Small and Medium Sized Enterprises (SMEs)
There is no globally recognised definition of an SME....
Definitions of SMEs differ across countries and industry sectors, and can be based on a variety of criteria, such as number of employees, invested capital and total value of sales. However, more important for policy consideration are the characteristics of these businesses, which typically include:
- Personal ownership and management
- Few, if any, specialist managerial staff
- Not being part of a larger business enterprise.1
...although SMEs generally share some key characteristics
These characteristics mean that the managers in small firms need to be multi-skilled rather than specialists, with expertise in a diverse range of areas such as marketing, production and accountancy. They are also constrained in the amount of time and money they can invest in searching for and using assistance. These factors, together with a culture of self-help and independence prevalent amongst New Zealand firms, have implications for business development policy.
For the purposes of this report, SMEs employ 19 or fewer staff
The above characteristics are typically exhibited by businesses with fewer than 20 employees. Therefore, for the purposes of this report, SMEs will be defined as enterprises employing 19 or fewer full time equivalent employees2 (FTEs) unless otherwise stated. Within this, small enterprises will be defined as those employing 0-5 FTEs and medium enterprises as those employing 6-19 FTEs.
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