The economic role of different sized companies and their growth effects

Abstract

Small and medium-sized enterprises are often regarded as separate companies even when they belong to a group of companies. Such an approach assigns a larger economic role to SMEs than when groups of companies are examined as entities. The report provides a more systematic analysis of the ways in which taking note of interdependencies within a group changes the perception of the roles different sized companies play in the economy.

Two methods of treating groups as entities comparable to companies are identified; these are referred to as the national and international group level. SMEs’ share of person years and added value is 8 percentage points lower at the national group level and 15 percentage points lower at the international group level when the effect of group structures is not factored in.

Independent SMEs account for the strongest intra-company net job growth. Factors contributing to personnel changes in companies in each category include internal personnel growth, so-called creative destruction, and inter-category transfers of companies. SMEs belonging to a group of companies account for the strongest aggregate job growth.

The report shows that the independent SMEs’ share of Finland’s exports is lower than suggested in earlier studies.

Business subsidies allocated to SMEs have mainly been granted to genuine SMEs, but when group structures are factored in, the actual share of SMEs of the beneficiaries is lower.

Publication Information

Karhunen, H., Kerko, S., Kiema, I., & Lähdemäki, S. (2020), Erikokoisten yritysten rooli taloudessa ja kasvun aikaansaamisessa, Publications of the Ministry of Economic Affairs and Employment 2020:7.

• ISSN: 1797-3562 (Online)
• ISBN: 978-952-327-494-5 (Online)