Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions - Report on the evaluation of the 3rd Multiannual Programme for SMEs in the European Union (1997-2000)
Date: 1999-06-29
Institutions: European Commission
Subjects: EU programme, aid to undertakings, business policy, report, small and medium-sized enterprises

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 29.06.1999 
COM(1999) 319  final 

COMMUNICATION FROM THE COMMISSION 

TO THE COUNCIL, THE EUROPEAN PARLIAMENT, 
THE ECONOMIC AND SOCIAL  COMMITTEE 
AND THE COMMITTEE OF THE REGIONS 

Report on the evaluation of the 
3rd Multiannual Programme for SMEs in the 
European Union (1997-2000) 

Council Decision 97/15/EC of 9 December 1996 

1. 

INTRODUCTION 

In December  1996, the Council  adopted the  3rd Multiannual Programme  (MAP) for  Small  and 
Medium-sized  Enterprises  (SMEs)  in  the  European  Union1.  The  programme  covers  a  4  year 
period  from  1997 to 2000. The Decision  sets out 6 Objectives  and defines  25 measures  under 
these  objectives. 

The  purpose  of  this  Communication  is  to  present  the  external  evaluation  report  on  the 
implementation  of the 3rd MAP. Article 6 of the Council Decision requires the Commission to 
submit  such  a  report  to  the  European  Parliament,  the  Council,  the  Economic  and  Social 
Committee  and the  Committee  of the Regions  before  the  end of  1999. However,  as  requested 
by the  Council, the report  is presented  now, 6 months  ahead  of the  Commission  proposal  for 
the next  MAP  for  SMEs planned  for  the  end  of  1999. This  is to  give time  for  effective  feed 
back from the evaluation results into the proposal for a new programme. 

The contract  for the evaluation report was awarded to Deloitte & Touche after  an open call  for 
tender2.  Actual  evaluation  work  started  in  September  1998.  The  final  report  was  received  on 
30th April  1999 and its Executive Summary is presented with this Communication in the annex. 

2. 

GENERAL COMMENTS 

1. The Commission welcomes the evaluation undertaken  by the consultants, in particular  their 
assessment  that,  in  so  far  as  can  be  established  at  this  point  in  time,  the  3rd MAP  is  being 
implemented  in  an  acceptable,  cost-effective  manner.  As  more  than  half  of  the  MAP 
expenditure  is incurred under  Objective  C3, the Commission notes with  satisfaction  that,  apart 
from  the partner-search  networks, the measures taken under  this  objective  receive  a  generally 
good evaluation. 

Overall the evaluators highlight the clear role for the activities of DG XXIII (Enterprise  Policy, 
Distributive Trades, Tourism and  Social Economy) which is responsible for  implementing  the 
Programme. They particularly rate positively the 'policy actions' undertaken by DG XXIII. 

Points  of  criticism  concern  mainly  the  areas  where  'pilot-actions'  are  undertaken  which, 
according to the evaluators, inadequately  feed into genuine policy development.  Fragmentation 
of scarce human  and financial  resources into too many  small-scale  actions is also  identified  as 
a  weakness  in  parts  of  the  Programme.  The  Commission  agrees  on  the  principle  that  pilot-
actions  should  clearly  link  into  a  wider  policy  programme,  and  that  the  results  should  be 
actively  used  and  disseminated.  The  size  of  actions  should  be  sufficient  to  achieve  useful 
results. 

2.  The  approach  and  methodology  of  the  evaluation  are  set  out  in  Chapters  1 and  2  of  the 
Executive  Summary.  The  Commission  wishes  to  underline  here  two  inherent  features  of  the 

i 

3 

Council  Decision  of 9 December  1996, 97/15/EC, OJ L6,  10/01/1997,  pp. 25-31. 
Call  for  tender published  in the OJ series  S n°48 of  10.3.1998, pp. 38-39. 
Objective  C:  "Help  SMEs  to  europeanize  and  internationalize  their  strategies,  in  particular  through  better 
information  and co-operation  services". 

evaluation  and  the  Programme  that  the  reader  should  bear  in  mind  when  going  through  the 
evaluation: 

Firstly, the timing of the evaluation is very early  in the implementation  of the Programme. As 
outlined  above, this is to allow effective  feed-back  into the preparation of the next Programme. 
However the fact that the evaluation took place half way through the Programme  does present 
methodological  drawbacks. For many new actions launched  under the  3rd MAP, results  cannot 
yet  be measured.  As  a result,  firm  assessments  about their  impact,  effectiveness  or  usefulness 
cannot  yet  be  made.  The  same  holds  true  for  measurement  of  the  effects  of  changes 
implemented  in the design and delivery mechanisms of more mature measures. 

Secondly, the end-target  group of the  18 million  SMEs in the European Union is in itself  very 
wide  and  diverse4.  Hence,  evaluating  effects  on  the  end-target  group  through  statistically 
representative  samples  for  all  objectives  and  actions  would  have  been  an  impossible  task 
within  the  timeframe  and  a  reasonable  budget  for  this  evaluation.  The  result  is  that  the 
evaluation,  necessarily,  draws  substantially  from  opinions  of  stakeholders  and  intermediaries 
to  arrive  at  the  conclusions,  rather  than  on  more  'objective'  data.  The  report  does  however 
stress  the  need  to  establish  proper  performance  indicators  to  enable  actions  taken  under  the 
MAP to be evaluated  on a more scientific  basis in future.  The Commission  agrees on the need 
to establish a set of performance  indicators to accompany the proposal for a new Programme, 
so that a more objective evaluation of future  actions should be made possible. 

OBSERVATIONS ON THE ASSESSMENT OF SPECIFIC MEASURES BY OBJECTIVE 

This  section  aims  to  give  an  initial  response  to  some  of  the  major  conclusions  and 
recommendations  made  by  the  evaluators.  A  more  detailed  response  will  be  given  in  the 
proposal for the next MAP. 

3.1.  Objectives A&F 

The  Commission  agrees that  further  work  should  be  done to  build  on the  results  achieved  so 
far  under  the  Concerted  Actions  programme  with  the  Member  States.  Developments  in  the 
past  year  have  brought  structure  and  focus  to  the  initially  wide  range  of  issues  under 
discussion, and are leading to the identification  of specific  cases of good practice. For instance, 
Member  States have now agreed a list of good practices arising from  the analysis conducted  in 
the  seminars  examining  support measures  for  business  start-ups. These  good practices  will  be 
widely distributed in a publicity brochure. This brochure will also draw attention to the Internet 
site - due to be operational  mid  1999 - where more extensive  information  will  be provided  on 
Concerted Actions and where interested organisations will be guided to an active discussion of 
good/best  practice  in  the  areas  concerned.  There  has  also  been  considerable  progress  in 
establishing  appropriate  procedures  with  the  Member  States  in  recent  years,  notably  in  the 
form of a rolling work programme. 

to 

the 

the 

follow-up 

the  Business  Environment 
Regarding 
Simplification  Task Force (BEST), the Action Plan was endorsed by the Council on 29 April 
1999.  The  Action  Plan  is wide  ranging  and  brings together  for  the  first  time  all  policy  fields 
that impact on entrepreneurship and enterprises. The implementation of the Action Plan will be 
vigorously followed  up by the Commission in close co-operation with the Member States. This 

recommendations  of 

4 

See  Enterprises  In Europe,  DG XXIII/Eurostat, 5th report  June  1999. 

3 

will  include  regular  reports  to  the  Council,  starting  in 2000,  on the  ongoing  implementation, 
detailing specific new actions which have been taken. The Commission will also agree with the 
Member  States ways of measuring progress in entrepreneurship policies. This could include an 
independent  evaluation  of progress  involving  the  business  community.  The  evaluation  would 
consider  the  impact  that  the  Action  Plan  is  making  on  enterprise  performance,  and  help  to 
identify  areas where  it is thought  that  further  work  is needed  and, where  appropriate,  propose 
specific recommendations to achieve this. 

On the Business  Impact  Assessment  system, the  Commission  takes the  view that  there  have 
been  important  improvements  to  the  regulatory  impact  analysis  carried  out  on  legislative 
proposals,  and  more  comprehensive  consultation  procedures.  However,  the  Commission 
recognises  the  need  for  further  improvements  in  the  quality  of  business  impact  assessments. 
Revised  guidelines  on how to  complete  a business  impact  assessment  together  with  a  revised 
business  impact  assessment  form  are  currently  being  discussed,  and  it  is  hoped  that  these 
should be adopted  shortly.  While these  are internal  working procedures, the  Commission  will 
also consider making the revised guidance notes and form public. 

The product on the euro referred  to is in fact not just a CD-Rom, but a CD-Rom  accompanied 
by  a  brochure.  The  brochure  contains  a  summary  of  the  content  of  the  CD-Rom,  and  is 
therefore  useful  to  entrepreneurs  (in  particular  small  businesses)  who  do  not  have  access  to 
material  enabling them to read  CD-Roms. This dual approach  of publishing  a CD-Rom plus a 
brochure  should  be  helpful  to  all  SMEs,  regardless  of  size.  The  impression  given  in  the 
executive  summary  that  the  product  is  solely  a  CD-Rom  and  therefore  inappropriate  for  the 
smallest SMEs should be considered in this light. 

The  conclusions  reached  on  the  value  and  cost-effectiveness  of  the  work  on  European 
Economic Interest  Groupings  (EEIGs) appear  subjective  and not very well  informed.  As the 
EEIG  remains  the  only  transnational  legal  instrument  available  to  EU  businesses,  it  is 
important to draw attention to its existence. Around  1,000  EEIGs have been created. The work 
carried  out  has  involved  only  a  modest  promotion  of  this  facility  through  an  explanatory 
brochure  and through the information  provided  on EEIGs in the REGIE database. It has  never 
been  the  Commission's  intention  to  promote  EEIGs  directly  to  businesses,  but  rather  to  use 
channels  such as the Euro-Info  Centres  and professional  organisations, while  allowing  market 
forces to operate. The Commission does, however, monitor interest and provides full  details on 
the EEIG via its internet  site. As recognised  in the report, the costs of pursuing this action  are 
minimal.  In  addition,  the  European  Parliament  has  favoured  a  more  dynamic  and  focused 
approach towards the EEIG5. 

3.2.  Objective B & Joint European Ventures (JEV) 

Regarding the Round Table of Bankers  and SMEs, and the dissemination  of the results, the 
final  report of the 2nd Round Table consisted  of a summary  and recommendations, which  were 
translated  into  all  official  languages  and  published  together  with  the  full  report  in  English. 
Around  8,500 copies were printed  and  every  request  for  a copy  was  satisfied.  With  regard  to 
the subjects covered by the 3rd Round Table, it was necessary to combine access to loan  finance 
with  access  to  external  equity,  which  is  largely  underdeveloped  in  Europe.  It  is  important  to 
highlight  new  sources  of  finance  for  SMEs  in  order  to  reduce  their  dependency  on  loan 

European  Parliament's resolution of  14.7.98 following the Commission's Communication  of 9.9.97  (COM(97) 434). 

finance,  where  some  1/3  of  SMEs  still  face  problems  in  gaining  access.  On  the  basis  of  the 
final  report  of  the  3rd  Round  Table,  which  will  be  published  and  put  on  the  Internet,  the 
Commission  plans  to  organise  at  least  3  conferences  in  the  Member  States,  which  could  as 
recommended be linked to the Concerted Actions. 

Regarding  CREA, the Commission, pursuant  to Art 3, point 2 of Council Decision  97/15/CE, 
did publish annual reports on the Seed Capital I pilot action and did provide for  a full  external 
evaluation.  The  management  committee  of the  Member  States  for  the  3rd MAP  (the  'article 4' 
Committee)  was kept regularly  informed  of the progress  achieved  and  had  the  opportunity  to 
comment  on  the  external  evaluation.  It  also  agreed  to  the  launch  of  CREA.  This  makes  the 
criticism of CREA all the more surprising. 

The  new  CREA  programme  adopted  by  the  Commission  in November  1998  is  based  on  the 
continuing  market  failure  as  regards  the  supply  of  seed  capital  in  Europe.  Several  thousand 
innovative  SMEs  are not  created  each year because of a lack  of risk  capital. The  Commission 
proposed  several  substantial  modifications  to  the  first  Seed  Capital  action  so  as  to  increase 
both the number  of new  SMEs created  under  CREA and the number  of jobs  created  by  these 
SMEs,  such  as  the  introduction  of  a  minimum  size  of  €4  million  for  the  fund  capital,  a 
requirement that  50% of the capital must come from  the private sector (so as to allow the  fund 
to  support  only  viable  projects)  and  opening  the  action  to  cover  the  transfer  of  existing 
enterprises  to  new  owners,  which  in  most  cases  represents  in  legal  terms  a  newly  created 
business. 

CREA is also a response to the request of the European Parliament to focus the budget for  this 
programme,  at low cost, on the creation of new businesses and new jobs.  It is  still  on a  small 
scale  but  will  demonstrate  at  European  level  the  possibilities  to  support  the  creation  of 
innovative  SMEs through investments of seed capital and early stage finance.  The Commission 
will,  as  for  the  first  Seed  Capital  action,  provide  for  an  evaluation  of  CREA  and  wide 
dissemination of the results. 

The  draft  directive  on  late  payments,  which  is  rated  as  cost  effective,  is  a  major  policy 
initiative in favour  of SMEs which will be vigorously pursued. The Commission welcomes the 
political  agreement reached at the Industry  Council on 29 April on the compromise text under 
the  German  Presidency,  and  urges  the  European  Parliament  and  the  Council  to  make  rapid 
progress  in  adopting  the  directive.  The  practical  actions  on  training  in  cash  management  for 
SMEs will be reviewed in the light of the results of actions already  launched. 

The  major  part  of  JEV  is  implemented  outside  the  3rd MAP.  The  Commission  was  already 
aware  of  the  absence  of  a  marketing  instrument  for  JEV,  which  is  still  unknown  to  a  large 
number  of  SMEs.  The  Commission  therefore  decided  to  launch  a promotion  facility  early  in 
1999 to help SME organisations organise JEV events which bring together  SMEs from  at least 
two Member States. 

With regard to procedures, the Commission is conscious that both financial  intermediaries  and 
SMEs  are  asking  for  administrative  simplification  in this  area.  However,  a balance  has  to  be 
achieved  between  simplifying  procedures  on  the  one  hand,  and  the  need  for  effective  fraud 
prevention on the other hand, with the reporting system that results from this. 

With  regard  to  support  for  the  feasibility  study,  this  is  a precondition  for  access  to  the  10% 
investment premium to be paid once the transnational  Joint Venture has been created.  Without 
the second instrument, the Commission would only support costly feasibility  studies but would 

have no real impact on the creation of new joint ventures. Since maximum support is limited to 
€100,000 per project,  SMEs tend to keep the cost  of  the  feasibility  studies  down  and  favour 
the investment premium, which will lead to the creation of new jobs. 

3.3.  Objective C 

The  Commission  is pleased  to  note  the  overall  positive  evaluation  of  the  Euro  Info  Centre 
(EIC) network, which accounts for over one third of the total expenditure under the MAP. The 
continued drive for quality in this network has been successful,  and has led to an assessment of 
good value for money. The quality policy pursued to date will be continued in order to provide 
the  best  possible  service  to  enterprises.  Regarding  this  and  the  notion  of  first-stop  shops,  the 
Commission  will reinforce  the role of the EIC network  in relation to  closer  co-operation  with 
other  local  and  regional  business  support  services  in  order  to  make  available  a  collective, 
coherent  service  to  SMEs. The  "Business  Dialogue"  initiative, which  is part  of the  "Dialogue 
with  Citizens  and  Business"  launched  at the  Cardiff  European  Council  in  June  1998,  goes  a 
long  way  to  contributing  to  this  orientation.  Greater  synergy  with  national  SME  support 
agencies is part of this policy. 

The report recognises that there have been major  changes to BC-Net and BRE, so as to  make 
them more  effective,  and that  it  is too  early to  assess the results. The  early  signs however  are 
that  the  changes,  such  as the  new  computerised  tool  introduced  in  1998, are  starting  to  yield 
results. The  Commission  agrees that  a comprehensive,  independent  evaluation  of BC-Net  and 
BRE  should  be carried  out  in the year 2000. When the results  of the  evaluation  are  available, 
the  Commission  will  consider  the  most  effective  way  of  proceeding,  including  studying  the 
possibility of merging these networks. 

Europartenariat  and  Interprise  events  are rated  as broadly  cost  effective.  First  results  from 
the  last  Europartenariat  event  in Vienna on  10-11 May, which was combined  with  a PHARE-
Partenariat  and  where  around  2,700  businesses  participated,  indicate  the  continued  success  of 
these major  events. Specific  evaluations on Europartenariat, Interprise and IBEX events will be 
carried out in  1999-2000, but already work is under way to improve the quality  of these  events 
and to develop new tools. 

The  Commission  agrees that  further  policy  work  on the  important  issue  of  subcontracting  is 
necessary.  Following the 2nd European  Subcontracting  Forum held  in Graz  in October  1998, a 
communication  on  subcontracting  will  be produced  before  the  end  of  1999. A main  aspect  of 
this communication will be a new work programme for subcontracting in the coming years. 

Regarding the extension  of existing DG XXIII  programmes, the report omits to mention  the 
aspect  of  enlargement  of  the  EU  and  the  fact  that  the  3rd MAP  has  now  been  opened  up  to 
seven  candidate  countries6  and  that  four  more  will  probably  join  by  the  end  of  1999.  These 
countries have  shown their commitment to the programme  by contributing  their  own  funds  to 
its  budget.  The  opening  up  of  the  programme  is  part  of  the  Commission's  pre-accession 
strategy  and will help to facilitate  the integration  of the candidate  countries  into EU  enterprise 
policy  and  actions.  It  will  also  help  them  to  develop  their  own  policies  and  initiatives  to 

6  Bulgaria, the Czech  Republic,  Estonia,  Hungary,  Poland  and  Slovakia  from  1 December  1998, and  Romania  from 
1  January  1999.  Together  with  EU  Member  States  and  EEA  countries,  the  3rd  MAP  now  has  25  participating 
countries. 

stimulate  entrepreneurship  in preparation  for  future  EU membership. The recommendations  in 
the  report  on  for  example  opening  up  Europartenariat  events  to  businesses  from  non-EU 
countries are therefore  inappropriate in this context. 

3.4.  Objective D 

The pilot  actions  on innovation  have  only  recently  (since  1997) been  launched,  and  it  is too 
early  at  this  stage  to  draw  firm  conclusions.  The  results  of  these  pilot  actions,  which  are 
necessarily  one-off,  will  be  evaluated  and  the  results  analysed.  The  intention  of  these  pilot 
actions always has been to test policy options. 

The work planned  on training  involves  mainly  policy  work  and  does  not  necessarily  involve 
any  new  spending  initiatives. The  intention is to  finalise  shortly  a communication  on  training 
and  SMEs, with a view to analysing the needs of SMEs in the field of entrepreneurial  training, 
taking  account  of  the  initiatives  which  are  already  underway  both  in  Member  States  and  at 
Community  level.  On  quality,  the  only  initiative  taken  so  far  under  the  3rd MAP  has  in  fact 
been  the  continuation  of  Commission  support  for  part  of  the  European  Quality  Award  for 
SMEs, which has been operating for a number of years and is widely recognised in the industry 
as a valuable tool for improving quality management systems. 

3.5.  Objective E 

The  work  on  promoting  entrepreneurship  has  taken  on  increasing  importance  since  the 
Commission's  Communication  of  1998  on  promoting  entrepreneurship.  The  Commission 
agrees with the recommendation  to focus  on the development  of research  and to promote  best 
practice. 

Most  of  the  horizontal  actions  in  the  programme  benefit  small  and  craft  enterprises.  The 
Council decision on the 3rd MAP confirmed  the need also for specific  actions to support  crafts, 
small businesses  and micro-businesses,  as well  as target  groups  such as women  and young 
entrepreneurs  and  enterprises  owned  by  minorities.  The  comments  on  whether  or  not  target 
groups should be the subject of particular actions are therefore not appropriate. 

Moreover,  the  Commission's  proposal  for  the  3rd MAP  explicitly  stated  that  the  means  to  be 
used  in  achieving  these  objectives  should  include  pilot  projects  (transnational  co-operation, 
training measures, joint participation in trade fairs etc), conferences  (specific  reference  is made 
to  the  Third  and  Fourth  European  Conferences  of  crafts  and  small  businesses)  and  studies. 
These are precisely the methods which have been used throughout the 3rd MAP. 

The report  gives the impression that  actions in this area have been  slow  in getting  under  way. 
Regarding the evaluation of projects funded  under the 2nd MAP, it should be noted that some of 
these have only been completed this year. Calls for proposals under the 3 rd MAP were issued in 
1997  and  1998, which  is not  late  in the  context  of  a four-year  programme.  The  Commission 
agrees  that  the  focus  should  now  be  on  evaluating  the  results  of  the  actions  undertaken  and 
disseminating the results as widely as possible. 

The  question  of  whether  actions  in  the  area  of  commerce  are  appropriate  is  again  an  issue 
which  was  clearly  settled  in the  Council  decision  on the  3 rd MAP,  which  included  commerce 
and distribution as one of the target groups for a number of actions. 

The  White  Paper  on  Commerce  has  in  fact  been  very  warmly  welcomed,  especially  by  the 
European  Parliament,  the  Council  of Ministers  and the  Economic  and  Social  Committee.  The 
focus  now  will  be  on  implementing  the  Action  Plan  annexed  to  the  White  Paper  in  the  most 
efficient  way.  One  element  of  the  plan  is  an  information  campaign.  Part  of  this  will  be  the 
publication  of  the  results  of  Commerce  2000  (3rd phase)  and  the  use  of  the  internet  to  gather 
further  best practices. The Commission  agrees that the results  of Commerce  2000  should  now 
be analysed  and widely  disseminated,  and work  on achieving  this is already  underway.  It will 
be  this  activity  which  principally  produces  value-added  from  the  researches  undertaken.  The 
results obtained in electronic commerce will be included in the information  campaign. 

CONCLUSIONS 

The  Commission  welcomes  this  evaluation  report  as  a useful  assessment  of  actions  launched 
under the  3rd MAP. The conclusions  and recommendations,  some of which have  already  been 
accepted  in  this  Communication,  will  be  considered  carefully  in  the  preparation  of  the  next 
MAP. The Commission agrees with the overall recommendation  that future  work should  focus 
on  a  smaller  number  of  major  priorities,  and  that  smaller  scale  actions  which  have  not  been 
shown to be cost-effective  should not be pursued.  DG XXIII will  also  strive to ensure that  the 
best value for money is achieved for the remainder of the current programme. 

ANNEX: executive  summary  of the evaluation  report by  Deloitte  & Touche 

Our Approach 

1. 
Deloitte  &  Touche  was  chosen  to  carry  out the  evaluation  of the  3rd Multi-Annual  Programme  for 
Small  and  Medium  Enterprises.  A  team  of  consultants  from  six  Member  States,  based  in  four 
offices,  carried  out the work over a six month period  in line with a detailed proposal  submitted  in a 
competitive tender. 

The assignment divided into three clear sections: 

•  Tabulation of the activities undertaken under the third multi-annual programme; 

•  Extensive  desk  and  field  research  to  establish  the  results  of  the  activities,  the  impact  on 
interested  parties  and perceptions  of the  value  of the  activities  on the  part  of  the  Commission, 
the representatives of the Member  States and other interested parties; 

•  Analytical evaluation of the results obtained. 

The  evaluation  team  paid  significant  attention  to  direct  consultation  with  key  actors  in  the  field. 
These included: 

•  Target  audiences  of  the  programme  (contacted  through  SME  representative  organisations  and 

individual companies in some cases); 

• 

Intermediary  organisations  and  agencies  which  operate  measures  with  and/or  for 
Commission under the Programme; 

the 

•  Officials  throughout the Commission, working in connected areas; 

•  The programme's  institutional monitors, i.e. Member State officials  on the Article 4 Committee; 

and 

•  Officials  throughout DG XXIII itself. 

Our  approach  focused  on  four  main  elements,  both  of  the  individual  measures  within  the 
programme and in relation to the programme as a whole.  These elements were: 

•  Quality  of  design  and  approach,  In  this  area  we  look  closely  at  the  role  and  the  choice  of 
intermediary organisations selected by the Commission,  subsidiarity  questions and of course the 
justification  for the measure in the first place, based on expressed needs or identified  problems; 

Quantitative  impact,  an  area  of  some  difficulty  given  the  relative  remoteness  of  the 
Commission from  the actual field of operations of Europe's  SMEs.  In addition, many  measures 
are designed to test an issue or idea and are therefore not expected to deliver a direct  quantitative 
impact  at this  stage.  Here  we have  sought  to  establish  the  existence  of  quantitative  measures, 
wherever possible. 

Qualitative  impact, expressed  as a combination of several factors  such as regulatory  change to 
the benefit  of SMEs, added value of the Commission's  activities  compared to what would  have 
happened had the Multi-Annual Programme  not taken place, the degree of penetration  of  useful 
information  and "lessons learned", and indirect impact through persuasion of other actors to take 
measures for the benefit  of SMEs; 

•  Cost effectiveness,  where we seek to establish the effectiveness,  efficiency,  utility  and  viability 
of  the  programme's  measures.  In  this  area  we  look  at  the  ratio  between  quantitative  and 
qualitative  results, on the one hand,  and the cost of the measure  on the other.  We try  to  assess, 
where relevant, the likely  cost  of other actors having to replace the  Commission's  actions.  Our 
conclusions  are  based  on  our  subjective  weighing-up  of  all  the  factors.  The  fact  that  some 
measures  are not yet  at a stage where  results are clear makes it difficult  to  offer  an  opinion  on 
the cost-effectiveness  of these actions. 

It  should  be  noted  that  all  of  the  above  evaluation  tests  were  assessed  as  a part  of  the  context  in 
which  the  measures  appear.  We  have  looked  at  the  multi-annual  programme  in  relation  to  the 
activities  of  other  Commission  departments  and  those  of  the  Member  State  authorities.  We  have 
also  considered  it  in  relation  to  the  current  policy  priorities  of  the  European  Union  in  relation  to 
helping  SMEs  and  stimulating  entrepreneurship  and  employment.  We  have  taken  the  resources 
available to DG XXIII (financial  and human) into account in our conclusions. 

Our evaluation  covered the activities funded  under the third Multi-Annual Programme in the period 
1997-1998 and including activities undertaken in the first months of  1999. We also tried to take into 
account the likely impact of actions to be launched  later in  1999 and even in 2000 to the extent that 
this  could  be  determined.  Clearly,  however,  a  "mid-term"  evaluation,  such  as  ours,  could  not 
pronounce  definitively  on the final  value and cost-effectiveness  of some of the actions, which  were 
still evolving at the time of our analysis. 

2. 

Methodology 

Our team first  conducted  extensive and often  lengthy interviews with a full  range of officials  within 
DG  XXIII.  We then  visited  all  Member  States  (both  for  discussions  with  officials  in  the  national 
capitals  and  for  visits to  project  organisers  and  intermediary  service  providers  in the  regions).  We 
organised  a round  table  discussion  day  in  Brussels  to  allow  all  the  European  SME  representative 
organisations the chance to submit comments to us. We also conducted a number of interviews with 
officials  from  other Commission departments. In addition, a total of 34 separate questionnaires were 
prepared and issued to almost two thousand recipients in  15 different  target groups; 

Overall,  the  desk  and  direct  field  research  was  painstaking  and  exhaustive.  Our  aim  was  not 
necessarily to obtain statistically valid samples of opinion in all cases (in the case of the users of the 
services  this  would  have  implied  a much  more  extensive  operation).  Our  evaluation  is  necessarily 
an  overview  of  the  functioning  of  the  entire  MAP.  Detailed  evaluations  of  individual  measures 
within the MAP  are being  carried  out separately.  Our task was not to  duplicate  these, but  rather  to 
sample  a  range  of  opinion  and  highlight  successful  experiences  and  problem  areas.  We  tried, 
therefore,  to  offer  all  categories  of  respondent  the  chance  to  comment  on  the  programme  and  to 
obtain enough replies that a general indication of the range of opinions could be discerned. 

We  had  a  high  level  of  response  from  most  of  the  surveys  directed  at  government  officials, 
intermediary  organisations  and project  organisers. Only  in the case of the Interprise  organisers, the 
BC  Net/BRE  intermediaries  and  the  members  of  the  Committee  on  Commerce  and  Distribution, 
were the  results  disappointing,  despite  dedicated  follow-up.  In  both  cases,  a number  of  interviews 
were conducted to supplement the questionnaire research. 

Given the nature of the study, it would be impossible to ascribe scientific  weightings to the views of 
the  specific  categories  of  stakeholder  involved  in  our  research.  Moreover  the  detailed  discussions 
revealed  a range  of opinions, different  intensities of view and  degrees  of emphasis  even within  the 
same categories of respondent. The inevitable tendency for self-interest  to colour responses was also 

10 

a factor,  which  we  had  to  take  into  account.  We have tried  to  take  more  seriously  those  opinions, 
which were based  on objectivity  and on consensus amongst  large sample  groups than those  offered 
by directly  interested parties  or isolated  individuals. However,  in some cases where  we  felt  that  an 
individual  comment  reflected  unusual  insight, we have reported  it and indicated  whether  we  agreed 
with the sentiments  expressed. 

In  some  cases  we  encountered  widespread  ignorance  of  the  detailed  content  of the  Commission's 
activities,  even  amongst  members  of the  Article  4  Committee.  Sometimes  we  also  felt  that  views 
were  based  on  information,  which  was  out-of-date.  We  have  tried  to  take  account  of  the 
inaccuracies  which  this  may  have  caused  and  in  many  places  we  have  indicated  that  we  disagree 
with  comments  expressed  by  one  or  other  interested  party.  Where  we  do  so, we  explain  why  we 
disagree. 

In relation to the views of the Article 4 Committee, our research uncovered many critical  comments, 
even  in  areas  where  the  Committee  had  unanimously  approved  the  measure  in  question.  Our 
approach has been to faithfully  reflect the views that were presented to us, in confidence,  during the 
interviews.  Voting  patterns  in  Committees  may  have  all  kinds  of  motivations  and  we  cannot 
comment on why there might be discrepancies between the views reported to us and those presented 
in public during the Committee meetings. 

We  are  satisfied  that  our  conclusions,  which  are  partly  based  on  the  views  of  all  the  various 
stakeholders  in the MAP, and partly based on our own assessment  of these views and of the  actions 
taken under the MAP so far,  are valid in the context of our assignment.  In the report's  annexes the 
reader will  find  a summary  of the research  results  from  each target  category  of respondent.  Where 
we  express  our  own opinions  on the  individual  elements  of the MAP, we try  to  make  this  clear  in 
the text. 

3. 

Tabulation of Measures 

Objectives  A  and  F:  Simplify  and  Improve  the  Administrative  and  Regulatory  Business 
Environment. Improve SME Policy Instruments. 

We identified  the following  actions: 

•  Co-ordination with other parts of DG XXIII and with other parts of the Commission to  influence 
the  terms  of  the  policy  debate  and  to  ensure that  SME  interests  are  taken  into  account  in  the 
development of EU policies; 

•  Consultation with SME representative organisations and, where possible, with samples of SMEs 
themselves,  to  ensure  that  the  SME  representatives  have  the  chance  to  comment  on  new  EU 
legislative proposals and on SME access to EU programmes; 

•  Monitoring  of  the  system  of  "Business  Impact  Assessments"  to  ensure  that  all  Commission 

services evaluate the potential impact on SMEs of any legislative proposals; 

•  Concerted  Actions,  promoting  the  co-ordination  of  action  between  Member  States  to  assist 
SMEs and promoting the identification  and dissemination of "best practice" and "good practice" 
at all levels of government; 

•  Establishment  and  encouragement  of  the  Business  Environment  Simplification  Task  Force 
(BEST)  and  publication  of  the  two  parts  of  the  BEST  report.  Also  the  publication  of  a 

11 

communication  on  the  Commission's  response  to  the  recommendations  of  BEST,  with  a 
proposed Action Plan for Member States and the Commission; 

Publication of  a Recommendation on Improving and Simplifying  the Business Environment  for 
Business  Start-ups  and  preparation  of the  creation  of  a database  of  Member  State  measures  to 
encourage start-ups; 

Organisation  of  a  forum  on  the  Transfer  of  Businesses  plus  a  Communication  on  the  same 
subject  summarising  the  results  of  the  1994  Recommendation  on  this  issue  and  a  call  for 
proposals for pilot projects on the training of SMEs in the field  of transferring  businesses; 

Specific  measures  to  help  SMEs  adapt  to  the  introduction  of  the  Euro  (in  addition  to  work 
described above in relation to influencing  the activities of other Commission DGs on this issue). 
The  specific  measures have  included:  round tables  and  conferences/seminars  on  specific  issues 
with  other  interested  parties,  information  campaigns  conducted  through  the Euro Info  Centres, 
the  securing  of  a  Code  of  Conduct  between  consumer  organisations  and  SME,  tourism  and 
commerce  representatives  on  the  introduction  of  the  Euro,  the  preparation  of  a  CD 
Rom/Brochure  for  use by  SMEs and the launch of a call  for  proposals  for  pilot  projects  on  the 
training of SMEs on the introduction of the Euro; 

• 

• 

• 

Maintenance  of  a  database  called  Regie  on  the  creation  of  European  Economic  Interest 
Groupings  (EEIGs),  plus  a  Communication  on  the  participation  of  EEIGs  in  public  contracts 
and programmes and the production of a practical handbook for  SMEs on when EEIGs could be 
a useful  instrument for cross-border  co-operation; 

Work on statistical  issues in relation to SMEs in Europe, including  a regular report  "Enterprises 
in  Europe",  brochures  on  specific  issues,  including  "statistics  in  focus",  and  a  publication 
"Business  Services  in Europe" plus the preparation  of  a draft  Regulation  on business  statistics 
for the  future; 

Regular reports entitled "The European Observatory  for  SMEs" prepared by outside  consultants 
and  research  institutes  on policy  issues  surrounding  SME  development  and  experiences  across 
the Member States; 

Conduct  of  a  number  of  specific  evaluations  of  individual  elements  of  the  MAP,  plus  the 
organisation  of  the  current  evaluation,  co-ordination  with  DG  XIX  of  the  Commission  in  this 
area  and  the  development  of  performance  indicators  for  ongoing  internal  monitoring  of  DG 
XXIII programmes. 

Objective B (and JEV): Improve the Financial Environment for Enterprises 

We identified  the following  actions: 

•  Organisation  of  Round  Tables  of  bankers  and  SMEs  to  identify  "best  practices"  and  improve 

SME banking relationships and publication of the results of the Round Tables; 

•  Research  studies  and  seminars  on various  aspects  of  SME  financing  including  venture  capital, 
mutual guarantees, lease financing,  access to long-term  credit, factoring,  business  angels, bonds 
for SMEs and the idea of an SME investment agency; 

•  Launch of a new Seed Capital pilot action programme, CREA, to subsidise the creation of up to 

30 seed capital funds to invest in new businesses or the transfer  of existing businesses; 

12 

•  Communication  and  proposed  Directive  on  combating 

in  commercial 
transactions, plus a call for proposals for pilot projects  for training  SME managers  in  cash-flow 
management; 

late  payments 

•  Establishment  of  the  Joint  European  Ventures  (JEV)  project,  whereby  SMEs  setting  up joint 
ventures or other new co-operative entities across borders  are entitled to subsidies  of up to 50% 
of  the  cost  of  feasibility  studies  and  of  up  to  10% of  the  cost  of  establishing  the  investment, 
(with a maximum  subsidy per joint venture of Euro 100,000). 

Objective  C:  Help  SMEs  to  Europeanise  and  Internationalise  their  Strategies,  in  Particular 
through Better Information  and Cooperation  Services 

We identified  the following  actions: 

•  Maintenance and improvement  of the network of Euro Info  Centres through the development  of 
a  "first  stop  shop"  concept  in relation  to  advice  to  SMEs  on EU  issues  and  through  enhanced 
activity monitoring, quality control, training and network support in Brussels. New categories of 
"network  co-ordinator  EICs"  (EICs  which  operate  a  network  of  branches  or  relays,  through 
which they  offer  services to  SMEs)  and  "associated  members" (organisations  unable  to  offer  a 
full  range  of  EIC  services,  but  still  contributing  something  to  the  network)  were  created  to 
extend  the  reach  of  the  network.  A  start  was  made  in  using  EICs  to  supply  feedback  to  the 
Commission on SME reaction to policy initiatives; 

•  Efforts  to  promote  SME  policy  actions,  including:  the  Euro  Info  newsletter,  the  use  of 
promotional  stands  at  events, the  supply  of  a "visits  service" to  look  after  groups  of  interested 
parties  visiting  the  Commission,  the  supply  of  an  information  service  to  the  public  and  the 
creation  and  maintenance  of  the  DG  XXIII  web-site.  DG  XXIII  has  also  produced  the 
publication  "Activities  in  favour  of  SMEs  and  the  Craft  Sector"  which  contributes  to  the 
understanding of EU actions in this area; 

•  Maintenance  of  the  BC  Net  and  BRE  networks  of  business  counsellors,  which  use  a 
computerised  search system to locate potential business partners for  SMEs in other EU Member 
States.  The  computerised  system  has  been  significantly  upgraded,  but  emphasis  is now  put  on 
the network of counsellors, rather than the computer tool itself as the means of locating partners. 
The  networks  are  now  being  re-launched  with  a  promotion  campaign  consisting  mainly  of 
national meetings of  the intermediaries in the Member States; 

•  Organisation of Europartenariat and Interprise events, where SMEs can meet other SMEs, which 
are  interested  in  forming  cross-border  partnerships.  Europartenariats  have  continued  at  two 
multi-sectoral  events  per  year,  located  in  less-developed  regions  of  the  EU.  Interprise  events 
have continued to be sector-specific  and much smaller in size. 51 Interprise  events took place in 
the  1997/1998 period.  DG XXIII  has produced  a Vade Mecum  for  organisers  of  both  types  of 
event and given more priority to follow-up  and evaluation of the success of the events; 

•  A  number  of  initiatives  have  been  launched  to  try  to  develop  subcontracting  partnerships  for 
SMEs. These include a number of publications, studies and reference tools, the organisation of a 
forum  of  subcontracting  intermediaries,  the  organisation  of  some  sectoral  projects  and 
promotional  actions  for  EU  subcontractors  in  third  countries,  the  subsidisation  of  SME 
participation  in  training  programmes  in  Japan,  the  further  development  of  a  system  to  link 
existing  subcontracting  databases  and  the  organisation  of  IBEX  (international  buyers' 
exhibitions) events; 

13 

•  Several  measures  have  also  been  introduced  to  improve  SME  access  to  international  markets 
outside the EU. These have consisted  of the extension of the EIC and BC Net/BRE networks to 
central  and  Eastern  Europe,  to  the  Mediterranean  countries  and  beyond.  The  Europartenariat 
model  has  also  been  extended  to  other  parts  of  the  world,  to  offer  EU  SMEs  the  chance  to 
develop partnerships with companies all over the world.  Other actions have  included  studies on 
internationalisation  and the likely  impact of  enlargement  on EU  SMEs  and the  launch  of  pilot 
projects to test new approaches to helping SMEs form new business contacts in new markets; 

Objective  D:  Enhance  SME  Competitiveness  and  Improve  Access  to  Research,  Innovation 
and Training. 

We identified  the following  actions: 

•  Studies, research and pilot projects on innovation and technology  issues for SMEs; 

•  Exerting  influence  on other parts of the Commission  (notably  DGs XII  and XIII) to ensure that 

SMEs have improved access to EU programmes on research, technology and innovation; 

•  Creation  of  a  network  of  Business  Schools  (BENE  network)  and  study  on  best  practices  in 

relation to SME management training; 

•  Launch of a new European Quality award for SMEs; 

•  Financial  support  for  NORMAPME,  an  organisation  helping  SMEs  to  become  involved  in 

standard  setting at European level; 

•  Call  for  proposals  for  pilot  projects  on  the  training  of  SME  managers  in  a range  of  areas  and 

preparation for a Communication; 

•  Pilot  scheme  for  the  development  of  a  European  methodology  to  assist  SMEs,  wishing  to 
participate  in  the  EU's  eco-management  and  eco-audit  scheme  (EMAS).  547  SMEs  were 
involved  in  the  audit  and  inventory  phase,  50  were  selected  to  be  assisted  with  EMAS 
certification.  In  1997 a report was drawn up on the whole project; 

•  Production of an eco-management guide, by the EIC environment specialist group. 

Objective E: Promote Entrepreneurship and Support Target Groups. 

We identified  the following  actions: 

• 

• 

Preparing  and  organising  a  major  conference  on  "Employment  through  Innovation"  focussing 
on the craft  sector. The preparation involved  11 pre-conferences  and consultations  with  national 
experts and SME representatives. The conference  attracted 2,000 delegates; 

Influencing  the policies  of  other  parts  of the  Commission  on the needs  of the  craft  and  micro-
enterprise sectors and of women and young entrepreneurs; 

The  launch  of  39  studies,  conferences  and pilot  projects  on  identifying  the  needs  of  small  and 
craft  enterprises,  involving  them  in  cross-border  activity,  improved  standardisation  for  craft 
products, financing  and training of enterprises run by women, encouraging  entrepreneurial  spirit 
through training, and overcoming the specific  difficulties  faced by young entrepreneurs; 

14 

Publication  of  a  Communication  on  "fostering  entrepreneurship  in  Europe:  priorities  for  the 
future; 

Funding of surveys, study groups, seminars and conferences  to identify  future  challenges for the 
retail  and  wholesale  sector  under the  Commerce  2,000  programme.  Also  dissemination  of  best 
practices found through conferences  and (soon) publications; 

Publication of a Green Paper and then a White Paper on Commerce; 

Meetings  with  the  Committee  on  Commerce  and  Distribution  (CCD)  and  distribution  of  the 
minutes  to  all  interested  parties,  plus  reports  on  the  opinions  of  the  CCD  and  of  its  panel 
missions to third countries; 

Inter-service consultations on commerce issues; 

A  conference  and  the  launch  of  studies,  a  pilot  system  for  certifying  web-sites  to  improve 
consumer  confidence  and  an  on-line  business  information  service  for  SMEs  on  electronic 
commerce. 

15 

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4. 

Types of Action  Identified 

During the course of the evaluation four different  types of DG XXIII action emerged: 

•  Policy development  actions 

•  Pilot projects or demonstration  actions 

•  Operational  measures 

•  Publications, Databases and other Information  actions 

Of  course, it  is not  always possible to  completely  distinguish  between  the  four  types  of 
action  in practice.  In  many  cases pilot  actions  are an integral  part  of the policy  process, 
for  example,  where  they  can  be  used  to  test  policy  responses  to  problems,  which  have 
been  identified  through  policy  analysis  and research.  Some  pilot  actions  may  be  small-
scale  precursors  to  full-scale  operational  measures  and  some  publications  are  linked  to 
operational  actions  as well. Nevertheless,  the distinctions  are  useful,  in our  opinion,  for 
distinguishing  between  the  different  types  of  activity  undertaken  under  the  third  MAP, 
especially  since a number of themes emerged from  our research concerning the responses 
of the various parties and our own opinions in relation to each type of action. 

Policy  Development 

Under  "policy  development"  we  include  all  measures  to  research  problems  and 
difficulties  faced  by SMEs. This includes discussions with interested parties,  conferences 
and seminars and the production of research reports and analyses of specific  areas. It also 
includes  the production  of communications, recommendations  and  draft  action plans  for 
addressing  policy  reforms  towards  the  problems  identified  and  any  other  work 
identifying  possible policy solutions to specific problems. 

All parties  agree that  DG XXIII  has  a clear  role to play  in the  elaboration  of  policy  for 
enterprise  development.  It  is  felt  that  a  European  dimension  to  policy  research  is  of 
enormous  value, because  it  allows  for  exchanges  of experience  between  Member  States 
and  analysis  on  a  European  scale.  The  Commission  can  compare  and  contrast  the  very 
different  experiences  encountered  in a range of locations and then help to  analyse  which 
solutions  have  proved  effective.  Such  analysis  (and  the  results  of  the  research  itself) 
must,  however,  in  our  view,  be  disseminated  widely  and  discussed  with  the  Member 
States in order to maximise its value. This is because the appropriate policy response may 
have to be delivered  at national or regional  level, rather than by the EU itself,  depending 
on the nature of the problem. 

All  parties  also  agree  that  the  DG  XXIII  activity  of  influencing  the  rest  of  the 
Commission to adopt SME-friendly  policies and legislation is of great importance. 

Pilot Projects 

As  "pilot  projects"  we  include  all  test  or  demonstration  actions  funded  by  DG  XXIII, 
which  are not  of  sufficient  scale to  have  any  kind  of  generalised  impact  within  the  EU. 
The direct quantitative impact of pilot actions is typically localised and limited in relation 
to  the  potential  number  of  beneficiaries  in  the  EU  as  a  whole.  The  main  value  of  the 
actions  lies  in  the  potential  to  influence  a  policy  debate  and  to  be  replicated  by  other 

19 

actors, or by the  Commission  itself,  if they  are successful.  They  are usually  used  to  test 
different  policy  responses  to  identified  problems  and  are  often  called  "demonstration 
projects" because  of their ability  to demonstrate  suitable  courses  of policy  action  for  the 
future. 

Our  interviewees  were  often  sceptical  about  the value  of  some  of the  DG XXIII  actions 
of  this  kind.  They  were  mostly  not  against  pilot  actions  in  principle,  but  the  point  was 
made many times that pilot actions should only be used to test potential policy responses, 
and only those which are not already being tested elsewhere. This means that they  should 
only be launched  after  an exhaustive  analysis of the relevant policy  options. They  should 
be  seen like  clinical  trials to test the performance  of a new drug.  You  cannot  start  them 
until the research is complete, and you do not need them to test a drug, which has already 
been  tested  in  another  laboratory,  unless  that  test  was  carried  out  under  different 
conditions. 

Our  own view  is that pilot  actions must  indeed be linked to policy  development  and  not 
just  launched  in isolation.  Furthermore, the results  of the pilot  action  must  be  examined 
in  great  depth  and  communicated  to  all  relevant  policy  making  bodies  and  interested 
parties.  Finally,  the  objectives  of  the  pilot  actions  must  be  clear  and  if  possible, 
performance  indicators  should  be  designed  to  measure  the  success  or  otherwise  of  the 
pilot, before  it is even launched. 

Operational  measures 

Operational measures are those which are conducted  on a large scale by the  Commission, 
because  it  makes  sense  that  the  measures  be  managed  at  European  level.  The  "large 
scale" need  only  be  relative  to the  size  of the potential  beneficiary  group, however.  For 
example,  a  strictly  sectoral  measure  for  scooter  industry  component  suppliers  will  only 
be  of interest  to  a few  hundred  companies  across Europe  so an action,  which  involves  a 
hundred of them, would be "operational". On the other hand, a project, which is designed 
to  benefit  a  hundred  SMEs  in  the  bakery  sector  or  the  restaurant  sector,  can  only  be  a 
"pilot" because it can only have generalised impact through influencing  policy change. 

We  encountered  no  fundamental  objection  to  DG  XXIII  being  involved  in  operational 
actions,  as  long  as there  is  a clear  identification  of  a need  for  action  at  European  level. 
When the Commission does act, however, it was often  pointed  out that it should do so in 
conjunction  with  national  and  regional  programmes  in  the  Member  States,  wherever 
possible.  EU  actions  should  be  integrated  as  far  as  possible  into  other  mechanisms  in 
order  to  gain  greater  visibility  and  greater  efficiency  and  to  avoid  duplication  and 
wastage of resources. 

As  with  pilot  actions,  our  view  is  that  the  objectives  of  the  action  should  be  clear  and 
there  should  be performance  indicators  built  into the programme  so that  an  independent 
evaluator can judge whether they have been  successful. 

Finally,  operational  programmes  must,  in  our  view,  be  mounted  on  a  scale,  which  is 
sufficient  to  make  a  real  impact.  This  is  necessary  to  achieve  economies  of  scale  and 
administrative  efficiencies.  Administering  several  small  programmes  is much  more  time 
consuming  than dealing with one large one. In order to  achieve the necessary  volume  of 
activity  and  market  penetration,  these  actions  should  also,  in  our  opinion,  be  well-
marketed and resourced and planned on a multi-annual basis for sustained  impact. 

20 

Publications, Databases and other Information  Actions 

Most  of  the  publications  and  other  information  actions  produced  by  DG  XXIII  are 
directly  related  to  its  policy  work  and  none  of  these  have  been  seriously  criticised. 
Publications  are  alternatively  often  related  to  the  dissemination  of  the  results  of  EU 
actions.  These  have  not  generally  been  criticised  either.  The  third  type  of  information 
action  is  related  to  the  promotion  of  EU  policies  for  SMEs.  These  have  not  been 
questioned  in terms  of their purpose  and  validity,  though  some  detailed  comments  have 
been  made.  A  few  of  the  publications  and  databases,  however,  have  broader  business 
advisory aims and many of these have been questioned. 

The consensus  on this type of action was that such activities  should be very  focussed  on 
specific  policy  purposes,  if they  are to  have  real  value.  The  Commission  should  not,  in 
our  view,  replace  the  role  of  academic  publishers  nor  undertake  activities  which  other 
bodies,  such  as  intermediaries  or  trade  associations,  could  and  should  perform 
themselves. EU actions should be devised either to feed  into a specific  policy  framework, 
or  with  a  specific  objective  in  mind  in  terms  of  having  a  direct  impact  on  European 
SMEs. 

5. 

Application of the Themes to DG XXIII's Activities 

Policy  Development 

Most of the Commission's policy work was praised  and welcomed  by the respondents  to 
our  surveys  and  is rated highly  in our evaluation. New  initiatives  such  as BEST  and  the 
Concerted  Actions  were  found  particularly  useful  and  most  respondents  acknowledged 
the progress made  in putting  SME policy  on the agenda of other DGs  and on that  of the 
Member  States. Most  of the  comments  made by the various  interested  parties  related  to 
improving further,  areas which already functioned  reasonably  well, and to integrating the 
various actions together. 

A recurring  comment,  which  we find useful,  was that  the themes  of policy  research  and 
exchanges of information  should be carried forward  consistently through the full  panoply 
of  Commission  instruments.  This would  mean, for  example, that  a research  task  handed 
to the Observatory  should then form  the basis for  specific,  in-depth research  on practical 
applications  and  then  give rise to  a Concerted  Action  with  exchanges  of  views  between 
the  Member  States.  After  that,  there  could  be  further  analysis  and  perhaps  follow-up 
research  or  discussions  and  then  finally  an  analytical  report,  including  perhaps  a 
Recommendation,  or  a  pilot  action  to  test  an  innovative  solution.  There  are  several 
examples of this type of consistent policy activity within a given theme in the third MAP, 
which  have  achieved  practical  results  in terms of changing  policy  in the  Member  States 
as well as in the Commission itself. 

There is a feeling that sometimes, however, policy research has been started in the middle 
of  this  process  or  stopped  after  only  one  or  two  of  the  elements  have  been  completed. 
Research  actions, conducted  within  the  context  of the  European  Observatory  for  SMEs, 
are not always  linked to any other actions and some Concerted  Actions  have taken  place 
with  very  little  preparation  or  Europe-wide  analysis  to  form  a  specific  basis  for 
discussion.  In  some sectors, we believe that the Commission  is perhaps  dealing  with too 
many  themes  at the  same time, without the resources  allocated  to  policy  issues  to  cover 
such a wide range of subjects.  Some of the themes were also deemed by  some  interested 

21 

parties  to  be  too  general  to  allow  specific  conclusions  to  be  drawn,  though  we  are  not 
sure that this criticism was always justified. 

Finally,  the  level  of  communication  of  the  results  of  some  of  the  various  research  and 
policy  development  actions  was  also  criticised.  We  agree  that 
in  some  cases 
dissemination of results of research could be improved 

Pilot and Demonstration  Projects 

Most of the actions of the Commission in this area were criticised  by at least some of the 
experts  whom  we  contacted.  Some  of  the  criticisms,  especially  from  some  members  of 
the Article 4 Committee, were quite fundamental.  In some cases we have  sympathy  with 
the criticisms, but in other cases, we feel that they are  unjustified. 

The biggest  issue raised by the Article 4 Committee members was that many of the pilot 
actions  did  not  seem to be related to  any  comprehensive  policy  development  agenda  on 
the  part  of  the  Commission.  Since  the  results  of  many  of  these  same  actions  were 
allegedly not communicated to the Member  State authorities, they could not feed  into the 
policy-making process there either. In these cases it is felt that the money is being largely 
wasted,  according  to  many  Article  4  Committee  members.  In  some  cases  it  is  believed 
that no evaluation is being carried out on the projects  either and the long-term purpose of 
some of the projects  is, according to some members of the Committee, not entirely clear. 

A further  complaint was that  some actions  seem to be run like operational  measures, but 
are  run  on  such  a  small  scale  that  they  will  never  have  an  overall  impact,  except  in  a 
policy  development  context.  Yet  some  of  the  measures  are  allegedly  not  innovative  or 
based  on  a  clear,  identified  need  and  sometimes  they  duplicate  actions  already  taking 
place  in  the  Member  States.  The  Commission  should,  according  to  the  complainants, 
instead  first  analyse  the  Member  State  actions,  then  develop  a  policy  and  only  later 
launch any kind of pilot to test any alternative approaches. 

In  any  case,  all  believe  that  the  results  of  the  actions  must  be  clearly  analysed  and 
communicated  to  all  interested  parties.  Some respondents  stated  that  there  were  simply 
too  many  different  programmes  and  types  of  action  for  them  all  to  be  evaluated  and 
analysed  properly,  given  staffing  and budgetary  constraints. DG XXIII  should  therefore, 
according  to  these  individuals,  have  fewer  initiatives,  but  make  sure  that  they  are  all 
relevant  and targeted  and that their results are evaluated  and communicated  to  interested 
parties. 

As stated above, we do not feel that all the above criticisms are fair.  Most obviously, it is 
not entirely reasonable to criticise the Commission for the range of its activities, when it 
is implementing  an  MAP  agreed  by the  Member  States  (though  the  Commission  could 
still  perhaps  have  limited  its  actions  in response  to  the  finally  agreed  reference  amount 
for the MAP and in reaction to its own staffing  limitations). 

Secondly, we believe that  some of the pilot projects  launched  under the third  MAP  have 
been related to policy analysis and undertaken within an overall policy framework  to test 
innovative  approaches.  This  is certainly  the  case with  CREA  and  the pilots  in the  Craft 
It  is  at  least  partially  the  case  in  relation  to  the  pilots  supporting 
sector  at  least. 
entrepreneurs  amongst  women  and the young.  It is less obviously  the case  in relation  to 
the pilot  actions  for  SME training  (except  in relation  to tightly  identified  issues  such  as 

22 

transfer  of  enterprises)  and 

the 
innovation, 
internationalisation,  environmental  management,  Commerce  2000  and  electronic 
commerce. 

the  actions  on 

relation 

in 

to 

The complaint about absence of evaluation  and failure  to communicate results  is also not 
entirely  fair,  because  many  of  the  pilot  actions  are  only  now  being  launched  and 
evaluation  and  dissemination  actions  will  only  be  conducted  in  some  months  or  years' 
time.  The  delays 
innovation,  environmental 
management  and  Commerce  2000  must,  however,  be  regretted,  as  encouraging  such 
criticism. 

in  evaluating  the  pilot  actions  for 

Operational  Measures 

Most  of  the  genuine  operational  actions  undertaken  under  the  MAP  have  been  broadly 
welcomed and seem to function  effectively.  In the cases of the EIC network, for example, 
and of the Europartenariat,  Interprise  and Ibex events, opinion was generally  favourable. 
The value of EU-level action was clear, the measures were targeted  on areas of need  and 
attempts had  been made to differentiate  the products from  other programmes  operated  at 
Member  State  level,  though  integration  with  national  programme  structures  could  be 
improved. 

The  actions were operated  on a scale, which made  a significant  impact possible  (though 
they  could  be  better  marketed)  and  they  were  planned  and  operated  on  a  multi-annual 
basis.  Their  objectives  were reasonably  clear  and  attempts had been  made to ensure  that 
their  impact  was  monitored  and  evaluated  and  that  quality  control  was  maintained 
throughout the duration of the programme. 

Some  other  operational  actions  came  in for  more  criticism.  Some  of the  smaller  actions 
were deemed to be insufficiently  planned on a long-term basis and therefore  seemed to be 
rather  "ad hoc". We  feel  that this criticism  is perhaps justified  in relation to the  sectoral 
actions  for  supporting  EU  subcontractors  (which  are, however,  otherwise  highly  rated), 
but is generally not fair in relation to the other operational measures. 

Another criticism was that  some of the actions were inadequately  promoted.  We feel  that 
this  a  fair  criticism  in  relation  to  JEV  and  BC  Net/BRE,  but  in  both  cases,  the 
Commission  is  aware  of  this  weakness  and  is taking  steps  to  remedy  the  situation.  The 
criticism also seems to be fair to us in relation to the European Quality Award  project. 

A further  criticism  of some operational  measures  was that they had not been  sufficiently 
evaluated. Again, we feel  that this is probably a fair  criticism  in relation to JEV  and  BC 
Net/BRE,  but  there  are  circumstances  in both cases, which  may  have justified,  to  some 
extent, the delay in launching full  evaluation measures. 

Publications, Databases and other Information  actions 

Some  of the  small  activities  of this  type  undertaken  under  the  multi-annual  programme 
were  also  criticised,  though,  as  stated  above,  the  vast  majority  of  information  actions 
were  clearly  related  to  policy  development  and  communication  and  these  were  not 
criticised. 

One  of the publications  (the  Euro  CD  Rom/brochure)  was  felt  by  some  respondents  to 
our  survey  to  duplicate  Member  State  initiatives  and  we  feel  that  others  were 

23 

inappropriate  actions  for  a  public  authority  (some  of  the  publications  in  relation  to 
subcontracting  and  EEIGs).  Others  (mainly  related  to  subcontracting)  were  found  by  us 
to  be  interesting,  but  not  a priority  for  the  department  in  question,  therefore  absorbing 
valuable  staff  time  and  resources  to  limited  effect.  Others  were  not,  in  our  opinion, 
disseminated  in  sufficient  volume  to  have  an impact.  The  information  materials,  on  the 
other  hand,  which  were  designed  to  summarise  EU  policy  for  SMEs  in  general,  were 
generally welcomed as useful  summaries of activity. 

Conclusions  and  Recommendations  by  Objective  of  the  Multi-Annual 

6. 
Programme 

Objectives  A  and  F:  Simplify  and  Improve  the  Administrative  and  Regulatory 
Business Environment. Improve SME Policy Instruments. 

Conclusion 
The  Commission  should  build  on  the  good  work  done  under  the  Concerted  Actions 
approach.  These  actions  secure  the  commitment  of  the  Member  States,  enhance  the 
prospects of wide dissemination of the lessons learned, and increase the likelihood of real 
impact being  achieved.  We have no doubt that the actions have been  cost-effective  from 
the EU's perspective. 

Recommendation 
The resourcing inside the Commission for this work should perhaps be increased  in order 
to  secure  adequate  planning  and  research  to  precede,  accompany  and  follow-up  all  the 
events and initiatives. This is clearly understood within DG XXIII  and the situation  does 
seem  to  be  improving.  Where  the  Commission  has  invested  the  resources  for  detailed 
comparative  policy  analysis  and  specific  recommendations  for  change  (in 
the 
Recommendations  on  the  transfer  of  enterprises  and  on  business  start-ups),  the  results 
have  been  impressive.  Further  follow-up  measures  on  these  issues  should  consolidate 
their success. 

Conclusion 
The  BEST  initiative  appears  to  have  been  a  success.  Its  costs  were  limited  and  its 
potential  benefits  are  considerable.  We  have  no  doubts  about  the  cost-effectiveness  of 
this action. 

Recommendation 
Many  observers  fear  that  the  Action  Plan  has  been  watered-down  so  that  immediate 
changes  will  be  limited.  The  Commission  may  have  to  invest  resources  in  detailed 
follow-up  to  the  BEST  initiative,  to  ensure  that  pressure  is  maintained.  It  may  be 
advisable  to  launch  some  smaller  task  forces,  following  the  BEST  model,  to  address 
more  specific  areas  and  produce  more  specific  recommendations,  which  can  be  more 
directly promoted and monitored. 

24 

Conclusion 

On  consultation  of  SMEs,  much  progress  has  been  achieved.  Costs  are  minimal  and 
benefits  potentially major,  though impossible to quantify.  The activity has certainly  been 
cost-effective  in our opinion. 

the  SME  representative  organisations 

Recommendation 
The  Commission  should  now  invest  more resources  into persuading  the  Member  States 
to  set  up  statistically  valid  and 
and/or 
comprehensive  databases  of  SMEs  to  be  used  in  test  panels.  The  Danish  model  could 
form  a useful  example to use for this purpose. Until this is done, the use of these panels is 
unlikely  to be effective.  We do not  favour  using the EICs systematically  for  this  kind of 
feedback  role either,  unless they  are  specifically  paid  for  this purpose  and trained  in  the 
establishment  of  representative  samples  and  sampling  techniques.  In  the  meantime,  the 
Commission  must continue to consult with the  SME representative  organisations  and,  if 
necessary,  ask them to  survey their  members  on issues  of major  importance.  Other  DGs 
should  be  brought  in  for  the  consultations  with  the  existing  SME  organisations  in 
relevant areas. 

Conclusion 
On influencing  the Commission,  it is recognised  that progress has been made  in recent 
years  in getting  SME policy  firmly  onto the  agendas  of most  other  DGs.  The  formation 
of  the  "group  of  Commissioners  on  SMEs  and  Entrepreneur ship"  to  address  enterprise 
policy  in  a concerted  way  is considered  a major  success. Progress  has  also  been  widely 
noted in relation to SME access to R & D funds  and further  progress  seems to us to have 
been made in relation to the structural funds.  There is no problem with  cost-effectiveness 
here. 

Recommendation 
Continue efforts  in the same direction 

Conclusion 
The  Business  Impact  Assessment  (BIA)  system  does  not  work  optimally,  but  the  fact 
that BIAs must be done gives DG XXIII  some leverage over the other DGs and  scope to 
influence  their  activity.  The  cost  is  negligible,  except  in  relation  to  staff  time,  and  the 
benefits  are identifiable.  We conclude that the procedure is still  cost-effective. 

Recommendation 
The  BIA  system  should  be upgraded  in  status, with the  addition  of  ex  ante  cost-benefit 
analyses  in  cases  where  draft  legislation  will  have  a major  business  impact.  DG  XXIII 
should  also  examine  ways  of  showing  to  the  outside  world  that  the  procedure  is  taken 
seriously. 

Conclusion 
There  is  allegedly  some  danger  of  duplicating  Member  State  actions  in  relation  to  the 
proposed  CD-Rom  on  the  Euro.  This  product  has  also  been  justifiably  criticised  for 
being  issued  late.  We  doubt  whether  the  CD  Rom  format  is  fully  appropriate  for  the 

25 

smallest  SMEs, who need  such  a product  the most.  The  cost-effectiveness  of this  action 
cannot  be  determined  yet,  but  these  weaknesses  are  likely,  in  our  opinion,  to  have  a 
negative  impact. 

We also have doubts about the likely cost-effectiveness  of the pilot training  actions to be 
launched  in relation to the Euro, given the number of training  initiatives  being  launched 
in most Member  States and the time that  it will take  for  the lessons  of this pilot  to  filter 
through  to  national  policy-makers.  DG XXIII  should,  in  our  opinion,  in  the  light  of  the 
time  pressure  for  helping  SMEs  address  Euro  changeover  issues,  have  concentrated  on 
ensuring  that  other,  better-resourced  actors  integrate  the  interests  of  SMEs  sufficiently 
into their information  and training campaigns on the single currency. 

On the other hand, DG XXIIFs work in relation to the Code of Conduct  for  retailers  has 
been universally praised and the Euro campaigns mounted  by the EICs have been, in our 
opinion, both valuable and  cost-effective. 

Recommendation 
The  results  of  the  pilots  on  training  should  be  analysed  and  disseminated  as  fast  as 
possible.  Other  actions, if  any,  should  be  integrated  with those  of the  Member  States  in 
this key area. 

Conclusion 
We are not convinced that the work undertaken  in relation to EEIGs is valuable  or cost-
effective,  despite  the  relatively  low  spending  on  these  items.  Our  opinion  is  that  the 
Regie  database  mainly  serves  the  interests  of  intermediary  organisations,  rather  than 
SMEs,  and  that  brochures  on  the  instrument  should  not  have  to  be  produced  at  public 
expense fourteen  years after  the legislation  setting up the EEIG was adopted.  Since there 
is, in our opinion, no genuine need or utility for the actions, they do not seem to us to be 
cost-effective. 

Recommendation 
These  actions  should  in  our  view  be  discontinued  after  the  1999  brochure  has  been 
distributed. 

Conclusion 
The process of working to produce statistics  and research  studies with Eurostat  and the 
SME Observatory generally, in our view, produces useful  results at an acceptable cost. 

Recommendations 
The  exercise  could  be  more  creative  (faster  reports  on  single  topics,  for  example)  and 
more  responsive  to  user  needs  (through  Internet  dissemination).  There  have  also  been 
useful  suggestions  that  the  work  of  the  Observatory,  in  particular,  be  more  closely 
integrated  with  the  other  research  work  being  undertaken  in  DG  XXIII  so  that  the 
Observatory's research capacity can be mobilised to directly influence the policy debate. 

26 

Conclusion 

DG XXIII's  efforts  in the field of evaluation have shown a marked improvement  during 
the third MAP and are certainly  cost-effective. 

Recommendations 
Evaluation  activities  should  be  stepped  up  and  accelerated  over  time,  but  a  noticeable 
improvement in evaluation culture can already be discerned. 

Objective B (and JEV): Improve the Financial Environment for Enterprises 

Conclusion 
The  Round  Tables  of  Bankers  are  considered  to  be  useful  by  almost  everyone  and  in 
view of the low cost, we have no difficulty  with the cost-effectiveness  of this action. 

Recommendation 
The  dissemination  of the  results  of the  meetings  has  been  criticised  and  could  probably 
be further  improved. It might also improve the practical effectiveness  of the round  tables 
if their work were more focussed  on specific  issues, rather than dispersed  over a range of 
subjects. The work of the round tables could also be more clearly linked to the  Concerted 
Actions by providing input for discussions between Member  States. This would also help 
with  dissemination  of  the  results  of  the  meetings  and  might  generate  ideas  for  further 
research. Such research could then be addressed at the next meeting of the Round Table. 

Conclusion 
In  the  area  of  access  to  finance,  all  parties  welcome  the  research,  which  has  been 
undertaken by the Commission  so far and look forward  to the follow-up  measures, which 
are  being  planned  in  a  number  of  areas.  The  actions  in  this  area  have  been,  in  our 
opinion, cost-effective  so far. 

Recommendation 
There  is  a  risk  that  the  research  workload  is  growing  too  fast  and  might  outpace  DG 
XXIII's  ability  to  continue  to  follow  up  its  initiatives  or  adequately  publicise  their 
results. Without such follow up, the value of the research would be much diminished. 

Conclusion 
The CREA  initiative was much criticised during our research. Many respondents  claimed 
that the new "pilot" duplicates to some extent the pattern of the first pilot and therefore  is 
not  sufficiently  innovative  to  be  a  true  "pilot"  at  all.  Others  complain  that  the  new 
scheme fails to take into account the lessons of the first scheme. Others feel that CREA is 
really an operational measure, but a full  operational programme in this area would  offend 
against  the  principle  of  subsidiarity.  Our  view  is  that  the  Commission  is  probably 
justified  in launching  a new seed capital  fund  pilot, in view of the many  changes,  which 
have been introduced to the  scheme, largely  as a result of the evaluation  of  Seed  Capital 
I. As long as the pilots are evaluated and the results disseminated, they could, we believe, 
help  inform  policy  deliberations  at  national  and  Member  State  levels.  It  is  too  early, 
however, to judge the likely cost-effectiveness  of this action. 

27 

Recommendation 
Timely  evaluation  and analysis  of this action, with full  dissemination  of the results, may 
well, in our opinion, help to dispel doubts about the quality of its design. 

Conclusion 
The  legislative  work  on  late  payments  responds  to  a  need,  in  our  opinion,  and  costs 
little. We believe that  it is cost-effective.  However, the pilot  actions relating  to  training 
in  cash  management  do not  currently  seem  likely to  us to  feed  into  any  kind  of  policy 
environment,  which  casts  doubt  on  their  likely,  eventual  cost-effectiveness,  in  our 
opinion. 

Recommenda tion 
The legislative work should be pushed forward,  in view of its implications  for  facilitating 
trade  and  investment  flows  within  the  Internal  Market.  In  relation  to  SME  cash 
management training, the Commission  should, in our view, first  examine the activities of 
the  Member  States  in this  area  and  analyse  the  lessons  learned  from  their  own  training 
programmes in the field  of cash management. 

Conclusion 
The  JEV  programme  was  welcomed  in principle  by  almost  all  of those  involved  in  our 
research, but there were questions about its rules and restrictions. These ranged  from  the 
topic  of  the  corporate  form  that  can  be  supported  (joint  ventures  only),  to  the  lack  of 
marketing  and  the  appropriateness  of  the  choice  of  financial  intermediaries  in  the 
network. In our view, the design of JEV is broadly appropriate, when taking into  account 
the  need  to  prevent  fraudulent  applications  and  minimise  the  risk  of  "free  riders" 
(companies  who  claim  the  subsidy,  when  they  would  have  established  the joint  venture 
anyway). The most  valid  criticism  of the programme  so  far  is therefore  in relation  to  its 
lack of promotion. Cost-effectiveness  cannot be determined at this stage. 

Recommendation 
In our view, far more financial  intermediaries need to be attracted to the scheme so that it 
becomes "mainstream". The balance of work and responsibility  between the  Commission 
and the financial  intermediaries  could also be reviewed  in any eventual  evaluation  to  see 
if  this  could  make  application  procedures  faster  and  easier.  Another  issue  to  be 
considered  in  the  future  would  be  whether  the  subsidy  for  the  feasibility  study  alone, 
might achieve almost as much at much lower cost. 

Objective  C:  Help  SMEs  to  Europeanise  and  Internationalise  their  Strategies,  in 
Particular through Better Information  and Cooperation Services 

Conclusion 
The Euro Info  Centres (EICs) are evaluated positively. They show a strong  quantitative 
and  qualitative  impact,  growing  network  effect  and  a  development  of  added  value  to 
SMEs  beyond  their  traditional  role  of  EU  information  service  providers.  The  technical 
assistance  office  in Brussels  is performing  well  and  systems  for  monitoring  EIC  activity 
levels  and  maintaining  quality  control  have  been  improved  during  the  third  MAP.  We 

28 

conclude that despite the high cost of the measure and the high number of staff  involved, 
that the spending has been broadly  cost-effective. 

Recommendations 
The  EIC  project  would  benefit  from  clarification  of  the  first-stop-shop  concept  and  an 
acceptance  that  EICs should  be more  integrated  into the national  SME  support  agencies 
in the Member  States. This  should  probably  be done on  a regional  basis  in, at  least,  the 
larger  Member  States.  Such  integration  could  allow  for  a  reduction  in  the  number  of 
EICs,  but  this  may  not  be  possible  in  all  Member  States  and  must  be  agreed  with  the 
national authorities in question. 

There  should  be  no  compromise  in the  maintenance  of  strict  quality  control  supervision 
over  the  entire  network,  including  "network  EICs"  and  "associated  EICs".  Any 
organisation  permitted  to  use  the  EIC  brand  name  should  be  governed  by  the 
Commission's  quality  standards.  There is also  a need to  avoid  confusion  or  competition 
that  could  arise  in  the  context  of  two  EICs  in  the  same  region.  We  believe  that  the 
"network  EIC"  concept  could  ultimately  risk  being  divisive  if  it  removes  regional 
consensus  and joint  "ownership" of  some EICs at local  or regional  level. It  is  preferable 
to persuade all relays, networks and agencies to co-operate at local level than to empower 
them at national level to compete with each other on the ground. 

The  network  function  should  be  further  developed  in  order  to  foster  growth  in  new, 
market-driven  services. However, it would be desirable to clarify  the "network rights and 
responsibilities" of participating  EICs, to  make  "good  behaviour"  a rule  of  participation 
and reward it appropriately, as it is the key to the future  development of the  instrument. 

The  subsidy  level  should,  in  our  view,  be  revised  upwards  in  deserving  cases,  but  the 
total  number  of  EICs  could  also  be  somewhat  reduced,  in  order  to  maintain  value  for 
money.  As  for  the  Technical  Assistance  office,  its work  is  valued,  but  the  Commission 
needs to be alive to the possibility that  some savings might be possible there too  without 
losing valuable services. There should be more emphasis on training of EIC staff  and less 
on the "spoon-feeding" of pre-digested  information  materials. 

Conclusion 
The promotional  actions all seem sensible and react to a need. We think that the content 
and  design  of the  Euro  Info  Newsletter  and the  DG XXIII  web-site  could  be  improved, 
and  that  publicity  stands  are  probably  not  needed  at  small  events  such  as  Interprise 
meetings. The activities are, however, assessed as broadly cost-effective  overall. 

Recommendation 
DG XXIII  should  consider  whether,  at  some point  in the  future,  a hard  copy  newsletter 
could be replaced by an upgraded and more regularly updated web-site. 

Conclusion 
BC-Net  and  BRE  were  widely  criticised  by  most  of  the  respondents  to  our  survey  of 
opinion. 

29 

A  European,  public  sector  action  can,  in  principle,  be justified  under  the  subsidiarity 
principle  in this  area,  in our  opinion.  However,  unless the  current  schemes  can be  made 
to  achieve  critical  mass  and  to  claim  the  support  of  a  large  number  of  competent  and 
enthusiastic  intermediary  organisations,  they  should  not  continue  to  be  subsidised  from 
public  funds.  In  any  case, they  should  not,  in our view, be  supported  from  public  funds 
indefinitely. 

A  new  computerised  tool  was  introduced  in  1998  and  some  intermediaries  are 
enthusiastic about it (though many are not). The networks are also now being re-launched 
and  there  is,  according  to  the  Commission,  renewed  interest  in  them.  We  are  not 
convinced  that  the  new  system  and  the  re-launch  will  attract  sufficient  high-quality 
support  for  the  schemes  to  become  cost-effective  in  the  future,  but  it  is  too  early  to  be 
sure  of this.  In  the past,  we  consider  that  the  limited  results  have  not  been  sufficient  to 
justify  the substantial expenditure. 

Recommendations 
Our  view  is  that  BC  Net/BRE  should  be  subjected  to  a  comprehensive,  independent 
evaluation in the year 2000. By then it should be possible to determine whether the recent 
improvements have been sufficient  to re-energise the network  such that greatly  improved 
results justify  continued public spending. If not, radical action is required, in our opinion. 
BC  Net  should  be  privatised  or  closed  down  at  the  end  of  the  third  MAP.  The  EICs 
should  explicitly  take  over the role of intermediary-based  partner  search, where  they  are 
willing  to  do  so. BRE,  on  the  other  hand,  should  be  set  up  on  the  Internet  with  public 
access  for  viewers,  but  controlled  access  for  inputting  data.  This  would  facilitate  the 
linkage  of  BRE  with  other,  internet-based  partner  search  mechanisms,  notably  in  the 
USA. 

Conclusion 
Europartenariat,  despite the absence of clear statistics on final results in terms of lasting 
co-operation,  is generally believed to be worthwhile. 44% of the participating  companies 
we researched directly claimed to have started a form  of useful  co-operation as a result of 
the event. Our opinion is that the events meet a real need and that the substantial  amounts 
spent  on  the  events  are justified  by  the  quantitative  and  qualitative  effects,  which  they 
have. They are therefore broadly  cost-effective. 

Recommendations 
The purely regional approach could be complemented by a stronger sectoral focus, in our 
view, but the events should not grow too big. Companies could and probably  should  pay 
a  small  fee  in  order  to  attend.  The  mandate  for  the  national  counsellors  could  be 
somewhat  tightened,  linked to a contractual  obligation  to trace the  outcome  of the  event 
ex post. 

More attention should be given to follow-up  of the contacts made at the events. Attention 
should  also  be  paid  to  making  sure  that  the  quality  of  the  events  is  not  reduced  by  the 
participation  of  subsidised  attendees  from  non-EU,  developing  countries,  who  may  not 
fully  understand  the  nature  of  the  partner  search  focus  of  Europartenariat.  Organisers 
should also, if possible, be subject to tighter evaluation obligations, perhaps involving  an 
obligation to select an external evaluator. 

30 

Conclusion 
Interprise  is  also  generally  found  to  be  useful  and  successful  by  almost  all  interested 
parties.  Here,  54%  of  the  companies  we  surveyed  claimed  a  commercial  link-up  as  a 
result. As with Europartenariat,  we consider that the events meet  a real need  and that  the 
substantial  amounts  spent  on Interprise  are justified  by the  substantial  benefits  obtained. 
The action is, therefore, broadly cost-effective,  in our opinion. 

Recommendations 
We  believe  that  better  matching  in  advance  would  help  Interprise  and  a  much  stricter 
evaluation obligation should be placed on the organisers as a condition for receiving their 
subsidy.  The  Commission  could try reducing the  subsidy  per event slightly  at the  end  of 
this MAP, to see whether this affects  demand from host organisers. 

Conclusion 
On subcontracting,  we  believe  that  generally  the  publications  seem  to  have  had  little 
impact,  except  perhaps  on  intermediaries,  and  we  have  doubts  about  whether  they  are 
cost-effective  or  whether  the  Commission  should  be  involved  with  them.  The  sectoral 
projects, by contrast, seem to be appreciated by those who have taken part in them and to 
be  highly  rated  by  their  organisers  in  at  least  two  cases.  They  are  worth  pursuing,  and 
have  probably  been  cost-effective  so  far,  in  our  view,  but  should  be  integrated  into  a 
multi-annual plan, marketed better and evaluated externally. 

The IBEX events were highly rated by almost all respondents to our research.  Evaluation 
and  promotion  of the  events were, as usual, the weak  aspects, but  we  believe  that  more 
IBEX  events  should  be  held  in  future,  if  the  Commission  can  find  the  necessary 
organisers.  These  actions  seem  to  have  been  cost-effective  so  far.  The  other 
subcontracting  actions risk being a distraction from  the good, sectoral events, but we can 
see  the  sense  of  the  Commission  attending  (though  not  subsidising)  the  conferences  of 
subcontracting  intermediaries.  The  proposed  SCAN  system  of  linking  subcontracting 
databases seems to be a good idea, but it is not clear whether it is feasible, at this stage. 

Recommendations 

Unless the unit(s) responsible for subcontracting actions is (are) given far more resources, 
our opinion is that it (they)  should concentrate  exclusively  on more  sectoral projects  and 
on the  IBEX  events  in  future.  Policy  work,  including  research  and  analysis  of  Member 
State policies and Concerted Actions in this area could also be valuable, however, if more 
resources were available. 

Conclusion 
The extension  of existing DG XXIII programmes to the wider world  seems to us to be 
a  cost-effective  way  of  expanding  the  reach  of  the  programmes  and  increasing  their 
potential  value  for  SMEs  at  little  cost.  The  cost-effectiveness  of  the  other  actions  to 
encourage internationalisation  is uncertain at this stage. 

Recommendations 
Limits  may  have  to  be  placed  on the  international  expansion  of  the  events  in  future  if 
they  are  not  to  be  overwhelmed  with  peripheral  visitors  and  lose  some  of their  original 

31 

value. DG XXIII  should take care to integrate its other actions with those of the Member 
States in this area. 

32 

Objective  D:  Enhance  SME  Competitiveness  and  Improve  Access  to  Research, 
Innovation and Training. 

Conclusion 
Innovation  actions  are judged  as good  in terms of DG XXIII's  influence  on the  content 
of the Action Plan for  Innovation  in Europe and on the Fifth  Framework  Programme  for 
Research  & Development.  The Commission DGs who lead on these  issues welcome  DG 
XXIII's  input  and  expertise,  but  question,  as  do  the  Member  States,  and  as  do  we, 
whether  the  pilot  actions  in  this  field  are  valuable.  The  cost-effectiveness  of  actions  in 
this  area  could  only  be  justified  on  the  basis  of  their  low  overall  cost.  DG  XXIII's 
resources for this work are very limited and focus is essential. 

Recommendation 

We believe  that  DG XXIII  should  focus  in future  on influencing  the way  in which  DGs 
XII and XIII make funds  available to SMEs. Pilot actions should only be launched, in our 
view, to test policy options. 

Conclusion 
In  the  field  of  training  and  quality,  most  commentators  have  seriously  questioned 
whether  DG XXIII  should  be  active  at all  in this  area.  Subsidiarity  issues  arise, as  does 
the  obvious  fact  that  Member  States  all  have  very  substantial  programmes  under  way, 
and  the  Commission  has  big  spending  activities  under  the  management  of  DGs  V  and 
XXII. We doubt that the pilot actions in this area will be seen to be cost-effective  overall, 
though some training  actions could be useful  in areas where in-depth policy research has 
already  been conducted  (such as the transfer  of enterprises), but it is too  early to make a 
definitive  conclusion on this. 

Recommendations 
DG XXIII's  activities,  if  any  in future,  should  in our  opinion, be  limited  to  influencing 
other  actors  and  conducting  research  on  policy  in  this  area,  without  starting  spending 
initiatives on its own. 

Conclusion 
Standardisation,  on  the  other  hand,  is  an  area  that  calls  for  EU-level  action,  in  our 
opinion. The NORMAPME  action fills  a gap in the European standard-setting  process, is 
cost-effective  and  should  be  well  publicised,  so  that  potential  clients  can  be  enabled  to 
use it. 

Recommendation 
This action should be continued for the time being, with enhanced publicity. 

Conclusion 
The work done in relation to the environment was complimented, during our research; in 
as far  as it has led to positive account being taken of SME interests  in the revision  of the 

33 

EMAS Regulation. There was a clear link, in our opinion, between the Euromanagement-
Environment  action  and  EMAS, but,  again, the  issue  of  staff  resources  available  to  DG 
XXIII to administer this action arose as a serious issue. 

Recommendation 
It is not clear that further  actions in this area are called for, but if they are, we believe that 
they should be strictly  policy-oriented. 

Objective E: Promote Entrepreneurship  and Support Target Groups. 

Conclusion 
Promoting entrepreneurship  is the overriding aim of Objective E, and it has been given 
effect  most  noticeably 
the  Commission's  Communication  on  Fostering 
Entrepreneurship,  published  in  1998. This  action  should,  in  our  opinion,  acquire  greater 
force  in  the  light  of  the  conclusions  of  the  Luxembourg  Employment  Summit,  and  the 
BEST follow-up  will play a role also in keeping the issue in the spotlight. 

in 

Recommendation 
DG XXIII  should  continue  to  focus  on the  development  of research  in this  area  and  the 
promotion of best practice amongst the Member State authorities. 

Conclusions 
The  work  on  the  craft  sector,  and  on  special  target  groups  such  as  Women,  Young 
Entrepreneurs  and the disadvantaged, has given rise to scepticism that sufficient  concrete 
developments  can  be  expected  from  the  large  number  of  conferences,  pilot  projects  and 
demonstration  events  that  have  taken  place. The  administrative  and  processing  systems 
have been  slow to date, such that DG XXIII  is only now evaluating projects  from  the 2nd 
MAP, while projects under the 3rd MAP are now getting under way. There are constraints 
on  following  the  results  of  these  pilot  actions  to  the  policy  development  stage,  which 
should be speedily looked at. 

Some members of the article 4 Committee also object,  in principle, to the singling  out of 
craft  and micro-enterprises  for  special treatment. According to them, all  SMEs  should be 
treated  equally  in relation  to the  Commission's  actions.  Special  needs  groups  should  be 
considered  within  a policy  context  only, through  research,  concerted  actions,  etc.  Some 
Member States feel the same way about special actions for women and the disabled. 

Our  opinion  is that  the  pilot  actions  for  the  craft  sector  can  be justified  in principle,  in 
that they  clearly  fall  within  the  policy  framework  established  by the  Milan  Conference. 
They will only be cost-effective,  however, if the results are evaluated  and  communicated 
to all  interested  parties  in a timely  fashion,  and  fed  into the  EU policy  context.  It  is  not 
clear  to  us, that  the  same  policy  context  exists  for  the pilot  actions  in  favour  of  women 
and promoting young entrepreneurs, so the use which is made of the results of these pilot 
actions will be an even greater determinant of whether they were  cost-effective. 

Recommendations 

34 

The evaluation  of existing  actions and the starting  of a policy  debate on the  implications 
of the results  should now, in our view, take precedence  over the launching  of more  pilot 
actions. DG XXIII  should make sure, in future,  that pilot  actions in this area make  sense 
within  an  overall  policy  framework,  which  has been  agreed  with  the  Member  States,  as 
well  as  the  intermediaries,  trade  associations  and  lobby  groups  for  the  special  interests 
concerned. 

Conclusion 
The  commerce  sector  is  controversial  in  the  context  of  the  3rd  MAP,  because  of  its 
sectoral  focus  within  what  is  a  horizontal  programme.  There  is  a  doubt,  in  many 
countries,  about  whether  spending  on the  commerce  sector  should  be undertaken  within 
the  framework  of  the  MAP  for  SMEs,  although  we  believe  that  DG  XXIII  has  tried  to 
give its efforts  in this area an SME focus. 

As for the actions undertaken, the recent White Paper has been mostly welcomed,  though 
there  is a view in some quarters that it could have been more strategic  in focus  and  fears 
exist  that  resource  limitations  and  delays  may  mean  that  its  action  plan  is  not  fully 
implemented.  There  are also doubts about the follow-up  likely to be given to  Commerce 
2000  phase  3,  where  the  stakeholders  fear  that  the  various  reports  and  conference 
conclusions,  while  valuable,  may  not  receive  the  detailed  attention  they  need  to  make 
them go further.  The electronic commerce initiative has been broadly welcomed. 

The cost-effectiveness  of the electronic commerce initiatives cannot be determined  at this 
stage.  We  have  doubts  about  the  eventual  cost-effectiveness  of  the  spending  so  far  on 
Commerce 2000 under the third MAP, but again, it is too early to judge what use may be 
made of the results of this spending. The other, policy-related  actions seem to present no 
difficulties,  in  terms  of  cost-effectiveness,  as  long  as  it  is  accepted  that  supporting  the 
commerce sector is a valid objective under the MAP. 

Recommendations 
DG XXIII should make sure that the White Paper is implemented effectively,  and that the 
results of Commerce 2000 are analysed and disseminated  in a timely fashion  and used  for 
the development of improved policy for the sector. 

7. 

Overall  Conclusions 

There is a clear impression that policy  development  is under-resourced  at the moment  in 
DG XXIII. Because  of the variety  of  different  fields  in which  policy  is  being  discussed 
and developed, substantial resources are needed to ensure that all research is followed  up, 
that  all  Concerted  Actions  are  well-prepared  and  highly  targeted  and  to  check  that 
Member  State  commitments  are  honoured.  Policy  development  should  be  more 
integrated and perhaps more measured, with priority target themes to be developed  every 
year or every two years. 

There  are,  in  our  opinion,  too  many  small  pilot  projects  and  actions  which  are 
inadequately  feeding  into genuine policy  development  at the moment. There  are also too 
many  publication-type  actions  at  present,  which  do  not  directly  relate  to  policy 
development  or to tangible benefits  for  SMEs, or which are inadequately  disseminated  to 
have major  effect.  In  our  opinion  some  of the  least  cost-effective  actions  should  be  cut 
and  the  rest  much  more  stringently  and  rapidly  evaluated  and  integrated  into  the  policy 

35 

development  framework.  This  would  release  resources  for  policy  development  and  for 
developing  and  perhaps  expanding  some  of  the  genuine  operational  actions,  most  of 
which are found to be useful  and rewarding. 

The  good  points  of  DG  XXIII's  current  performance  are  that  it  has  a  committed 
leadership with a focus  on achieving  results and continuing  to keep  SME and  Enterprise 
issues  at the forefront  of the Union's  agenda. A large number  of measures  in the  Multi-
Annual  Programme  receive  a  generally  good  evaluation,  in  terms  of  their  quality  of 
design  and  execution,  qualitative  impact  and  cost-effectiveness.  The  weaknesses  are 
generally  to  be  found  in  a tendency  of  fragmentation  inside  the  DG,  a  proliferation  of 
small-scale  actions  without  adequate  resources,  monitoring,  analysis  or 
further 
processing through the policy  system, and a resulting  frustration  on the part  of the  many 
stakeholders,  be they Member  State  authorities,  business  representative  organisations  or 
intermediary  organisations.  A common  feature  is also the  lack  of dissemination  of  what 
may be interesting results of DG XXIII's activities. 

Consultation  with  SME  representative  organisations  on  policy  issues  has  improved 
during  the  course  of  the  3rd  MAP.  The  Commission  must,  however,  in  our  view,  be 
careful  not  to  follow  too  readily  the  wishes  of  special  interest  groups  and  sectoral 
representatives for pilot projects and publications on specific  issues. Such initiatives must 
always feed into an overall public policy context. 

There  is  a  strong  general  consensus  on  the  need  for  an  active  voice  within  the 
Commission,  promoting  the  enterprise  angle  in  relation  to  the  very  large  number  of 
issues  that  affect  SMEs.  There  is  an  equally  strong  consensus  that  DG  XXIII  does  not 
have  to  « do »  so  much.  Its  best  work  often  comes  through  expert  advancement  of  the 
SME  cause.  The  fact  of  having  a budget  to  spend  on the  MAP  may  inevitably  create  a 
spending culture, but the implication of our evaluation is that the real gains for DG XXIII 
often  come  from  expert  policy  work.  This  may  well  bring  Europe's  SMEs  greater 
benefits  in the medium term than will the  spending  of the relatively  small  amount  at the 
DG's disposal. Having said that, many of the biggest operational actions have been  found 
to  be  well  designed  and  successful  and  should  be  continued  and  even  expanded,  if  the 
budgetary  authorities so permit. 

Our  overall  conclusion  in relation  to the  cost-effectiveness  of the  Commission's  actions 
under  the  third  MAP  as  a  whole  to  date,  is  that  it  is  broadly  acceptable  as  far  as  it  is 
known.  In  many  cases, however,  the  cost-effectiveness  of  the  spending  in  the  first  two 
years of the MAP cannot yet be determined. In some cases, there are grounds for  concern, 
that the results  of  some of the pilot actions will be inadequately  analysed  and/or that the 
results  will  not  be  disseminated  in  a  timely  fashion.  DG  XXIII  must  concentrate  on 
extracting maximum value from  1997/1998 spending during the remainder  of the  MAP's 
life.  It  may  be  advisable  to  reallocate  some  of  the  DG's  human  resources,  in  order  to 
ensure that this is possible and to increase efficiency  and cost-effectiveness  overall. 

36 

ISSN  0254-1475 

COM( 1999) 319  final 

DOCUMENTS 

EN 

08  10  04  17 

Catalogue number: CB-CO-99-324-EN-C 

Office  for Official  Publications of the European  Communities 

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