Innovative Approaches to SMEs and Entrepreneurial Financing for Enhanced Competitiveness 2017 | ADB Institute | 8 November 2017 | Jakarta, Indonesia

The contribution of small firms to innovation-led growth and job creation has been of renewed interest in recent years. A large body of evidence shows that small and medium enterprises (SMEs), especially young firms, greatly and increasingly contribute to the innovation system by introducing new products and adapting existing products to the needs of customers. This explains why economists have reopened the debate on whether some market and systemic failures disproportionately affect small firms, and why governments have generally prioritized policies directed toward SMEs, while focusing more on the promotion of innovation.

These policies must consider the challenges and opportunities raised by globalization and new technologies. They must also find the right balance between measures addressing generic problems related to firm size or newness on the one hand, and more targeted responses that are tailored to the varying needs of different types of SMEs on the other hand.