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The dynamic role of Small & Medium scale Enterprises (SMEs) in developing countries towards employment generation & income creation has over time been highly emphasised by several authors (Kayanula & Quartey 2000, OECD 2004). While it is generally accepted that SMEs are important contributors to the domestic economy, not many governments have framed policies to enhance their contribution or increase their competitiveness (UNCTAD 2005).
Previously insulated from international competition, many SMEs are now faced with greater external competition & the need to exp& market share. As indicated by OECD 2002, SMEs fast-changing technologies & globalising economies are putting increased pressures on firms to reorganise their structures to enhance adaptability & flexibility. Upgrading the skills of all types of employees is hence central to firm performance in SMEs which must be able to adapt quickly to evolving markets & changing circumstances, but which often have limited resources. Indeed there is preliminary evidence that competence development activities can reduce the failure rates of small firms, which are far more likely to fail than larger firms, particularly in the early years (OECD 2002).
1.2 SMEs in Ghana: Definition & Role towards Economic Development
As per statistics from the United Nations Economic Commission for Africa 2010, Ghana's GDP grew at an annual rate of 5.4 per cent between 2001 & 2007. Such impressive performance was partly contributed to the robust growth of the SME sector in Ghana. Available data from the Registrar General in Ghana indicates that 90% of companies registered are micro, small & medium enterprises (Mensah 2004). This target group has been identified as the catalyst for the economic growth of the country as they are a major source of income & employment.
Analogous to the situation in other countries though, Kayanula & Quartey 2000 state that there is no single, uniformly acceptable, definition of a small firm in Ghana as these firms differ in their levels of capitalisation, sales & employment. Hence, definitions which employ measures of size (number of employees, turnover, profitability, net worth, etc.) when applied to one sector could lead to all firms being classified as small, while the same size definition when applied to a different sector could lead to a different result. Kayanula & Quartey in their research however identified a number of common definitions used when referring to SMEs in Ghana that could be used for purposes of this essay. These definitions are summarised below:
The Ghana Statistical Service (GSS) considers firms with less than 10 employees as Small Scale Enterprises & their counterparts with more than 10 employees as Medium & Large-Sized Enterprises. An alternative criteria used in defining small & medium enterprises is the value of fixed assets in the organisation. However, the National Board of Small Scale Industries (NBSSI) in Ghana applies both the fixed asset & number of employees' criteria. It defines a Small Scale Enterprise as one with not more than 9 workers, has plant & machinery (excluding l&, buildings & vehicles) not exceeding 1000 GHS. From these definitions however, it would be prudent for purposes of this essay to note that the process of valuing fixed assets in itself poses a problem as continuous depreciation in the exchange rate often makes such definitions out-dated.
It is further noted that SMEs in Ghana can be categorised into urban & rural enterprises. The former can be sub-divided into 'organised' & 'unorganised' enterprises. The organised ones tend to have paid employees with a registered office whereas the unorganised category is mainly made up of artisans who work in open spaces, temporary wooden structures, or at home & employ little or in some cases no salaried workers. They rely mostly on family members or apprentices. Rural enterprises are largely made up of family groups, individual artisans, women engaged in food production from local crops. The major activities within this sector include: soap & detergents, fabrics, clothing & tailoring, textile & leather, village blacksmiths, tin-smithing, ceramics, timber & mining, bricks & cement, beverages, food processing, bakeries, wood furniture, electronic assembly, agro processing, chemical based products & mechanics (UNECA 2010, Kayanula & Quartey 2000).
Among their many roles, SMEs in Ghana have been crucial in mobilising funds which otherwise would have been idle (Kayanula & Quartey 2000). The authors further point out that SMEs have been recognised as a seed-bed for indigenous entrepreneurship, are labour intensive, employing more labour per unit of capital than large enterprises & promote indigenous technological know-how. Furthermore, due to their regional dispersion & their labour intensity, argument goes that small scale production units can promote a more equitable distribution of income than large firms in Ghana. They also improve the efficiency of domestic markets & make productive use of scarce resources & thus facilitating long term economic growth.
1.3 Challenges facing SME Growth & Competitiveness in Ghana
Despite the wide-ranging economic reforms instituted in the country to promote SME development, SMEs in Ghana still face a variety of constraints (UNECA 2010, Kayanula & Quartey 2000). Mensah 2004 drew up a basic profile on such SME challenges: SMEs are dominated by the owner/manager who takes all major company decisions. The entrepreneur possesses limited formal education, access to & use of new technologies, market information, & access to credit from the banking sector is severely limited. Furthermore, management skills are weak, thus inhibiting the development of a strategic plan for sustainable growth.
Kayanula & Quartey in addition note that SME competitiveness in Ghana is mainly constrained by the following factors:
1. Limited access to finance remains a dominant constraint to small scale enterprises in Ghana. Credit constraints pertaining to working capital & raw materials are often cited by small firm & these partly stem from the fact that SMEs have limited access to capital markets, both locally & internationally.
2. SMEs have difficulties in gaining access to appropriate technologies & information on available techniques. This limits innovation & SME competitiveness. This fact is ascertained by UNCTAD 2005 which notes that most SMEs also lack the technical know-how & financial resources needed to acquire state of the art technologies & equipment required to improve productivity & to become internationally competitive.
3. Regulatory Constraints: Although wide ranging structural reforms have improved, prospects for enterprise development remain to be addressed at the firm-level. High start-up costs for firms, including licensing & registration requirements, can impose excessive & unnecessary burdens on SMEs. The high cost of settling legal claims & excessive delays in court proceedings adversely affect SME operations. In the case of Ghana, the cumbersome procedure for registering & commencing business were key issues often cited.
4. Of actual importance to this essay however, is the insufficient supply of skilled workers among SMEs in Ghana that limits specialisation opportunities, raises costs, & reduce flexibility in managing company operations. This is coupled with the lack of entrepreneurial & business management Skills: Lack of managerial know-how places significant constraints on SME development.
Mensah 2004 in conclusion notes that SMEs in Ghana have not been able to take full advantage of Government-sponsored business support services. This paper therefore seeks to identify the possible implications for strengthening SME competitiveness through competence development that could be attained through the acquisition of knowledge, skills & new abilities.
Chapter Two: Literature Review
2.1 Competence: Definition of the Concept
Studying a concept such as competence is very complex as the concept is used differently by many people (Awuah 2007). According to the author, the term competence can be defined as the ability of a firm to develop & manage relations with key suppliers, customers & other organizations. The term is further defined by the UN as the possession of a set of skills, related knowledge & attributes that allow an individual to perform a task or an activity within a specific function or job (UN 2007, UNIDO 2002). A graphical display of how the UN explains competence is displayed in figure 1 that follows:
A more practical definition for the term competence is provided by the European Commission which defines competence as the combination of human knowledge, skills & aptitudes serving productive purposes in firms & contributing to their competitiveness (EC 2003). From the EC definition, we notice that the possession of necessary skills & abilities should be able to provide a firm with a certain competitive advantage over its competitors. In this paper therefore, the term competence will be used to mean the ability to demonstrate knowledge, skills, experience, & attributes necessary for a firm to achieve a sustainable competitive advantage. In general, competence in a job means being competent at all aspects of each function or competency required to be performed within the role. The term competency is graphically explained in figure 1.
Several authors such as EC 2003 & Moe 1995 distinguish between competencies at individual & organisational level. Individual competencies imply a person's internal cognitive abilities & skills. Such competencies may be gained through education & experience in the work place (Nordhaug 1992). On the other h& institutional competence is more than the sum of competences of the individuals. It consists of institutional qualities such as the ability to mobilize teamwork & synergistic effects of interactions between individuals (Moe 1995). EC 2003 however cautions that a high level of individual competence does not automatically result in a high level of organisational competence & therefore an optimal degree of organisational competence requires a transfer mechanism that facilitates interplay between an individual & the organisation's frameworks & routines.
Figure 1: Definition of Competency
Source: UNIDO 2002, Page 9
In this regard, Nordhaug 1992 adds that much expertise based on practical experience is accumulated by individuals working within any company. To transform the experiences of the individuals into institutional knowledge is a great challenge to which there hardly exists any universal solution. The goal therefore must be to embed this experience in the organization in such a way that it is at any time available to those who need it, even after the individual who made it has left the company.
In contrast to many contemporary authors, UNIDO 2002 distinguishes competencies as being managerial, generic & technical. Managerial competencies are considered for staff with managerial or supervisory responsibility in any firm, including directors & senior posts. It is further noted that some managerial competencies could be more relevant for specific occupations however they are applied horizontally across a firm for example analysis & decision making & team leadership.
Generic competencies are considered essential for all staff regardless of their function or level for example communication, programme execution & linguistics. Technical or functional competencies on the other h& are specific competencies that are considered essential to perform a job within a defined area of work for example environmental management, finance management & human resource management among others. In conclusion, UNIDO 2002 notes that any function within a firm requires a set of essential managerial/generic & technical/functional competencies to be performed effectively.
2.1 Competence Development in SMEs
2.2.1 Definition of Competence Development
Competence development is defined by Koch, Gill & Ellstr'm 2006 as an overall designation for the various activities that can be used to affect the supply of employee competence & skills on the internal labour market. In this definition, it should be pointed out that the term competence development is sometimes also used to denote the individual learning processes through which competence is developed. A simpler definition is provided by the EC, which defines competence development as the measures taken by any enterprise to develop its competence base
Competence development in this case refers to activities that are planned & organized in order to foster learning as a primary aim, but also to activities that have learning as a secondary & perhaps unintended outcome. According to the EC, any enterprise can develop its competence base by a number of different possible measures, that is to say, by recruiting the right competence from outside or by developing the human resources the organisation already possesses. This goal can be obtained from a double perspective: first of all, through the development of the competence base of its human resources, basically through different forms of formal & non-formal learning such as training courses, internal seminars, work groups, assistance to expos. This kind of perspective was termed by Nordhaug 1992 as the 'Development of in-house competence', which represents the measure a firm takes to develop their competence status available within their in-house human resources.
Further more competence development activities may be formal through internal or external courses that are deliberately planned & organized as means for work place learning. These activities may or may not result in a certificate, a diploma or a mark that is recognized by the educational system or on the external labour market. In many cases, courses are carried out to meet more specific needs at the workplace, & do not result in some kind of formally recognized certificate or mark. Workplace learning through formal activities are usually financed by the employer & carried out during working hours.
In contrast, informal competence development may occur through the participation of the individual in development projects at the workplace, staff-meetings, job rotation & team-based work among others. Such activities are generally characterized by a low degree of planning & organization from the perspective of learning.
The second approach is through obtaining the desired competence externally. Examples include the recruitment of new employees, the purchase of consultant services or co-operation with other external stakeholders. Nordhaug 1992 complements this approach by noting that external competence acquisition, where firms acquire (buy or by other means get access to) different external competencies that are outside the enterprise's boundaries that they internally lack but may be regarded as essential for the optimal performance of the firm. Relating to the work of Griffiths et al 2007, the definition of competence development in this paper will emphasize the focus on the continuous updating & building of both individual & organisational knowledge, skills & abilities.
2.2.2 A Four Stage Model of Competence Development
To simplify analysis, a model of competence development which consists of four stages is presented in this section:
Figure 2: Competence Development Model
Adapted from Griffiths et al 2007: Page 134
According to the figure above, the cycle of competence development starts with a process of orientation, in which the learner determines which competences that need to be developed. Once this decision has been made, the learner has a choice. One very quick route, typical for informal learning & competencies related to leisure activities, is to go directly to the competence development activities, based on the learner's interests & only very little knowledge of their current proficiency level. The other route, more related to formal learning & to professional development is to proceed by collecting evidence, which shows the learner's current proficiency level. After the learner has collected this evidence, they can again choose: either they can have their proficiency level officially recognized by others, or they can go directly to the competence development activities. Again, the latter route is the more informal learning route.
Griffiths et al 2007 emphasizes assessment by others is the point where the formal learning route starts, where previous learning, which might have been either informal or formal, is turned into a formal recognition. When the cycle is passed through for the first time, the moment of assessment carried out by others is often referred to as intake assessment. The model is supplemented by Ogrean 2009 who notes that through orientation & assessment, the model serves as the basis for ensuring that the organisation is well positioned to achieve its vision & strategic goals.
2.3 Challenges towards SME Competence Development
An introductory picture into the challenges facing SME competence development is provided by EC 2003 that notes that specific SME research & studies taking a more holistic view of competence development in SMEs are very difficult to find. As a result, the share of SMEs participating in competence development is lower than the respective one for larger enterprises (M&l & Dorr 2004).
SMEs are however not only constrained by limited information on competence development. According to M&l & Dorr 2004 & EC 2003, smaller companies are indeed confronted with a wider range of barriers hindering the engagement in competence development than larger ones. The most important one they note constitutes the lack of time to both, strategically plan & participate in respective measures due to the dominance of the daily business.
M&l & Dorr 2004 specifically note that limited financial & human resources constitute the main barriers for SMEs to engage in competence development activities. Generally, employees are too much involved in the daily business life to have time to engage in qualification measures & due to the restricted number of employees no proxy is available in many cases.
It is further noted that SMEs are often sceptical towards external advice & training as they are not informed about what is offered &/or are unsure about the quality or the price-performance ratio. Furthermore, the programmes offered do in most of the cases not correspond exactly to their needs. Stone 2010 observes that small firms often report difficulty accessing training tailored to their needs in terms of type & quality, scheduling & location.
Additionally, SMEs fear that higher qualified employees will leave the company because of a lack of incentives such as higher salaries & career chances in larger enterprises. Larger firms often pay higher wage rates, so formal qualifications are perceived by many small employers as more valuable to employees than the business itself (Stone 2010). This is worsened by the fact that these firms lack competence development specialists in the company: very few SMEs indeed dispose of experts in the field of competence development leading to a lack of a systematic competence development scheme in these firms. This barrier is also mentioned in terms of lacking plans & personnel for conducting the training or identifying the company competence needs
Another obstacle identified from empirical research (Stone 2010) is that that small employers commonly lack information on what training is available to them, as well as evidence of the benefits of training to set against perceived & real barriers to training activity. Even where they perceive training to be of value, releasing employees for especially formal training is more difficult for smaller employers. Lost working time is an especially important constraint with respect to owner-manager training.
According to OECD 2002, for a variety of reasons, smaller firms are less likely than larger enterprises to provide external training to all grades of workers, including managers. In addition to financial constraints, information gaps make smaller firms less aware of the benefits they would obtain from management training & few see training as a strategic tool. Due to higher turnover in managerial staff, small firms may not realise the same benefits from training investments as larger firms.
Chapter Three: Competence Development for SME Growth & Competiveness in Ghana
3.1 Competitiveness: Definition & Concept
Competitiveness can be assessed at either the national or the enterprise level (UNCTAD 2005). At the national level, competitiveness has been defined as a nation's ability to produce goods & services that meet the test of international markets while simultaneously maintaining & exp&ing real incomes of its people over the long term. The ability to compete in international markets is usually thought to be dependent on macroeconomic policies & conditions (trade policies & exchange rates among others) as well as on a nation's comparative advantage that is its factor endowment (l&, labour & capital).
At the enterprise level, competitiveness is the ability to sustain a market position by, supplying quality products on time & at competitive prices through acquiring the flexibility to respond quickly to changes in dem& & through successfully managing product differentiation by building up innovative capacity & an effective marketing system (UNCTAD 2005). The difference between the competitiveness of an enterprise & that of a nation is that the enterprise will cease to exist if it remains uncompetitive for long whereas a nation never goes out of business no matter how badly it is managed or how uncompetitive it is. When a nation loses its competitiveness, this is reflected in its deteriorating welfare conditions rather than elimination from the market.
To achieve continuous competitiveness, enterprises must transform their ways of competing: they must shift from comparative advantages such as low-cost & labour, to competitive advantages, namely the ability to compete on cost & quality, delivery & flexibility. Such competitiveness may depend on the business environment, sophistication of company operations & inter-firm cooperation.
According to UNCTAD 2005 however, since an enterprise does not produce in a vacuum, its competitiveness can only be measured within various types of market territories at the sub national, national & supra-national levels. The optimization of its capital resources (finance, technology, labour) comm&s its ability to penetrate each of these three market territories. In general, OECD 2004 identifies that it is up to the SMEs to implement competitive business operating practices & business strategies. However, the options available to SMEs are also closely related to the quality of institutions, markets & organizations that constitute the business environment. These will however depend on the efficiency & effectiveness of institutions, markets & organizations that encourage or discourage SMEs to take their cues for learning new ways of doing business, compare their own competitive characteristics with those of their rivals, & makes their decisions to invest, including the introduction of innovations into their business strategies.
In conclusion, UNCTAD 2005 notes that competitiveness is embodied in the characteristics of the firm, namely through: the current efficiency & effectiveness of the use of resources; the willingness & the ability to relate profitability to growth of capacity through continued investment. Although the authors concur with the view that competitiveness is created at the firm level, it is also emphasized that this is partly derived from a systemic context, emerging from complex patterns of interactions between government, enterprises & other actors, & will therefore exhibit different forms in each society. In addition, external competitiveness can be achieved by firms through exports, sustaining diversification &/or better quality of production, upgrading technology & skills, & exp&ing the base of domestic firms to compete regionally & globally. A firm is competitive in external markets depending on its ability to supply quality products on time & at competitive prices & to respond quickly to changes in dem& by building up innovative capacities & market strategies.
3.2 Linking Competence Development Activities to SME Growth & Competiveness
In the current competitive & complex economic environment, human capital is increasingly recognised by both countries & by business organisations as a key engine for growth & competitiveness (L'fstedt 2001, EC 2003, Moe 1995). Moe further identifies that companies will rarely be allowed to benefit significantly from competitive advantages in terms of monopolies or privileged access to certain raw materials, special means of production or protected markets. The success of any company will depend on its ability to compete in the management of resources & in exploiting markets which are in principle available to all.
Competitiveness in the market-place, as well as for the best people, will also increasingly depend on the environmental qualities of the company. Thus, the key to success is in a superior ability to recruit, develop & mobilize human resources. The best way to adapt to the changing environment & new requirements is to increase the organization's competence & to use it in the best possible way (L'fstedt 2001).
Against such a background of globalisation & competition, the availability of up to- date knowledge, also within the smallest enterprises, is of increased significance not only for the individual company but also for the economy as such (M&l & Dorr 2004). The authors further note that the current economic environment is characterised by global competition, fast technology developments, shorter product life cycles, more dem&ing consumers & changing enterprise structures through merges, alliances & take-overs. Thus, the new growth theories make economic growth dependent on the rate of accumulation of both physical & human capital, defined by the levels of knowledge, skills & competencies of the workforce (EC 2003)
Another important concept of how SME competitiveness could be advanced through competence development is provided by Koch, Gill & Ellstr'm 2006, who argue that competence development can result into increased individual & organizational performance. This view is supported by Stone 2010; in his famous quotation that 'Firms that train their workers are significantly less likely to close than those that do not' (Kock, Gill & Ellstr'm 2006). In addition to this, Fretwell 2002 notes that employee morale is created by & directly proportional to the degree of employee competence supported by leaders throughout the organization. Employee morale within an organization in turn has a direct impact on the satisfaction level of its customers & the company's ultimate success. When relationship-based leaders promote core competency development of its workforce throughout the organization, an opportunity exists for ensuring high employee morale & customer satisfaction, an increase in employee & customer retention rates, & a positive long-term outlook for the company's successful performance. Common knowledge suggests that employee morale has a direct impact on the satisfaction level of an organization's primary external customers.
In general, firms that are able to invest in the development of their human capital & the improvement of organisational capabilities will be able to gain a competitive advantage need to survive in today's competitive world.
3.3 Implications for SMEs in Ghana
A clear analysis of the prevailing environment for SMEs in Ghana indicates that the combined forces of globalisation, technological progress & growing market dem& pose a challenge to SME competitiveness. However, there are a number of ways in which small firms can get around this situation. To support analysis, several implications for SMEs in Ghana have been identified through the framework for SME competitiveness as displayed in the figure that follows:
According to ECA 2001, the framework distinguishes between factors that are internal & external to the enterprises. The large circle in the centre of the diagram captures the key internal requisites & processes that might lead to increased competitiveness in enterprises. These inputs are often called technological capabilities & they are defined as the knowledge, skills & efforts required for firms to bring about an indigenous process of technological development.
ECA further emphasizes that such capability acquisition cannot be taken for granted & often requires purposeful & cumulative efforts aimed at assimilating & modifying existing technologies, adapting them to local conditions. This is especially the case in Ghana since major innovations are still concentrated in technologically advanced countries.
Figure 3: Framework to support SME Competitiveness
Source: ECA 2001 Page 12
On the other h&, marketing capabilities are required to make the product available & attractive to the buyer. They include activities concerned with establishing a marketing channel from the factory to the buyer (direct sales or intermediaries), organising the logistics (related to mode & speed of transport), promotion (advertising, br&ing) & after sales service.
Further more, research has shown that capability building & competitiveness also depend on factors external to the firm. As shown in Figure above, this external context is given first by the type of network or cluster to which the firms belong. It is now well recognised that the lonely enterprise is doomed & the quality of relationships with other producers, suppliers & customers is critical for learning & competing (ECA 2001).
The framework further identifies clustering to facilitate the mobilisation of financial & human resources. In summary, clusters & networks constitute the immediate external context in which SMEs operate. The benefits of clustering are widely acknowledged: the spatial & sectoral concentration of firms generates externalities, favours inter-firm cooperation & constitutes a niche for effective policy support. This fact is reaffirmed by UNCTAD 2005, that observes that the competitive pressure of globalization brings about the need for SMEs to come together in order to survive & grow. The formation of trade associations & industrial groups/clusters are accordingly being promoted. A commendable example of such clustering for competitiveness is observed in the Ghana metalwork cluster in Suame that has generated positive externalities for SMEs, namely access to markets, labour market pooling & significant technological spill-overs.
OECD 2010 for example further suggests that SMEs acquire new knowledge & skills that will enable them to obtain the ideas they require for innovation & the markets to exploit them. A major message is that small firms do not innovate by themselves but in collaboration with suppliers, customers, competitors, universities, research organisations & others. These networks will then help them overcome some of the obstacles to innovation linked to their small size. Needless to say however, the quality of their local entrepreneurship environments, strength of local technology partners, & the quality of local science-industry linkages is critical to SME competitiveness. In general, small firms ought to strongly participate in the flow of knowledge within innovation systems, not just as knowledge exploiters but also as knowledge sources (OECD 2010).
The second set of external factors concerns institutional support. It includes the regulatory & policy environment provided by the state & the range of support services provided by public agencies &/or private organisations. As far as institutional support is concerned, SMEs can benefit from government role in creating an enabling regulatory & policy environment or through direct provision of financial assistance & technical services to SMEs. Various public agencies to this regard have been put in place to support the promotion & development of SMEs in Ghana.
The Economic Recovery Programme instituted in 1983 has for example broadened the institutional support for SMEs. On the other h&, the National Board for Small Scale Industries (NBSSI) has similarly been established to address the needs of small businesses & has since then established an Entrepreneurial Development Programme, intended to train & assist persons with entrepreneurial abilities into self employment. In 1987, the industrial sector also witnessed the coming into operation of the Ghana Appropriate Technology Industrial Service (GRATIS). For SMEs seeking to strengthen their competitive capabilities, a simple visit to these institutions, would be a worthwhile start.
Completing the explanation for figure 3, we note that determinants of SME competitiveness also include direct intervention, which is usually subdivided into financial assistance & non-financial services. The problem however does not appear to be a lack of funds but rather how to make them accessible to SMEs. This therefore necessitates improving the information flow between SMEs & financial service providers.
In terms of non financial services, the ECA further notes that many development agencies seek to boost the technological capabilities & competitiveness of SMEs through non-financial services. Broadly speaking, they cover two areas; services concerned with improving production & innovation capabilities, such as counselling on production lay-outs, quality st&ards & maintenance; providing information for technology development, launching co-operative joint operation of large-scale & expensive equipment; testing of raw materials; & training of entrepreneurs & workers.
Other services are concerned with developing commercial/marketing activities in firms, such as marketing training, information gathering, business linkages & cooperative & sales initiatives. Several opportunities that SMEs in Ghana could take advantage of in this regard include for example the one stop information resource centre, established by MSME Program to some of the information needs of small firms (PACF 2010).
In a brief summary, a number of implications for SMEs in support by the Government of Ghana that could be undertaken to support SME competitiveness are detailed below: A first recommendation for governments is to engage more systematically in the evaluation of SME programs that have so far been implemented. Additional steps include the provision of training at local levels at reasonable times for small-firm managers make greater use of electronic delivery of training through the Internet & foster entrepreneurship through the general educational system. Government could also strengthen VET programmes for business founders, SME managers & workforces by changing the nature of vocational education & training to better fit the needs & motivations of entrepreneurs, offering short duration Innovation Boot camps for SME owner-managers such as weekend seminars & short online courses (OECD 2002).
Further implications include an increase the use of informal learning sources, by facilitating collaborations with firms & consultants providing knowledge-intensive service activities (KISA), such as using 'innovation vouchers' for SMEs. This can be coupled with strengthening knowledge-based entrepreneurship by providing advice & training to start-up entrepreneurs who have strong technological knowledge but lack market & commercial expertise. SMEs will further have to promote partnership activities that that involve large & small firms, universities & research institutes, & governments & their development agencies. These partnerships could then be used to provide soft enterprise support infrastructure such as science parks & business incubators, collaborative research opportunities & services for knowledge transfer.
Chapter Four: Conclusions & Recommendations
In conclusion we note that SMEs can play a much bigger role in developing national economies, alleviating poverty, participating in the global economy & partnering with larger corporations. They do, however, need to be promoted. Such support requires commitments by & between governments, business & civil society.
The best way forward in promoting SME competence development is to change prevailing perceptions/culture, including the desirability of skills-intensive production & workplace development strategies. The next step would be to organise effective sectoral /regional outreach mechanisms for directly dealing with small business owner-managers, providing them with information & support.
There is also further need to ensure there is flexible provision of training which individualises training information, content & delivery to the needs of each small business. In this regard, there is need for the integration of formal training & learning with informal learning processes in the workplace, accommodating training around work dem&s & minimising time spent off-site. Further suggestion include collaboration between small businesses through pooling resources & networking &, more broadly, to provide opportunities for small businesses to share skills, knowledge & experience with other business people & to develop training partnerships between larger firms & small businesses
To sum it up all, the development of competencies within small firms in cannot be disregarded & investments in this field must be systematic & consistent over long periods. For firm wishing to strengthen their competitiveness, tireless effort will have to be put into the acquisition of new skills, information & additional capabilities suited to their endowments & moreover upgrade them over time.