The Role of SMEs in Western Economies

  • Ciarán Mac an Bhaird
Part of the Contributions to Management Science book series (MANAGEMENT SC.)


Prior to the 1970s the focus of governments, practitioners, and academic researchers was primarily confined to large corporations, as it was considered that large enterprises were the key to economic growth. A notable development in the mid to late part of that decade was the increased attention of authors and scholars to the small business sector. The publication of “Small is Beautiful” by E.F. Schumacher in 1973 was characteristic of this change, and although he did not explicitly champion the SME business sector, his promotion of “smallness within bigness” marked a less enthusiastic attitude to large organisations than heretofore. A defining moment in the emergence of SMEs as a focus of the attention of policy makers and academic scholars was the publication of Birch’s (1979) paper entitled “The Job Generation Process.” Prior to this study, authors had concentrated on large publicly quoted corporations, which were considered the most important source of employment generation. Although it has since been criticised, primarily on methodological grounds (Storey 1994b), Birch’s study highlighted the contribution of SMEs in terms of employment, which was a serious concern for governments at the time. Increased interest by academics and policy makers in the sector resulted in a proliferation of publications and the implementation of many and varied policy initiatives. This phenomenon was not evident worldwide, however, and the burgeoning literature that emerged originated predominantly in the US and UK. Notwithstanding an increase in the geographical range and number of publications in the past two decades, the subject of SME research is still in its infancy.


Foreign Direct Investment Small Business Capital Structure Equity Capital Firm Owner 
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© Springer-Verlag Berlin Heidelberg 2010

Authors and Affiliations

  1. 1.Fiontar Dublin City UniversityDublin 9Ireland

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