 
extent. 

The  factor  "time" lies at the basis of the  lower  implementation  ratings  for  several  measures.  E.g., the  pilot  project 
to  train  apprentices  from  peripheral  areas  in  the  Community  for  a  three  year  sandwich  course  in  the  Federal 
Republic  of Germany  has suffered  severely  from  unrealistic  time  schedules  at the  beginning  of the  project  which 
are now the  root  cause  of the weak  result  of the measure.  In the case of Commerce  2000, the  findings  of the first 
phase  of  1 !  pilot  projects  have just  been  published  on  a wider  scale,  which  is more  than  one  year  after  the  first 
phase  was  terminated.  The  selection  process  for  the  second  round  of  pilot  projects  was  very  slow  and  time-
consuming.  Auto-audit  suffered  from  similar  delays: the  elaboration  of  the  manual  started  in  1992  but  too  much 
time was lost with consultations and translation. 

Achievement  of objective (quantitative  and qualitative  impact) 

Some  of  the  pilot  projects  are  too  recent  to  have  created  an  impact:  e.g.  Transnational  Co-operation  and  Cross-
border  Offices  are  still  in the  implementation  phase.  Other  measures  are  still  in the  implementation  phase,  which 
makes it too early to rate their  impact: e.g. the Green  Paper on the ECU sets the deadline  for  feed-back  by  industry 
federations,  professional  associations,  ... at December  1995 whereas the distribution  of the Auto-Audit  manual  still 
has to start (planned  for the near future); the measure public procurement  is also still  in the  implementation  phase. 

The  idea  behind  most  (pilot)  projects  is  not  to  reach  as  many  enterprises  as  possible  directly  but  to  leverage  the 
knowledge  and  experience  gained  in  the  different  (pilot)  projects  by  an  adequate  level  of  follow-up  and 
subsequent  dissemination  of the experience  gained  in the years to come. Depending  on the penetration  obtained, a 
multiple  of  the  directly  involved  companies  thus  should  benefit  from  the  different  projects.  As  mentioned  in  the 
previous  paragraph,  most measures are still  in the  implementation  phase; consequently,  follow-up  measures  were 
not yet taken. 

An  illustration  where  follow-up  measures  are  being  taken  is  Euromanagement  'Normalisation':  one  of  the 
objectives  of the  measure  was  to  map  the  problems  of  SMEs  in the  field  of  standardisation,  certification,  quality 
and  safety  and  - as a follow-up  measure  - to  increase  the  influence  of  SMEs  in the  process  of  standardisation:  DG 
XXIII  decided  to  devote  its  promotional  campaign  for  1995  to  the  theme  of  'normalisation'  and  to  support  the 
creation  of  NORMAPME,  a  non-profit  organisation  to  defend  the  interests  of  SMEs  in  European  normalisation 
bodies. 

For  REGIE  (which  is  still  being  further  developed),  the  impact  created  to  date  within  the  EEIG  community  was 
rated  "adequate":  although  the  response  rate  of  EEIGs  was  low,  there  was  a  considerable  interest  shown  in  the 
project  by professionals  involved  with EEIGs. 

No  overall  rating  for  achievement  of  the  objective  is  awarded  in  view  of  the  fact  that  for  more  than  half  of  the 
measures no evaluation  of the impact could be made. 

Cost-Effectiveness 

The  cost-effectiveness  of  the  pilot  project  to  train  apprentices  from  the  peripheral  areas  in  the  Community  for  a 
three  year  sandwich  course  in the  Federal  Republic  of Germany  was rated  "poor"  due  to the  fact  that  insufficient 
levers were  used. 

FOF  the  other  measures  no  cost-effectiveness  rating  is  given  as  they  are  still  in  the  implementation  phase  or  too 
recent  to  create  a  real  impact.  Therefore,  no  overall  cost-effectiveness  rating  is  given  to  the  strategy  to  meet  the 
objective. 

CONCLUSION 

As  mentioned  above,  only  a  few  measures  have  reached  a  stage  where  they  can  have  an  impact  and  contribute 
towards  an  effective  achievement  of  the  objective.  However,  as  most  measures  have  a  rating  of  "good"  on 
conception  and  "adequate"  on  implementation,  the  foundations  are  laid  to  achieve  useful  and  practical  results  in 
the  years  to  come,  provided  some  weak  points  are  addressed.  A  lot  of  measures  and  pilot  projects  suffer  at  this 
stage  from  a  lack  of  human  and  financial  resources  and  take  much  more  time  than  initially  planned.  This  is 

Arthur Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG  XXIII 

4 

29 

compounded  by  the  fact  that  the different  projects  have  a rather  limited  number  of  synergies  as  they  try  to  cover 
all  issues  of  relevance  to  SMEs  at  the  same  time.  The  real  impact  of  most  of  these  measures  depends  on  their 
follow-up  measures,  which  should  leverage  the  findings  and  experience  gained  through  a  wide  dissemination. 
However,  in  view  of  the  human  resources  problems,  the  necessary  follow-up  measures  will  probably  also  suffer 
from  serious delays. 

OVERALL RATING PER MEASURE 

• 
Questions  related 
to the  ECU 

• 
Auto-audit 
REGIE 
Commerce 2000 
Public Procurement 

• 
Educational  Project 
in FR Germany 

• 
EM  Normalisation' 

• 
Transnational co-operation 
Cross-Border Offices 

Poor 

Adequate 

Good 

Exceed 

Overall  performance 

•£ 
| 

iu 

3 

0) 
E 

o 
V) 
3 
re 
CO 

RECOMMENDATIONS 

DG  XXIII  should  continue  its  'laboratory'  approach  of  working  through  pilot  projects.  Pilot  projects  allow  DG 
XXIII  to  'test  by  doing', a legitimate  and  sensible way of assessing  new  ideas without  spending  large amounts  of 
money.  They  also  allow  DG XXIII  to  stay  in almost  direct  contact  with  SMEs  and  to  understand  their  concerns. 
However,  the  ultimate  impact  of  pilot  projects  lies  in  a broad  dissemination  of their  findings.  In  this  regard,  DG 
XXIII  should  ensure  that  it  identifies  at  the  earliest  possible  stage  the  different  levers  that  can  be  used  to  this 
effect. 

DG XXIII  has a central position with a pan-European  dimension  for enterprise  policy, especially  towards  SMEs. It 
should  reinforce  its  role  of  leading  facilitator  and  animator  towards  all  the  different  platforms  (European 
Community  enterprise  networks,  representative  and professional  organisations,  national  authorities,...)  for  sharing 
experience,  information  and  best  practices.  This  will  create  enormous  leverage  and  help  enterprises,  especially 
SMEs, to adapt  to the structural  changes of the Internal  Market. 

In  view  of  the  limited  available  resources,  both  human  and  financial,  DG  XXIII  should  set  priorities  in the  areas 
where action  is to be taken. This will also allow a better co-ordination  of some of the pilot projects. 

The  time  lags  between  the  different  phases  of  projects,  and  between  pilot  projects  and  their  follow-up  should  be 
reduced. This can  only  improve the impact of the different  measures. 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist SMEs - DG XXIII 

/  ^ 

3 0-

CHAPTER VII :  PROMOTING A BETTER FINANCIAL ENVIRONMENT FOR ENTERPRISES 

"Considering  ways  and  means  of facilitating  SMEs'  access  to sources  of credit  and guarantee,  including  mutual 
guarantee systems  and  risk capital  activity; appreciation  of the  opportunity  and feasibility  of  the  development  of 
secondary  markets;  facilitating  SMEs '  access  to  financial 
instruments  provided  by  the  Community,  without 
involving financing  of enterprises'" 

For  the  purpose  of  the  evaluation  study,  we  have  considered  the  objective  to  be  removing  market  inefficiencies 
and making Community  financial  instruments more accessible  for SMEs. 

MEASURES 

Recommendation  of May  12,  1995 on payment periods  in commercial  transactions ("Late  Payments") 

Communication  of the  Commission  of November  10,  1993 on  the  financial  problems  experienced  by  SMEs 
("Communication") 

Programme  consultations 

34 

Mutual guarantee  schemes  ("MGS") 

Round table of bankers ("Round  Table") 

Factoring"' 

Retention  of title 

Seed capital  fund  pilot scheme ("Seed  Capital") 

EASD/EASDAQ 

To  meet  the  objective,  different  approaches  were  used:  a  regulatory  approach  (e.g.  Late  Payments,  Factoring, 
Retention  of  Title,  Programme  consultations),  exchange  of  best  practices  (Mutual  Guarantee  Schemes,  Round 
Table), financial support (EASD/EASDAQ)  and pilot projects (Seed Capital). 

EVALUATION 

Conception 

The  different  measures  together  are  designed  to cover  the  objective  across  the  board;  both  public  authorities  (i.e. 
Member  States  and  the  Commission)  and  different  categories  of  financial  intermediaries  (e.g.  banks,  venture 
capitalists, stock-brokers, operators of mutual guarantee schemes) are  involved. 

On  the  one  hand,  the  First  Round  Table  and  the  Communication  made  an  inventory  of  the  different  problems 
regarding the financial  environment  of SMEs and suggested  possible solutions. 

On  the  other  hand,  specific  measures  were  implemented  to  meet  the  different  aspects  set  out  in  the  annex  to  the 
Council  Decision: 

•  Mutual guarantee  systems and risk capital activity ("Seed  Capital") were  promoted. 

• 

• 

• 

• 

Feasibility  studies  regarding  the development  of secondary  markets  were conducted;  further  to these  studies, 
DG XXIII  financially  supported  the creation  of the Association  of European  Securities  Dealers  (EASD)  who 
will help set-up  EASDAQ. 

The  Second  Round  Table  is  considering  concrete  ways  of  facilitating  SMEs'  access  to  credit;  if  actively 
pursued, "factoring"  and "retention  of title" will address this aspect as well. 

Through  programme  consultations  and  the  Round  Table,  DG XXIII  addresses  the  problem  of  SMEs'  access 
to Community  financial  instruments. 

Late Payments  aims to improve the  legal  framework. 

,4  The role of DG XXIII  in the elaboration of Community financial  instruments through  programme consultations is very  limited. They are 
also  not  specifically  linked  to the  Multi-annual  Programme as such; however, they  are  a key  instrument  in  facilitating  SMEs'  access to 
Community  financial  instruments and thus in attaining the objectives of the  Multi-annual Programme. 

These measures will  be started effectively  under the next Multi-annual Programme. 

Arthur  Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG  XXIII 

hk 

-31  -

For  the  achievement  of  the  objective,  it  is  a  prerequisite  that  in  the  conception  of  the  different  measures,  a 
maximum  of  potential  levers  are  identified  and  built  in.  All  the  measures  listed  above  successfully  pass  this  test. 
Four types of levers were  identified: 

•  Work  through  regulatory  measures:  they  combine  a  broad  impact  (the  entire  SME  population)  with  a 
limited  cost  (the  elaboration  of the  regulation).  Late  Payments,  Factoring,  Retention  of Title  and  programme 
consultations  fall  in this category. 

•  Work  through  networks  and  partners:  the  European  Mutual  Guarantee  Association  (EMGA  -  mutual 
guarantee  schemes),  the  participating  banks  (Round  Table),  the  SME  representative  organisations  (Late 
payments) and the EASD (EASDAQ)  are important  levers for  DG XXIII to realise the  objective. 

•  Work  through  other  -  more  powerful  - institutions  and  departments:  through  programme  consultations, 

DG XXIII tries to steer Community  financial  instruments towards SMEs. 

• 

Leverage  your  financial  resources:  for  Seed  Capital,  DG  XXIII  leveraged  its  financial  resources  by 
intervening  in  the  operating  expenses  of  the  funds,  the  equity  being  provided  by  regional  investors.  This 
leads  to  a much  greater  seed  capital  pool  via  public/private  sector  collaboration  than  DG  XXIII  would  have 
been able to create on  its own. 

Synergy  effects  are  noted  between  the  different  measures.  E.g.  the  First  Round  Table  helped  Hate  Payments  and 
how to facilitate  SMEs'  access to the Community's  financial  instruments. Through  programme  consultations,  pilot 
projects  for  Seed  Capital  and  mutual  guarantee  schemes  have  obtained  financing  through  Community  financial 
instruments. 

In  view  of  the  "good"  ratings  of  the  different  measures  for  conception  on  a  stand-alone  basis  and  taking  into 
account  the  "across  the  board"  approach,  leverage  and  synergy  potential,  the  overall  conception  rating  for  the 
strategy to achieve the objective  is "good". 

Implementation 

The  overall  scoring  given  to  the  implementation  of the  different  measures  is "adequate".  This  is  in  line  with  the 
ratings given  to the different  measures on a stand-alone basis. 

A common  thread  runs through  the lower  implementation  rating of most measures. DG XXIII tries to do too much 
at  once  - which  has  a  negative  impact  on  the  implementation.  E.g.  factoring  and  retention  of  title  will  be  started 
effectively  under  the  next  Multi-annual  Programme;  there  are  that  many  Community  programmes  which  all 
produce  a lot of requests  for  interservice  consultations  - with  documents  attached  in all official  Union  languages -
and meetings  of monitoring  committees, that they  overwhelm  the responsible  officials.  For the  First  Round  Table, 
there were  some  flaws  in the way  it was  organised.  An  implementation  flaw  of  Seed  Capital  is that  the  size  of the 
funds  is too small to pay back the operating costs (especially  after  the five year period where  DG XXIII  funds  will 
stop). 

Other  measures  were  well  implemented,  such  as  the  Mutual  Guarantee  Schemes,  EASD/EASDAQ  or  Late 
Payments. 

Achievement  of objective  (quantitative  and qualitative  impact) 

In  view  of  the  "good"  ratings  of  the  different  measures  for  quantitative  and  qualitative  impact  on  a  stand-alone 
basis and taking  into  account  the synergy  and  leverage  effects,  the overall  rating  for  achievement  of the  objective 
is "good". 

For  several  measures  it  is  too  early  to  evaluate  the  impact:  retention  of  title  and  factoring  are  still  in  the  start-up 
phase;  Member  States  have till  31 December  1997 to report  on the  follow  up to  Late  Payments  (which  dates  from 
1995) - first progress  reports bode well  in this respect. 

The  biggest  achievements  so  far  are  in the  area of removing  market  inefficiencies,  i.e.  mutual  guarantee  schemes 
(pilot projects,  European  Mutual Guarantee  Associations, networking,  improving the  regulatory  framework),  Seed 
Capital  (attraction  of private  funding, jobs  created),  EASD/EASDAQ  (networking,  a European  NASDAQ)  and the 
Round  Table  (awareness  function).  This  gains  additional  importance  if one  takes  into  account  that,  for  SMEs  in 
the European  economy,  the financial  markets are the most  important  external  source of  finance. 

As to the  better  access  of  SMEs to the Community's  financial  instruments  through  programme  consultations,  it is 
very  difficult  to  measure  the  impact  at  the  level  of  SME  funding  actually  obtained.  There  are  simply  too  many 

Arthur Andersen 
Business Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG XXI11 

LiS 

- 3 2-

parties  involved  and, to date, the role of DG XXIII  in the conception  and the  implementation  of the  instruments  is 
very  limited.  Therefore,  the  impact  was  measured  through  the  weight  DG  XXIII  carried  with  the  other  DGs 
involved:  the  impact  was  rated  adequate.  The  First  Round  Table  also  played  an  important  role  in  this  respect  by 
raising  the  awareness  of  other  DGs  and  the  EIB  of  the  problems  encountered  by  SMEs.  However,  the  approach 
remained  high-level; there  were no concrete  measures.  Because  of  its high-level  approach, the  impact  was  mainly 
qualitative; the overall  impact was therefore  rated "adequate". 

Cost-effectiven ess 

In view  of the  leverage  obtained  through  the  different  types  of  levers, the  cost-effectiveness  was  rated  "exceed": 
for  the  regulatory  measures, costs are  limited to personnel;  DG XXIII's  financial  resources  were highly  leveraged 
in  Seed  Capital;  the  final  cost-effectiveness  of the  pilot  scheme  will  depend  on the  degree  in which  the  advances 
will  be  repaid.  Based  on  the  performance  indicators  developed  by the  University  of  Warwick  in  an  intermediate 
evaluation  report,  the cost/benefit  varies according  to different  repayment  scenarios:  in case  of a 70%  repayment, 
the cost  per job  created  amounts to ECU  1,260; for  a 50% repayment, the cost per job  will amount  to  ECU  2,086. 
For  the  high-tech  capital  funds,  these  ratios  are  even  "better.  Working  through  networks  and  partners 
(EASD/EMGA/Round  Table) leverages  DG XXIII's human  and financial  resources. 

CONCLUSION 

Creating  a better  financial  environment  for  an  SME  population  of  15 million  in  15 Member  States  with  different 
market  realities  and  needs  is not  an  objective  to  be  achieved  in the  course  of  one  Multi-annual  Programme.  It  is 
inherently  a  long-term  process. To date,  the  efforts  of  DG XXIII  in promoting  a better  financial  environment  for 
enterprises  were given an overall rating of "good". 

DG  XXIII's  strategy  to  meet  the  objective  is  sound:  the  objective  is  ambitious  but  the  different  measures 
employed  generated  considerable  leverage  potential  and  synergy  effects.  The  fact  that  DG  XXIII  tries  to  remove 
market  inefficiencies  (Round  Table,  MGS,  Seed  Capital,  EASDAQ)  is  of  primary  importance.  Since  financial 
markets are the main external  providers of finance  to SMEs, any improvement  is bound to have a large  impact. 

OVERALL RATING PER MEASURE 

• 

• 

1  First  Round  Table  of  Bankers 
2  Programme  consultations 

1  Mutual  guarantee  schemes 
2  Late  payments 
3  Communication  on  financial 

problems  of  SMEs 

• 

1.  E A S D / E A S O AQ 
2.  Factoring 
3.  R e t e n t i on  of  title 

• 

Seed  Capital  Fund 
Pilot  S c h e me 

3 
in re 
o 
E 
v 
JZ 

™  a 

Poor 

Adequate 

Good 

Exceed 

Overall  performance 

RECOMMENDATIONS 

Discussions  with  officials  from  DG  XXIII,  other  DGs,  SME  representative  organisations  and  members  of  the 
Article  4  Committee  all  underscore  that  improving  the  financial  environment  of  SMEs  should  be  one  of  the  top 
priorities of DG XXIII  if the growth  and  internationalisation  of SMEs is to be promoted: the  limited  availability  of 
appropriate  financial  resources  is a major  headache  for entrepreneurs and stunts the growth  of too many  SMEs. 

The  following  recommendations  can be made to better achieve the objective  in the short  run: 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG XXIII 

/  / 

33-

• 

• 

• 

• 

• 

• 

A  close  follow-up  of  the  Recommendation  on  payment  periods  in  commercial 
encouragement  of slower  Member States to take action. 

transactions  and 

Ensure  that  the  findings  of  the  Second  Round  Table  of  Bankers  are  implemented  and  made  known 
throughout the banking sector.  Financial  sector professional  organisations could be involved  in this regard. 

Activate  factoring  and  retention  of  title.  The  organisation  of  a  Round  Table  on  Factoring  could  be 
investigated. 

For  Seed  Capital,  the  relations  and  exchange  of  expertise  with  established  early-stage  venture  capitalists 
should  be further  developed.  The  lessons of the pilot can be extremely, valuable  for  DG XXIII  to explore the 
barriers to early-stage technology  investments, especially  diseconomies of scale and scope for  small  funds. 

EASDAQ  will  become  operational  in  1996 but  there  remain  significant  barriers  to  assure  its  pan-European 
character.  If DG XXIII  wants EASDAQ to be successful,  it will have to encourage  Member  States to  remove 
the legal and regulatory  barriers the project  faces. 

Regarding  the  programme  consultations:  DG  XXIII  should  be  involved  at  the  conception  of  the 
Community's  different  financial  instruments,  thus  making  sure  that  the  financial  instruments  are  not  only 
accessible  but also tailored  to meet  SME needs. An early  involvement  would  also make  it possible  to consult 
and  involve  SME  representative  and  professional  organisations.  A  prerequisite  would-be  a  considerable 
increase  in the resources allocated to the process. 

For  the  longer  term,  DG  XXIII  should  continue  to  work  as  much  as  possible  through  mechanisms  based  on  the 
exchange  of  best  practices  because  of  the  inherent  advantages  this  technique  offers  (wide  pool  of  experience,  in 
line with new approach  of partnership and market-oriented). The following  new measures could  be  suggested: 

• 

• 

Create  Round  Tables  for  each  of  the  different  parties  and  professions  that  are  involved  in  the  financing  of 
SMEs: e.g. venture capitalists, stock-brokers, accountants, public sector bankers,... 

Create  a Committee  for  Improving  the  Financial  Environment  modelled  upon  the  Committee  for  Improving 
and  Simplifying  the  Business  Environment:  the  Committee  would  study  what  measures  (including  taxation) 
can be taken  at the level of the Member  States to improve the financial  environment  of SMEs. 

Arthur  Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG  XXIII 

47-

- 3 4-

C H A P T ER  VIII  :  PROMOTING  BETTER OBSERVATION OF THE ECONOMIC DEVELOPMENT 
OF ENTERPRISES 

"Promoting  better  observation  of  the  economic  development  of  enterprises  as  part  of  the  dynamic  of  effective 
implementation  of  the  internal  market.  European  Observatory for  SMEs,  improved  statistics  on  SMEs  without 
increasing the burden  on enterprises " 

MEASURES 

Business services  in Europe ("Business services  statistics") 

Enterprises  in Europe ("Enterprise  statistics") 

CMA  statistics 

European  Observatory  for  SMEs 

Conference  of Berlin  ( 1994) 

EVALUATION 

Conception 

In  view  of  the  sound  approach  and  the  potential  leverage  effects,  the  overall  rating  given  to  "promoting  a  better 
observation  of the  economic  development  of enterprises"  is "good".  This  is in line with the rating  of the  measures 
on a stand-alone  basis. 

The  different  measures  constitute  a  complementary  approach  of  the  objective  as  set  forth  in  the  Annex  of  the 
Council  Decision:  all sectors and industries are covered by the different  publications  or events. 

The  different  publications  (Business  services  statistics,  Enterprise  statistics,  CMA  statistics  and  the  European 
Observatory  for  SMEs) respond  to an explicit  information  need  of policy  makers  as no comparable  data  sets exist 
at a European  level. This  is particularly  the case with respect to the European  Observatory  for  SMEs: the  measure 
corresponds  directly  with  the objective  outlined  in the Annex;  policy  makers  regard  the  European  Observatory  as 
a unique reference  document  dealing with  all SME-related aspects. 

In order to avoid  adding to the burden  on enterprises through  questionnaires  or surveys,  DG XXIII  clearly  defined 
and  implemented  a strategy  of using  as much  as possible  statistical  data existing  at a national  level.  The  collected 
data  are  generally  available  at  National  Statistical  Institutes  and/or  professional  or  other  organisations  or  are 
gathered  by means of pilot surveys on a voluntary basis. 

The  Conference  of  Berlin  (1994)  is  a  clear  illustration  of  how  DG  XXIII  gets  direct  feed-back  on  the  different 
problems  that  companies  face  in the field. By exchanging  and debating  views of different  key  players  in the field, 
including  national  policy  makers  in the craft  and small businesses  sector, the conference  helped to  identify  to what 
extent  an  action  at  a  European  level  is  needed.  Some  of  these  proposals  have  already  been  followed  up  by 
measures or pilot  schemes. 

With  respect  to  the  CMA  statistics,  questions  arise  as  to  whether  it  should  be  a priority  of  DG  XXIII  within  the 
Multi-annual  Programme. 

No synergies  were  identified  between  the different  measures  as they  cover different  sectors  of activity  and  are not 
comparable. 

For nearly  all the measures  listed above, DG XXIII succeeded  in identifying  different  types of levers: 

• 

• 

Co-operation  with  specialised  institutions/organisations  for  statistical  research  and  leverage  of  financial 
resources.  For  example,  the  different  publications,  except  the  "European  Observatory  for  SMEs",  are  a co-
production  of  DG XXIII and  EUROSTAT. 

The  Conference  of  Berlin  allowed  DG  XXIII  to  identify  areas  for  priority  action,  thanks  to  the  input  of 
policy  makers  and experts  from  professional  organisations  in the craft  sector and small businesses. 

CMA  stands  for  co-operatives, mutuals and  associations. 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG XXIII 

35 

Implementation 

The  overall  scoring  given  to  the  implementation  of  the  different  measures  is "adequate".  This  is  consistent  with 
the ratings given to the measures on a stand-alone basis. 

The  implementation  of the  different  measures  has generally  been  well  prepared  and  followed  up. The  role  of DG 
the  different 
XXIII  varies  from  co-defining,  in  collaboration  with  EUROSTAT,  the  type  of  information 
publications  should  contain, to the preparation  of workshops  and of a detailed thesaurus  of proposals expressed  by 
the participants of the  Berlin  Conference. 

The common  element  in the  lower implementation  ratings  is that some publications  are  incomplete  and  inaccurate. 
This  is  because  of  the  frequently  poor  quality  of  data  available  at  national  institutions  or  because  of  the  low 
response  rate  in  the  pilot  surveys  by  which  the  data  are  gathered  (e.g.  "Business  Services  in  Europe",  "CMA 
Statistics").  Moreover,  by  the  time  the  publication  is  released,  the  data  are  often  considered  obsolete  by  its 
potential users. 

For  the  European  Observatory  for  SMEs,  extensive  use  is  made  of  different  SME  research  institutes  throughout 
Europe - which  created  a network  effect  between the different  institutes. The  European  Observatory  for  SMEs has 
a  strong  academic  basis,  but,  in the  opinion  of  some  respondents,  it  is not  a very  practical  document  to  its  target 
group  of  policy  makers:  its  format  is  not  practical  and  all  information  included  is  not  always  of  direct  use  or 
interpretation.  In  view  of the  absence  of  non-research  bodies  in the  network,  some  pragmatic  dimensions  are  not 
enough  considered. 

Achievement  of objective  (quantitative  and qualitative  impact) 

The overall  rating given  to the achievement  of the objective  is "adequate". 

Several  measures  are  still  in  a  development  phase:  this  was  the  case  for  the  CMA  statistics  and  the  Berlin 
Conference.  While  it  is still too  early  to  assess their total  impact,  it can  be  assumed  that  they  can  and  will  have a 
bigger  impact as they reach  maturity. 

The  biggest  achievements  of  the  different  measures  are  in  the  sphere  of  establishing  a  better  and  more 
comprehensive  picture of the situation  of SMEs and of analysing the  impact of the  Internal  Market  on  SMEs. The 
statistics clearly fill a gap as no comparable  publications exist at a European  level. 

Furthermore,  they  provide  enterprise  policy  makers  at  a  national  and  European  level  with  a  useful  tool  for 
identifying  the  right  initiatives  in the  enterprise  policy.  With  respect  to  the  European  Observatory  for  SMEs,  the 
surveys  and  interviews  indicated  that  officials  attach  a quite  high  importance  to  the  publication,  which  confirms 
the  use  they  make  of  it.  The  Conference  of  Berlin  resulted  in  a  short-list  of  priority  measures  to  be  taken:  the 
necessary  follow-up  is also taking place. Therefore,  its impact was rated  "good". 

Unfortunately,  for  the other measures, the  impact was rated "adequate" because they  are hampered  by some  flaws. 
Their  impact  suffered  from  a perceived  incompleteness  and  a weak  distribution  policy:  the target  group  for  most 
publications  is  generally  poorly  defined  and  inadequately  implemented.  Policy  makers  at  a  European  level  have 
generally  been  well  targeted;  those  at  the  Member  State  level  and  other  people  having  an  impact  on  the 
environment  in which  SMEs operate are much  less effectively  targeted. 

Cost-effectiveness 

An  inefficient  distribution  policy  with  respect  to  all  publications  hampers  the  potential  impact  the  different 
measures could  achieve, and  hence reduces their  cost-effectiveness. 

With  respect  to  the  Conference  of  Berlin,  the  average  cost  per  participant  was  acceptable  in  view  of  the  good 
qualitative  and quantitative  impact of the measure. 

CONCLUSION 

The  Commission's  strategy  to  meet  the  objective  of  a  better  observation  of  the  economic  development  of 
enterprises  is "adequate".  It disposes  of  considerable  leverage  effects  by  using  information  existing  at  a  national 
level and  because of the  co-financing. 

DG  XXIII's  added  value  in this area of activity  consists  in the compilation  of a comprehensive  and  unique  source 
of  information  on the development  of enterprises  in the different  Member  States of the  European  Union.  Its role in 

Arthur  Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG XXIII 

36 

this  area  would  seem  completely  justified  as  no  comparable  compilation  or  information  exists  at  the  European 
level. 

The  different  publications  provide  policy  makers  with  extensive  information  which  can  help  them  define  the 
appropriate  strategies.  Some  concern  arose  with  respect  to  the  number  of  copies  distributed  and  the  number  of 
policy  makers that  have  finally  been  reached.  An  improved  distribution  policy  aimed  at targeting  more  effectively 
national  officials  should  be considered, as it could considerably  increase the impact of the different  publications. 

The development  of quantitative  information  on small and medium-sized  enterprises  is an  important  issue. But the 
distinctive  roles  DG  XXIII,  EUROSTAT  and  authorities  at  national  or  international  level  play  in  the  collection 
and compilation  of the  information  did not appear to be optimal. 

The  objective  not  to  increase  the  administrative  burden  on  enterprises  has  been  achieved  and  a  similar  policy 
should  be adhered  to in the  future. 

The  Conference  of  Berlin  made  possible  an  identification  of the  problems  in the  field  through  direct  consultation 
with field experts and hence helped to take appropriate  action. 

OVERALL RATING PER MEASURE 

• 
Business services  statistics 
Enterprise  statistics 
European  Observatory 
for SMEs 

• 
CMA statistics 

• 
Conference of Berlin 

Poor 

Adequate 

Good 

Exceed 

Overall  performance 

S 
3 
(0 
2 

CO 
re 
O 
E 
o 
SZ 
° I 

•£ 

o 
"53 

</) 
3 
</> 

RECOMMENDATIONS 

To improve the workjng  of the different  measures, the following  recommendations  can be made: 

• 

• 

• 

• 

• 

A  focus  on  the  quality  of  the  data  included  in  the  publications  is  a  top  priority:  DG  XXIII  should  try  to 
achieve this by trying to encourage the national (statistical) organisations  to obtain  data that are both  accurate 
and  up-to-date. 

A clear  definition  of target  groups  at the  European  and  Member  State  level  for  the different  publications  and 
subsequently  the  implementation  of a focused  distribution  policy. 

Feasibility  studies  should  be  conducted  in order  to  even  better  integrate  new  information  technologies  (CD-
ROM, On-line  Databases with  interrogative  software,  ...) to make the data more user-friendly  and accessible. 

Concerning  the  European  Observatory  for  SMEs,  the  integration  in  the  network  of  some  non-academical 
organisations  could  help to engender  a more practical  approach  towards  SMEs.  In addition,  in order  to avoid 
its  heavy  format,  a publication  per theme  or  segment  could  be considered  or,  preferably,  a CD-ROM  format 
with  interrogative  software.  This argument also applies to the Enterprises  in Europe  publication; 

In  view  of  its  success  in  fostering  closer  contacts  with  and  feed-back  from  the  field,  events  like  the 
Conference  of Berlin  should  continue to be held; follow-up  measures, however,  should be  implemented  more 
rapidly  (it  took  over  a year  for  the  Conference  of  Berlin).  The  idea  of  a Conference  could  also  be  used  for 
other  focused  groups of SMEs. 

A\rthur  Andersen 
Business  Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG XXIII 

b& 

37-

CONCLUSION 

What  is the overall  evaluation  of the achievement  of the objectives  of the  Multi-annual  Programme  as set 

forth  in the Council  Decision  of June  14,  1993 ? 

The table below  presents the evaluation  per objective  for each criterion, and the number of measures. 

SCORINGS  PER  CRITERION 

NUMBER  OF  MEASURES 

DG  23  OBJECTIVE 

Admin & Legal Environm. 

Better access  to Community 
information for enterprises 

Improving the  business-partner-
search  network 

Direct  Contact  bt Entrepr.  -
Subcontracting 

Ensuring consideration of SME 
interests  in the various 
Community  initiatives  and 
policies 

Encouraging SMEs  to adapt to 
structural changes  and to 
changes  brought  about by the 
internal  market 

Promoting a better financial 
environment  for enterprises 

Promoting better  observation of 
the  economic  development of 
enterprises 

G 

G 

G 

G 

A 

A 

A 

A 

A 

A 

P 

G 

E 

A 

G 

G 

G 

A 

A 

G 

G 

G 

A 

A 

-

G 

-

E 

1 

2 

_5 

2 

1

1

13 

1 

4 

1 

3 

1 

2 

4 

1 

5 

3 

G  . 

A 

A 

N.A. 

2 

Evaluation and development of 
enterprise  policy 

-

-

-

The scorings  have the following  meaning: "E" stands for "Exceed",  "G" for  "Good",  "A" for  "Adequate". "P" for 
"Poor",  and "N.A." for "Not  Applicable". 

The  last  objective,  i.e. "Evaluation  and  development  of  enterprise  policy",  has  not  been  evaluated  as  it relates  to 
the evaluation  to be made by an external expert,  i.e. the subject  of the present  report. 

The  interpretation  to be made of the above table is as follows: 

1.  The conception  of the different  measures  is "Good"  as they  respond  to the objectives  of the  Council  Decision: 
in  most  of  the  cases,  the  different  aspects  of the  objectives  are  covered;  synergies  between  measures  are  to a 
certain  extent  identified  (e.g.  between  the  EIC  R&TD  Group  and  the  Euromanagement  R&TD  programme, 
correspondents  of  BC-Net,  BRE,  EIC  which  participate  in  one  third  of  Europartenariat/Interprise  events,  ..) 
although  there  is  still  room  for  improvement.  The  budgets  allocated  to  the  network  related  measures  (EICs, 
BC-Net,  BRE,  Enterprise,  ..) seem  to  be very  important  compared  to other  measures  (e.g.  pilot  projects).  One 
could  ask the question  if the measures have been sufficiently  prioritised. 

2.  The  implementation  of  the  objectives  is  "adequate".  For  most  of  the  measures,  the  major  strengths  of  the 

implementation  are that: 

Interactions  with the target environment  were  sufficient; 
Especially  for  pilot  projects  and  measures  in  the  start-up  and  development  phase,  a  structured  approach 
has been  developed; 
Appropriate  levers have been  identified  and used. 

Arthur  Andersen 
Business  Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG XXIII 

38 

The  major  weaknesses  in  the  implementation  of  the  measures  are  divided  into  a  strategic  and  operational 
dimension: 

Strategic: 
S 

Insufficient  "Customer  focus",  i.e. insufficient  identification  of the target customer  for  each  measure 
(this  is particularly the case for the EICs, Statistics, Information  & Publication  and others); 
Insufficient  identification  and use of synergy  and  integration  potential  between  all enterprise  related 
Community  networks; 

S 

S  With respect to mature measures,  insufficient  alignment on a continuous basis with the  environment. 
Operational: 
S 

Insufficient  management  information  allowing  fine-tuning  or  redirection  of  the  implementation  of 
the different  measures; 
Constraining and slow decision process within the Multi-annual  Programme; 
Insufficient  follow-up  and delays in the implementation  of the different  measures. 

S 
S 

3.  The  achievement  of  the  different  objectives  is  "adequate",  except  for  the  objectives  which  encompass  the 
subcontracting  measures  and  those  related  to the promotion  of a better  financial  environment  for  SMEs.  With 
respect to the  latter two, the scoring  is "good". 

The  scorings  on  achievement  are  closely  related  to  the  implementation  of  the  different  measures.  Overall  the 
qualitative  and  quantitative  impact  increased  during  the  Multi-annual  Programme.  We  believe  however  that a 
more significant  increase could have been  achieved. 

4.  Concerning  the  cost-effectiveness  ratio,  scorings  are  generally  better  and  vary  from  "adequate"  to  "good"  and 

"exceed". 

The  better  scorings  with  respect  to  the  cost-effectiveness  ratio  in  comparison  with  those  attributed  to  the 
achievement  of the objectives  can be explained  by the  following: 

The  evaluation  was  made  in  light  of  the  limited  operational  resources  allocated  to  the  Multi-annual 
Programme.  These  limited  resources  hamper  to  some  extent  an  optimal  quantitative  and  qualitative 
impact but not the  cost-effectiveness; 
The  levers, which,  although  valuable,  could  not  sufficiently  contribute  to  reach  a significant  quantitative 
impact  on the total SME population. 

The  "adequate"  scoring  with  respect  to  the  achievement  of  the  objectives  compared  to  the  good  cost-
effectiveness  indicates an existing  imbalance  between  the broad and ambitious objectives  on the one hand, and 
the limited  resources on the other hand. 

Which  conclusion  can  be drawn  from  the evaluation  of the Multi-annual  Programme  from  a dynamic  perspective, 
i.e. the progress  made compared to the situation two years ago ? 

The actual  Multi-annual  Programme  contains a lot more objectives  and measures compared to the previous one. 

Major  progress  has  been  achieved  in  the  implementation  of  some  measures  (e.g.  Recommendations  have  been 
adopted  on  Transfer  of  Businesses  and  Late  Payments).  For most  of the  measures,  considerable  improvement  has 
been  identified  in terms of quantitative and qualitative  impact. 

The relationship  between  DG XXIII  and the environment  has become  more  interactive: the environment  has been 
more often  consulted  and taken  into consideration  in the implementation  of different  measures. 

Although  it  appears  that  progress  is  being  made  into  the  right  direction,  there  is  still  considerable  room  for 
improvement. 

Arthur Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG XXIII 

^ 

39 

RECOMMENDATIONS 

of the Multi-annual  Programme ? 

What  is the policy  recommendation  we could make after  the evaluation  of the different  measures 

First,  a  suggestion  for  a  mission  statement  for  the  new  Multi-annual  Programme  : in  view  of  the  ambitious  and 
broad  objectives  and  the  limited  resources,  the  Multi-annual  Programme  should  foremost  be  about  the  "Creation 
of an appropriate  environment  for  Growth  & Internationalisation  of SMEs through  a uniquely  conceived  network 
and  by extensively  using the adequate  levers". We suggest six axes to achieve this mission: 

- 
- 

Create a visibility  on SMEs 
Focus on  deregulation 
Focus on an  integrated  approach 
Focus on  levers 
Focus on  Information  Technology 
Continuous  development  of a single  network 

Visibility on  SMEs 

A  precondition  for  an  effective  SME  policy  is to  understand  the  SME  population  and  the  problems  they  face  in 
their  attempt  to  grow  &  internationalise^  . The  instruments  that  currently  exist  (SME  Observatory  and  Statistics) 
do  not  sufficiently  provide  policy  makers  with  the  daily  realities  SMEs  face.  We therefore  recommend  to  set  up 
additional  measures  allowing to : 

Create visibility  on SMEs and their real needs, 
Analyse what kind of segmentation  of SMEs could be done based on their current needs, 
Disseminate  and  integrate valuable  information  in the implementation  of the existing measures38. 

To fill this  information  gap, alongside  new  measures, the existing  networks  should  be used  to serve  as grass-roots 
points  of  contact  with  the  SME  population;  they  should  help  DG  XXIII  in  identifying  areas  for  priority  action, 
with  a  continuous  feed-back  on  the  effectiveness  of  existing  measures  and  projects  and  help  fine-tune  new 
measures by providing  segmented  'market'  information. 

Focus on  deregulation 

Our analysis showed  that the administrative  and legal burden  SMEs have to face  should  be one of the top  priorities 
of  any  SME  enterprise  policy.  Therefore, 
include  measures 
concentrating  on  all  aspects  of  this  objective:  DG  XXIII  should  be  the  advocate  and  watch-dog  of  legal  and 
administrative  deregulation  (or  new  regulation)  within  the  Commission  through  the  interservice  consultation 
process, through  consolidation  of legislation  and through  a thorough  impact assessment  of  legislation. 

the  new  Multi-annual  Programme  should 

As an  important  part  of the  administrative  and  legal  burden  is created  at the  level  of the  Member  States,  the  new 
Multi-annual  Programme  should  also  address  this  point  by  making  DG  XXIII  a  facilitator  of  deregulation  within 
the  Member  States  on  the  basis  of  the  new  partnership  approach  of  article  130  of  the  Treaty  of  the  European 
Union. The Committee  for  Simplifying  and  Improving the Business  Environment  is a first step in this  regard. 

Integrated  approach 

DG XXIII  should  put  more  resources  in  its attempt to co-ordinate  those activities  resulting  from  other  DGs within 
the Commission  which  could  be considered  in support of SMEs. DG XXIII should  identify  the adequate  measures 
that  will  allow  them  to  be  more  closely  involved  in  most  of  the  initiatives  taken  towards  the  SMEs  at  the 
Community  level. 

>7  The objective  should  also be to  identify  the  percentage  of SMEs  interested  by  growth  & internationalisation, who they  are. and  what  are 
the actions  to  be conducted  to increase this percentage. "Integrated  Program  in favour  of SMEs" (Com  (94) 207  Final)  indicates  that  only 
5% of SMEs  are  really  interested  by growth  &  internationalisation. 

'*  This  in order  to  respond  to the  lack of a "Customer  focused"  approach  as highlighted  in the  conclusion. 

Arthur Andersen 
Business Consulting 

Evaluation  of the  Multi-annual  Programme 
to assist  SMEs - DG  XXIII 

S3 

- 4 0-

The levers 

DG XXIII  should  place yet more emphasis on the use of levers  in everything they do. While  DG XXIII  has done a 
good job  in trying to identify  levers in the implementation  phase, these levers were not always effectively  used. 

Working  through  pilot  projects  to demonstrate  the  viability  and  feasibility  of  new  ideas  that  might  benefit  SMEs 
also  forms  an  integral  part  of DG  XXIII's  mission.  DG  XXIII  should  ensure that  the  ideas  and  projects  that  have 
passed the market test successfully  are picked up by the market on a larger scale and thus create a leverage  effect. 

The exchange  of best  practices  is another  way to create  leverage effects:  it draws  from  a  large  pool  of  experience, 
it takes  into  account  the  different  realities,  it  is  in  line  with  the  new  partnership  approach  (between  the  Member 
States,  the  Commission  and  representative  organisations),  and  it  is  the  most  market  oriented  approach  which 
should  guarantee  a high  cost-effectiveness.  Therefore,  it should  be used  extensively  as a tool  in the  pursuit  of the 
different  objectives,  DG  XXIII  should  be  a  facilitator  of  an  effective  exchange  through  the  organisation  of  pilot 
projects,  conferences,  Round  Tables, seminars. Issues to  be discussed  should  certainly  include  finance,  exporting, 
research,  co-operation,... 

Information  Technology 

The  next  Multi-annual  Programme  should  consider  as  an  objective  a better  access  to  information  technology  for 
the  SMEs.  Moreover,  DG  XXIII  should  better  integrate  information  technology  in  the  existing  measures.  We 
cannot  sufficiently  stress  the  importance  of  the  information  society  in  providing  strategic  opportunities  for  the 
SMEs. 

The  networks 

The networks  as they  actually  exist cannot  fulfil  the objectives  as set  forth  in this recommendation,  i.e. to  provide 
valuable  information  on  the  SMEs  and  to  adequately  use  levers  by  focusing  on  the  distribution  channels. 
Moreover, the preceding  chapters have  identified  different  recommendations  that could  significantly  increase their 
quantitative  & qualitative  impact.  We therefore  believe  that the networks  should  be  significantly  transformed  and 
integrated  into  a single  network.  Moreover  the  new  single  network  should  be the  instrument  through  which  most 
of the measures  should  be  implemented.  The single network  concept  consists of one  central  structure  and  multiple 
distribution  channels.  The  central  structure  combines  all  information  and  competences  to  maximise  its  effectivity 
and  efficiency.  The  distribution  channels  include  different  types  of  non-exclusive  most  trusted  business  advisors 
to SMEs. This  should  contribute  to the  successful  integration  of the  first-stop-shop  and  one-stop-shop  concepts  as 
the basis of the single  network.  The single network  will continue the different  types of  individualised  services  that 
the networks currently  provide. 

The  suggested  new  approach  gives  rise  to  a  fundamental  question:  does  the  Multi-annual  Programme 

provide  DG XXIII with  sufficient  resources to achieve the  objectives? 

First the budget of the Multi-annual  Programme: based on the suggestions outlined  in the previous  chapter: 

• 

• 

• 

the  existing  non-network  measures  have  been  rated  "adequate"  or  "good" 

most  of 
;  different 
recommendations  have  been  highlighted  in the  preceding  chapters  that  could  improve  their  effectiveness  to 
achieve the objective.  We therefore  believe that most of them  should be continued ; 
as  previously  mentioned,  the  network  measures  should  be  transformed,  with  significant  investments  in 
technology ; 
we  believe  that  additional  measures  should  be  set  up  in the  area  of  information  on  SMEs,  deregulation  and 
integrated  approach. 

On the one hand,  the transformation  of the networks will require  investments. However,  it is too early  to say  if the 
future  functioning  of the networks will be significantly  more expensive than the current  situation. 

On the other hand, the new measures will require additional  budget. 

We  therefore  believe  that,  if  such  a  policy  statement  wants  to  be  adequately  implemented,  additional  budgets 
should be required. 

In terms  of human  resources,  it was not the purpose  of our evaluation  study to review  the  adequacy  of the  human 
resources  allocated  to the  execution  of the  Multi-annual  Programme. Nevertheless,  the  evaluation  has  shown  that 
some  implementation  problems  were  partly  due  to  a lack  of  human  resources.  The  additional  measures  proposed 
would  probably  also require additional  human  resources and specific  skills. 

Arthur Andersen 
Business Consulting 

Evaluation  of the Multi-annual  Programme 
to assist  SMEs - DG XXIII 

<~/ 

ISSN 0254-1475 

COM(96) 99 final 

DOCUMENTS 

EN 

08 

Catalogue number  : CB-CO-96-I39-EN-C 

ISBN 92-78-01919-4 

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