SMEs Internationally
SMEs account for the majority of firms in OECD economies.
There is no universally used definition of a SME. Internationally, firm size is measured in a variety of ways including by numbers of employees, sales figures assets and industrial classification. However, the diverse structures of economies makes adherence to a single statistical definition unworkable. International comparisons of SME demographics and performance are also difficult to make because of the different methods central statistical agencies use to collect and publish firm-level data.
Most countries use an employment measure to define SMEs. The following are examples of international SME definitions using employee numbers and the percentage of firms in each category:
|
Micro |
Small |
Medium |
Large |
| European Commission |
<10 employees |
< 50 employees |
< 250 employees |
- |
| Percentage of firms in all categories10 |
91% |
7% |
1% |
1% |
| UK |
<10 employees |
< 50 employees |
< 250 employees |
250+ |
| Percentage of firms in all categories11 |
- |
99.3% |
0.6% |
0.1% |
| Australia |
<5 employees |
5-19 employees |
20-200 employees |
200 + employees |
| Percentage of firms in all categories12 |
68.5% |
31.5% |
9.9% |
<1% |
International Case Study: Small Business in Ireland13
Ireland is a country that has a similar population to New Zealand (approximately 4 million people). Despite the differences in the definitions we use, it still provides an interesting economic comparison to New Zealand
What is the Irish definition of an SME?
Small businesses are defined as those who employ fewer than 50 people and whose annual turnover and/or annual balance sheet total does not exceed €10 million. Within the SME category, a micro-enterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed €2 million.
How many small businesses are there in Ireland?
Excluding businesses with zero employees, over 97 percent of businesses operating in Ireland are classed as "small", accounting for 226,000 businesses. Using the same definition and methodology, small businesses would account for 121,884 businesses in New Zealand, also representing 97 percent of all businesses.
The number of small businesses in Ireland has grown by more than 50 percent over the past ten years. Between 1995 and 2002, the number of small businesses grew by an average of 6.6 percent a year, slowing to 2.6 percent in more recent years. In 2005, Ireland had the highest rate of new business start-ups in the European Union.
Between 1998 and 2006, the number of small businesses in New Zealand increased by 55 percent, an average annual growth rate of 5.6 percent.
How many people work for small businesses in Ireland?
In Ireland approximately 777,000 people work in businesses that employ fewer than 50 people. This represents 53.3 percent of those who are employed in the enterprise sector, and 39 percent of the Irish Labour Force. Of small businesses, those with 2-9 employees are the largest employers (accounting for 27.3 percent of employment in the sector). Employment in small businesses grew by approximately 79 percent over the ten years to 2005.
In New Zealand, excluding those with zero employees, 763,330 people work in businesses that employ fewer than 50 people. This represents 43.2 percent of those employed in the enterprise sector. Firms with 20-49 employees have the largest share (31.6 percent) of employees in small businesses.
What contributions do small businesses make to Irish economic output?
Small businesses make a substantial contribution to gross value added (GVA – the value of output produced minus the cost of intermediate inputs) in the Irish economy. In the construction sector, small businesses accounted for over 70 percent of GVA in 2003 (around €7.2 billion), while in the services sector (excluding financial services, for which figures are not available), the contribution was over 40 percent (€15 billion).
In New Zealand, firms with fewer than 50 employees accounted for half of the economy's total output (on a deflated value added basis) in the 2004/2005 year.
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