Support Services to SMEs in Germany, Greece, Ireland, Italy and Sweden - A Comparative Study

8/9/2019 Support Services to SMEs in Germany, Greece, Ireland, Italy and Sweden - A Comparative Study

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Support Services to SMEs inGermany, Greece, Ireland, Italy

and Sweden

A comparative study

UnioncamereUnione Italiana

delle Camere di CommercioIndustria Artigianato

e Agricoltura

Ministero dell Industria,Commercio e Artigianato

With the financial support of the European Commission, Enterprise Directorate General


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Table of contentsPage

0. Executive summary 1

1. Background, characteristics and expected contribution of

this report 3

1.1 Background 31.2 Characteristics and expected contribution of this report 3

2. Comparisons among countries, following the countryreports structure 5

2.1 General overview 52.2 Demand structure 6

2.3 Most (and least) required services 72.4 Suppliers' characteristics 82.5 Best practices 102.6 Proposals 11

3. Summaries by country 12

3.1 Germany 133.2 Greece 183.3 Ireland 223.4 Italy 26

3.5 Sweden 32

4. Preliminary interpretation and suggested actions 37

4.1 Why this market is important 374.2 Why do SMEs need services 384.3 Main problems 39

- Phase 1: searching a provider and awarding the assignment 39- Phase 2: service delivery 40- Phase 3: Evaluation of the performance of the delivered service 40

4.4 Specific highlights on service quality 404.5 Specific highlights on visibility 414.6 The role of public vs private providers 444.7 Recommendations, conclusions and suggested actions 454.8 Specific details about one of the most important

recommendations 48

Appendices

1. Analysis of the Market of Support Services with the View of Improving itsEfficiency in the Context of the Working Group on the Visibility and Quality

of Support Services


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2. Proposal for a classification of support services (excerpt from the InterimReport to the Steering Group - Concerted Actions n. 2 & 3 Brussels,2.12.1999)


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Market of Support Services Final Report 2000Page 1 of 49

0. Executive summary

This report represents the final step of the synthesis phase of a pilot project 1 sponsored by theEuropean Commission within the framework of the Concerted Action Working Group on theVisibility and Quality of Support Services aimed at identifying common methodologies for the

realisation of a better matching between demand and supply of quality services to SMEs.

Concerted Actions is based on a methodology where the Member States and the Commissiontogether identify and promote the exchange of best practice. It has looked at several differentareas, one of which is the visibility and quality of support services.

The report has the objective of summarising, interpreting and reconciling the findings, conclusionsand recommendations made in different research reports on the current status of the market ofsupport services to SMEs, produced by five European countries (Germany, Greece, Ireland,Italy, Sweden).

All the research studies described in these reports were conducted with different approaches andmethodologies (sample sizes, information collection methods, etc.), from very different marketand cultural perspectives, and obviously suggest relatively different conclusions andrecommendations that are all very meaningful within their respective contexts but can not be allimplemented in the same way on a European basis.

The recommendations presented here therefore represent a compromise and attempt to interpretand reconcile the various views in order to identify some priorities and common guidelines foraction. They are classified in the following three major categories:

1. measures aimed at improving theconditions for a better service delivery

2. measures aimed at improving theex post evaluation of the quality of the delivered services

3. measures aimed at improving the outcomes and results of the support service initiatives inthe follow-up phase.

It is also suggested that the implementation of most of these measures should be:

introduced selectively and according to specific priorities, depending on the relative

attractiveness and potential of the targeted industries and firms

standardised, at least to a significant extent, across countries

supported by the use of advanced information technology tools

supported in various ways by the public sector.

1 The project was one of the outcomes of the Concerted Actions 2 & 3 (Measures aimed at supporting firms: thecreation and the assistance to new firms, Madrid, 16-17.11.1995, and Increasing the visibility and effectivenessof real services to SMEs, Dublin, 18-19.11.1996) and of an international conference on Identification ofsuppliers of quality services to SMEs (Rome, 4-5.2.1988 proceedings collected in the Unioncamere publicationCollana Profili n. 59). As a result of this conference, a European Working Group was created c/o the EuropeanCommission.


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In particular, it is suggested that one of the major prerequisites for the identification of prioritiesagreed upon by all the interested countries and parties, and for the creation of the conditions for abetter service delivery, would be a systematic classification of services and segmentation of targetusers, in order to assess the attractiveness and convenience of alternative ways of allocatingresources (especially, public funds) among segments.


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1. Background, characteristics and expected contribution of this report

1.1 Background

The preliminary phase of the project, conducted by five European countries (Germany, Greece,Ireland, Italy, Sweden), consisted in the collection of data 2 and information about the currentstatus of the market of support services to SMEs in each country (the original reportsdescribing the various research surveys are made available separately 3).

The participating organisations were the following: Deutsche Ausgleichsbank (DtA) andDeutscher Industrie und Handelstag for Germany, Eommex for Greece, Enterprise Ireland forIreland, Unioncamere for Italy, Swedish National Board for Industrial and TechnicalDevelopment (NUTEK) for Sweden.

Based on the analysis and a preliminary interpretation of the country reports findings (derivedfrom data collected with different methodologies and according to different research criteria bythe various countries), combined with the interpretation of the most relevant research literatureon the subject and of previous reports and experiences, the report provides a series of tentativeconclusions and recommendations.

1.2 Characteristics and expected contribution of this report

The characteristics and the expected contribution of this report can be evaluated from two majorperspectives:

as a summary of other reports, and apart from our own weaknesses, this report inevitablysuffers some of the limitations of those reports, that we briefly summarise here:

the findings contained in the reports are only related to the information collectionactivities conducted for this specific project 4, and do not take into consideration a verysignificant amount of other potential contributions to the issues of interest (in particular,reports produced by the Commission in previous years, experts opinions, reportsproduced by qualified research institutions and all the relevant academic and managerial

literature on services to SMEs)

in order to compare the various reports findings (which was one of the major objectivesof our assignment) we had to significantly rely on our own judgement (that can obviouslybe biased), since the reports were, in fact, not comparable (lack of homogeneity in termsof structure, type and dimension of the samples of respondents, ways in which theinformation was collected, manipulated, analysed and presented and, in particular,measurement scales adopted or not adopted); this was a result of the fact that although

2 The specifications for the phase of information collection are presented in Appendix 1.3 These reports will also be accessible via the Enterprise DGs website concerning Concerted Actions:http://europa.eu.int/comm/enterprise/entrepreneurship/concerted_actions/index.htm4 Apart from one report, that mainly refers to a research project conducted before the beginning of our project.


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a common methodology was agreed by the working group, the studies in fact respondedto the different situations in the different countries and consequently developed differentapproaches.

as an account of a process in which a co-operation among different countries was attempted,and as a memorandum of potential methodological solutions for the future, we think that the

report submits to the attention of the Commission and of all the interested parties somepotentially interesting issues and proposals.

Overall, we believe that the experience and the process that originated this report were verystimulating and fruitful, especially in view of future initiatives aimed at:

providing SMEs and all the interested parties with effective and applicable solutions

using in the most efficient way the resources made available by the Commission.


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2. Comparisons among countries, following the country reports structure

In this chapter we attempt a comparison among countries, with reference to each major issueaddressed in the reports. The limitations mentioned in the previous chapter (in particular, lack ofhomogeneity in the various reports structure) suggested to limit our comments to a concise

description of the most evident aspects: each countrys picture will be covered in more detail inthe next chapter and, in any event, it would have been redundant to replicate the exhaustiveness ofthe individual country reports, that are selectively accessible by all the interested parties.

2.1 General overview

It is clear that the countries of interest have their own economic background and context thataffects positively or negatively their performance in delivering services to SMEs.

While Germany has a consolidated economy and a leading position in the European consultingindustry, the young economy of Ireland is relatively more open, dynamic and subject, to someextent, to the other economies fluctuations.

Another case is Greece that, after having experienced a difficult economic period, hasundoubtedly improved its position in the European context; other peculiar characteristics of itscontext are the high concentration of the most important industry sectors in the Athens andThessaloniki area and a shortage of specialisation in information technologies.

Italy, Germany and Sweden have quite stable economies, significantly developed in the servicearea. In particular, Sweden has a well organised public sector, that parallels equally dynamicprivate initiatives.

The overall picture that emerges from all the reports shows a significant growth of the servicessector, both in terms of number of new companies and in terms of new jobs: statistics from somereports (i.e. Germany, Ireland and Italy) confirm that revenues and turnover have beenincreasing over the last four years.


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2.2 Demand structure and behaviour

Support services were considered both from the point of view of the supply of services and theperception by the users (demand).

A relatively common demand characteristic that emerges from all the reports is a lack ofmanagerial attitudes and skills, normally balanced by a strong entrepreneurial drive that, however,needs to be supported, especially during the start-up phases (public agencies, especially in Swedenand Germany often perform this tutoring role).

The most common conscious reason why firms ask for help is a lack of specific know-how inthe different areas of management but, on the other side, firms are quite sensitive to the price ofservices: the ratio price/quality is perceived to be too high in most countries (notably in Greece,Ireland and Italy).

This is probably due, to some extent, to the fact that the value of services is not adequatelyperceived in these countries, while in Germany and Sweden firms tend to appreciate this valuemore easily.

An underlying cause of the inability to appreciate the value of services could be represented by apoor visibility of the service providers: SMEs often face difficulties in the identification ofsuppliers that can satisfy their needs, both in terms of skills and in terms of willingness to providethe services in the required way: this finding is particularly evident in the Irish and Greek reports.

More frequently, in all the interested countries, the interaction between SMEs and providers istriggered by traditional (but very effective) factors such as word-of-mouth. On the contrary, other

communication tools like traditional advertising and Internet have a marginal impact (in somecountries like Italy, this could also depend on the fact that professional organisations in mostsectors are not allowed to advertise themselves).

Another obstacle to a mutually beneficial interaction between SMEs and service providers isrepresented by the fact that firms do not have any assurance about the characteristics and qualityof services, nor they can use relatively objective criteria for assessing them: this aspect ismentioned in all the reports, except for the Swedish one.


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2.3 Most (and least) required services

In the figure on the following page we tried to summarise and compare the information and datacontained in the various reports, with specific reference to the type of services required by thepotential users 5.

The information about this figure is based on questions that vary slightly from country to country.On a common ground, the questions are: What are the services needed by your enterprise? How often do you use these services?

The services most in demand are those related to the financial, accounting and legal sectors, thatare perceived as (and normally are) vital for the firms, and often are compulsory 6.

It is relatively strange to see that training and education services 7 are not very popular, taking

into account the fact that firms claim that the lack of specific know-how is one of the mainreasons why they ask for assistance.

It is more difficult to interpret the performance of other services. Obviously, the choice ofservices depends both on the firms characteristics and the economic context in the differentcountries (including suppliers structure), but taking into account the lack of homogeneity in thecollection, manipulation and presentation of the original data, any interpretation from our part ofthe reasons why some services are more or less in demand would be very arbitrary.

We therefore leave this task to the originators of the data, who know their country situation muchbetter than us, and we limit our contribution, as far as this aspect is concerned 8, to a simple

description of the histograms 9:

in Germany there is a significant demand for most services, with the exception of training andexport assistance

in Greece, the demand seems to be particularly relevant for marketing/sales and financial/legalservices

in Ireland, the demand seems to be, overall, relatively smaller, except for technical servicesand export assistance (in addition to financial and legal services, which are very popular

everywhere)

5 As already mentioned, the information presented in the reports was not very homogeneous, also in terms ofstatistical reliability (please see, for example, the very small sample of firms surveyed in Ireland). We therefore hadto compromise from various standpoints, in order to make data comparable: classification of services (number andtype of aggregations), adopted scales and scores assigned to the various countries on the various service categories.In some reports some data were missing, and therefore could not be considered: this does not mean that the relatedservices were not requested or offered.6 Please refer also to the classification we had suggested in the interim report of 2 December 1999, that howevercould not be adopted in this summary.7 Please refer also to the proposed classification presented in Annex 2.8 Our comments and interpretations will be mainly included in the 4th chapter.9 We do not comment the other category, since it includes various types of services.


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Fig. 2.1 Most (and least) required services

0

1

2

3

4

5

6

7

Inform

ation

Auditing

Financial

Training

Marke

ting

Technic

alLegal

Sales

Export

Other

Germany

Greece

Ireland

ItalySweden

1:leastrequired

-

7:mostrequired

in Italy and Sweden firms seem to require similar services, except for sales (higher demand in

Italy) and export assistance (higher in Sweden).

Overall, the reports point out that a better specialisation, accessibility, reliability and efficiency ofsuppliers would probably facilitate a higher demand growth.

2.4 Suppliers characteristics

The role played by the public and semi-public sector versus the private one is variable dependingon the country considered.

Sweden seems to be the best organised country from this perspective, with a quite wide range ofsupport services provided at both national and regional levels. In Ireland the public agencies playa crucial role in assisting firms in the various stages of their development.

Other countries like Germany and Italy have more diversified public structures, probably due tothe relevant complexity and limited homogeneity of their economic systems (please refer also tothe next chapter): overall, the public sector has the advantage of a more homogeneous geographicdistribution of services than the private one. In Greece, as mentioned above, the highestconcentration of support service provided by the private sector is in the Athens area. In Italy, in

Milan and Turin area.


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All the countries promote, especially with public initiatives and structures, projects aimed athelping firms development (both SMEs and providers): for example, in Italy there are severalprojects aimed at favouring the creation and development of new entities in the tertiary sector allaround the country (this sector represents about 70% of the national employment).

Different strategies are used by firms, agencies and/or institutions to make themselves visible.

Generally speaking, the public sector has more institutional communication channels with theirpotential and actual customers, the use of Internet is nearly absent or marginal, with the exceptionof some cases (again Sweden).

Private suppliers use more personal and traditional methods for stimulating the demand: seminars,exhibitions, direct marketing, etc.

The respondents to the questionnaires in the five countries complained about the lack of personalcontacts both in the start-up and in the follow-up phases of their development.

As far as the important issue of EU quality standards is concerned, the reports present divergentopinions. In Ireland, Greece and Germany respondents believe that a precise and measurablestandard in service delivery would benefit suppliers in terms of visibility and better perceivedvalue.

In other countries like Sweden and Italy, quality standards are not considered strategicallyimportant for the creation and stimulation of the demand.

The German report suggests that standards should be set and managed by the interestedcategories (within their industry sectors), following some general guidelines established at EUlevel.

In any event, in nearly all countries it seems that there are self regulated codes that guarantee theethics and professionalism of the persons or companies that carry out the services, and sometimesalso minimum standard of quality (which, however, are not precisely defined in the reports).


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2.5 Best practices

The willingness to help and assist new SMEs, especially in their start-up phase, is mentioned in allthe reports: clearly, as said above, these initiatives are especially carried out by public entities.

As far as the visibility and promotion of suppliers are concerned, Eommex in Greece andUnioncamere in Italy seem particularly active:

Eommex created a co-operation network between the public and private sectors, and hostssuppliers on its web site, in order to facilitate their visibility and accessibility

Unioncamere created and maintains an electronic directory (Repertorio) of suppliers on itsweb site.

Other Italian programs favour the creation of SMEs on a national scale:

the SEPRI (Servizi Promozionali per le Imprese)Project is co-financed by the European

Union with the aim of assisting 1000 firms in the start-up and consolidation phases

the LETE (Lecce-Teramo)Project aims at favouring technological innovation and processesand at improving the SMEs financial management skills.

In Germany, in addition to the national programs that support and assist the youngest firms, theDtA/DIHT (Deutscher Industrie und Handelstag) sponsorship model seems to be particularlyinnovative: it is a sort of voluntary organisation of tutors or coaches to new firms that want toimprove their competitive position (the organisation is made of professional consultants who areavailable to freely help SMEs that require their assistance).

Ireland too has interesting national programs aimed at supporting SMEs.

In particular, Enterprise Ireland is a new development agency with the specific purpose ofproviding a one-stop-shop-service addressed to some key managerial functions of the assistedfirms: strategic planning, manufacturing processes and marketing.

Sweden is among the countries with the highest ratio of per-capita investments in technology, andis planning the realisation of new programs in this area.

The country aims at reducing the importance of public intervention in the service sector andpromotes the development of clearly defined professional services (including the specification ofthe time needed to perform the services), in order to optimise the use of firms resources.


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2.6 Proposals

Even though each country differs from the others in terms of socio-economic and politicalcontext, all the reports seem to share the opinion that the development of the service sectordeserves a rational and systematic attention 10.

The major issues discussed under this chapter are the following (please see more details in thefollowing chapters):

the improvement of the visibility of services a better territorial distribution of services the definition of quality standards or, at least, of common guidelines for the assessment of

service quality and performance the creation of research forums the definition of national fiscal and/or financial policies aimed at favouring the development

and the consolidation of the service sector.

The German report suggests the creation of a forum on a EU scale, with the purpose ofconducting research projects on the current and projected market situations. It also suggests thecreation of a Commission of experts who would have the task of discussing and addressing, at theEU level, new economic policies and market strategies. Furthermore, Germany proposes to makeavailable to the other partners its experience and the efficiency of some of its agencies (such as thevoluntary assistance to firms).

The Greek report emphasises the importance of improving the visibility and the quality of services(and therefore, of the skills and competencies of service providers), in order to improve the

competitiveness of the SMEs system. It suggests the definition of quality standards that couldcontribute to a more homogeneous market structure.

The Italian report suggests the creation of a communication network among EU countries inorder to make the service sector more European11. It also points out the need for a betternational organisation of this sector, that would also address a better homogeneity of theterritorial presence of suppliers, in order to make services more accessible to the SMEs.

Finally, the forum project is also sponsored by the Swedish report, that also promotes a bettersharing of know-how among the various economic actors in the different countries: it would be

useful to launch a research project sponsored by the EU, specifically addressed to a betterexploitation of information technologies (and, particularly, of the new media) for improving thesectors performance and competitiveness.

10 As a matter of fact, this opinion reinforces our conviction that research programs in this area should also beconducted according to systematic and homogeneous methodological approaches.11 Some experiences already exist in this area: please see, in particular, the Netprise project, designed and managedby an Italian consulting firm and sponsored by several Italian and German Chambers of Commerce (we are addingthis piece of information, not contained in the Italian report).


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3. Summaries by country

In this chapter we present a detailed summary of the information contained in the various reports,arranged by country and, within each country, by subject.

The classification of subjects corresponds only in part to the reports structure 12 and theinformation is presented in tables, in order to facilitate comparisons and an overview of eachreport in few pages 13.

12 For analytical purposes we found useful to classify the information, both for the supply and the demand, in thefollowing categories (often used for designing and interpreting research frameworks including questionnaires):structure, behaviour and dynamics, performances (for the supply) and degree of satisfaction (for the demand).13 However, especially in this chapter, we tried to be as objective as possible in summarising the comments andconclusions of the five reports, limiting our own comments only to some cases in which the reports findings couldsound contradictory: also the language and the style reflect this choice, and therefore could seem, in someinstances, rather inconsistent with those adopted in the other chapters.


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3.1 Germany

Germany: Supply sideStructure Kind ofsuppliers and

servicessupplied

Type of

providers14

The industry of management consulting is extremelyheterogeneous in terms of structure and size of firms. Apart

from the independent consultants, there are medium-sizeconsulting firms as well as large consulting companies. The structure of the consulting industry is characterised by a

large number ofyoung enterprises

Characteristic of themarket(public/priv.)

Public and private sectors are both effective and organised.The private sector has a leading position in Europe for commercialmanagement consulting.The public sector consists of:

Chambers of Handicrafts and associations of the craft sector Deutsche Ausgleichsbank. Kreditanstalt fr Wiederaufbau (KfW)

In the semi-public sector: Chambers of Industry and Commerce, Euro-Info-centres; Reorganisation and Innovation Centre of the German

Economy.There are other support institution such as: Federal Agency for Information about Export; Industry Associations; Credit Institutes; Local technology and start up centres; Municipal economic development agencies.

Geographic

profile

Presence on

the territory

Providers are dispersed over the entire territory of the Federal

Republic of Germany, but there are clusters in the metropolitanareas.Size andimportanceof theservicessector

Totalturnover

18.8 billion DM (referring only to the private providers).

Percentage ofGDP

Number ofEmployees

Size of firms Average

turnover inEURO

Averagenumber ofEmployees

Legal issues Specialregulations15

In Germany there are no barriers to entry in the consultingindustry. No prerequisites are needed for practising a consultingactivity. There are no legally recognised professional standards.Every provider can use the qualification of ManagementConsultant regardless his experience and/or qualification.

14 Individual consultants, small firms, etc. providing a single or few kinds of services vs. a huge range of differentservices.15 Grants and/or other incentives, included special agencies set up for that purpose.


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Germany: Supply side (continued - 2)Behaviour anddynamics

Methodsused bysuppliers to

makethemselvesvisible

means of direct communication such as recommendations,references, personal contacts, seminars, etc. are used ratherregularly

means such as presentations on the internet and expertconferences, direct mailing, etc. are used rather sporadically more generic means ofadvertising (newspapers, phone books,

etc.) are practically never usedThese choices reflect what consultants think about the effectivenessof each way of communicating.The survey shows that consultants seldom advertise individualservices in particular.

Relationshipsand co-operationbetween theparts

The majority of consulting firms surveyed delivers servicesboth on call of their customers and based on appointmentsclearly contractually set ex ante

Usually the location of service delivery is the business locationof the enterprise

seeking advice Transparency (price)

Most consultants stick to the common practices in theconsulting industry. About one third of the firms surveyedarranges prices depending on individual preferences.

Most consultants deliver the service personally (the support ofother parties is often seen by customers as a probable increaseof costs)

Need for EUstandards

It is a largely shared opinion that precise and measurablequality standards would lead to an expansion of the demandfor consulting services.

The majority of suppliers (53.8 %) of management consultingservices thinks that introducing minimal standards of qualityon a European level is a reasonable approach, particularly inthe areas of advising and training.

the suppliers consider trademarks and quality standards as themost effective means toward a better information about thequality of consulting services.

Performances Mainproblems

It is almost impossible for providers to make the value of servicesvisible to potential customers before its concrete delivery.

Visibility Although the situation is not dramatic, the visibility of providersseems to be one of the main problems (firms point out difficultiesin finding a suitable provider for the service they are asking for)

Ability to

meetcustomersrequirements

Some customers complain about a mismatch between the

service they would have needed and had asked for and the onethey got. Suppliers emphasize the importance of professionalism in

their dealings with customers and maintaining flexibility whenchanges in the tasks performed become necessary duringservice delivery.

Overall performance is generally judged as somewherebetween good and satisfactory

Presence ofself regulatedcode of ethicor standards

With reference to quality standards, the sample considered showsthat almost 60% of consulting firms use criteria developed only fortheir own firms. Half of the consulting firms complies with thenorms customary in the industry. ISO 9000 has a very lowimportance, relatively speaking. An important issue is themembership in the BDU. Please refer to par. 4.1.2.1 of the Germanreport.


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Germany: Demand sideStructure

Sector (mix) Presence onthe territory

Size of the

demandsector

Total

turnover

Percentage ofGDP

Number ofemployees

Size of firms Averageturnover inEURO

Avg. numberof employees

Behaviourand

dynamics

Reasons forlooking forexternalsupport

Consulting services are typically acquired when significantchanges have to be managed or have to be coped with.

From the survey, the main reasons seem to be: Lack of know how (74.1%) No resources (quantitatively) (70.5%) External services are less expensive (30.7%) Quality and speed advantages ( lower percentages)

Methodsused to lookfor a serviceprovider

The users in the survey usually search actively for their providers.In this search, they pay particular attention to recommendationsof other people.When looking for suitable consulting firms, users do not react very

frequently to marketing.Firms (especially small and medium-sized ones) have a certainpreference for obtaining the services they need from a providerlocated in the same area (region or Bundesland), but realdifferences emerge between services obtained in Germany andthose obtained abroad.

Need for aEU qualitystandardsystem

It is a largely shared opinion that precise and measurablequality standards would lead to an expansion of the demandfor consulting services.

The majority of users (54.9 %) of management consultingservices thinks that introducing minimal standards of qualityon a European level is a reasonable approach, particularly in

the areas of advising and training. Users emphasize the opportunity of a clear definition of costs

and benefits


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Germany: Demand side (continued - 2)Satisfaction

Main

problems16

Part of the (potential) needs for consulting services does notmaterialize into actual demand. This is to a large extent aconsequence of the fact that consumers have great difficultiesin finding suitable suppliers (particularly in consideration oftime and cost restrictions)

There are significant information asymmetries beforecontracts are written.

How servicesare perceivedby demand17

The firms in the sample are largely satisfied with the consultingservices they obtained. External assistance in filing tax returns and dealing with

audits scores highest, followed by advice in legal and contract-related questions.

Most services provided by management consultants, includingservices in their core business, are judged as fullysatisfactory.

The supply of services by management consultants isconsidered to be relatively well adjusted to the needs of the

consumers. There is not a significant gap between firms of different sizes

in the evaluation of suppliers.

16 E.g., do they find the range of services they want?17 Is the service valuable? Does the service meet the real requirements of the firm?


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Germany: Recommendations Best

practices Voluntary control by means of membership in professional

associations Federal Association of German Management Consultants

(BDU) Federal Association of Management Consultants (BVW)The two associations above guarantee the qualification of

consultants in terms of experience, reliability, credits, etc. Certification according to ISO 9000 ff The DtA consulting agency: arranges contacts between SMEs

and competent and experienced consultants on a nation-widescale. The quality is ensured by means of two measures: the control ex-ante of the qualification of the provider the control over the process of consulting

Proposals Only market solutions will be feasible Further research is necessary to define which are the best

instruments for quality control Action plan in three points:

1. Diffusing information: Create a forum for all memberstates of the EU, in which the current situation of themarket for consulting services can be analyzed. In orderto generate a uniform starting situation, the results of thisanalysis should ideally be widely publicized anddiscussed in the EU.

2. Defining policies: In the steering committee of theConcerted Actions, examine the possibility of appointingan expert-group on the EU-level for the purpose ofdiscussing the implementation of market-orientedsolutions.

3. Diffusing best practices: some of the best practices ofeach state could be extended to other member states of

the EU. The diffusion of best practices throughout theEU should be supported in this way.

Actions Several public financed support programmes both at Federaland Bundesland level with: clearly defined goals focused recipients (target) clearly identified providers.


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3.2 Greece

Greece: Supply sideStructureKind ofsuppliers and

servicessupplied

Type ofproviders

Three broad categories:1. Large, exclusively consulting companies

2. Companies of Certified Accountants / Auditors which alsoprovide consulting services3. Small/medium size Service Rendering BodiesIt is worth noting that, in practice, there are no medium size firms(with a turnover between 1.5 and 3 billion EURO).Firms in the first two categories have an annual revenue of morethan 3 million EURO.

Marketcharacter.(public vs.private)

The public providers consist of: Regional administrations Local Government Organisations Development Companies

Chambers of Industry and Commerce Business Innovation Centre; Exporters Association; EOMMEX, concerned with the development of Handicrafts

and Carpet Manufacturers and the provision of technical-financial consultant services to SMEs. Now offers financialcredit services, too.

The private sector is characterisedby a large fragmentation andthe general level of competence is not yet suited to the demand oris too expensive. It consists of: Industry associations Exporters associations Private consultants.Public providersare mainly used to supply information, whileprivate providers are normally preferred for other services.

Geographicprofile

Presence onthe territory

Like the SMEs, providers are mainly concentrated in the areas ofAthens and Thessaloniki.

Size andimportanceof theservicessector

Totalturnover

It was approximately 50 million EURO in 1996 and 77 millionEURO in 1997

Percentage ofGDPNumber of

Employees

About 1,200 employees in approximately 100 companies and many

freelance consultants. Today it is estimated that consultingcompanies exceed 1,500 units.

Size of firms Averageturnover inEURO

837,000 Euro in 1997, with an average annual increase of 29% inthe period 1990-1997


13.2 employees, with an average annual increase of 4% in theperiod 1990-1997

Legal Issues SpecialRegulations

The profession of Business Consultant is not safeguarded. If anindividual has the qualification of a University degree or even aCollege degree and applies for a professional licence to the TaxRevenue Service, is allowed to practice as business consultant.


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Greece: Supply side (continued - 2)Behaviour anddynamics



In general, the tendency is to attract clients through personalcontacts or through the already existing clients; to a lesser degreemodern advertising and promotional methods are adopted.

In particular, generic advertising is practically not in use.The use of Internet and Web sites is a new promotional tool, butstill at an infancy level.


Consulting firms provide their services to SMEs mainly onrequestby the same SMEs.Usually, the meetings between users and consultants take place atthe users premises.Personal contacts and exchange of information between providersand customers is a broadly diffused practice.In general, services are personally provided by consultants.

Transparency (price..)

The pricing policy is usually based upon mutual agreementThe methods used for pricing are ranked below:1. mixed system of fixed fees and commissions depending on

results (33.9%)2. fixed amount (22.0%)3. list price for the various types of services (18.6%)4. per occupational hour of the Service Body (10.2%)

Need for EUstandards

The large majority of providers consider the introduction of an EUcode of ethics a desirable approach.

PerformancesMainproblems

Consultants act without clear aims or direction. This meansthat transparency does not exist. Everybody claims that hecan offer qualitative services with concrete results, but doesnot specifically mention what those results could be or howthey could be measured.

The providers do not perform any systematic promotional orcommunication activity.

Suppliers are very fragmented; smaller providers andindividual consultants do not adopt any systematic method formaking their level of qualification recognisable.

Visibility The absence of a satisfactory degree of visibility of providers andavailable services (including information about publicly financedprograms) is one of the main problems.

Ability tomeetcustomersrequirements

It seems to be quite low (but it could depend on the little awarenessthat SMEs have of their own needs)

Presence ofself regulatedcode of ethicor standards

The quality standards applied by consulting firms in the provisionof their services are ranked below: Standards developed by the consulting firm itself (58.5%). Standards established by the professional association of

Service Companies (22.6%) ISO standards (13.2%) Other standards (5.7%).


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Greece: Demand SideStructure Sector (mix)


The largest number of potential users is concentrated in the areasof Athens and Thessaloniki (52.1%), except for the Trade Sector,in which most SMEs are located in the periphery of the country.

Size of thedemand

sector

Totalturnover

Percentage ofGDP

Number ofemployees

Size of the

firms

Averageturnover inEURO

Average n. ofemployees

Behaviour anddynamics


The report does not contain this specific information, but the lackof know how and resources seems to be the main reason

Methodsused to lookfor a serviceprovider

SMEs usually find the provider they need through personalrecommendations and direct contacts.At the local level, public bodies are used to collect informationabout regional, country or European support programmes

Need for aEU qualitystandards

The large majority of SMEs considers the introduction of EUquality standards a desirable approach

Satisfaction MainProblems

Due to a significant lack of visibility, it is often very difficultfor SMEs to find an appropriate provider for the service theyneed.

Lack of resources (in terms of necessary capital) for usingsupport services.

Lack of knowledge and goals (planning): SMEs are oftennot able to see the value of services (as well as theirusefulness) because they do not know what they really need.

The small size of Greek businesses

How the

service isperceived bythe demand

The SMEs generally consider that the level of services provided to

them is low.The study shows that, in the opinion of SMEs, consultants do notunderstand their true needs.


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Greece: Recommendations Best

practices ISO certification for the internal organisation Continuous update on developments, seminars, conferences

and other relevant eventsProposals

Actions 1. Information Dissemination Promotion

Dissemination of the results of the research on providerslocated in the various Regions . Publishing in the Daily Financial Press of the conclusions

of the Research. Organising meetings to inform SMEs about suppliers at a

Regional level.2. Common European Policy

Defining European quality standards for all types ofservices provided.

Defining, at least tentatively, a common price list for theservices provided.

Designing an European program for assisting firms(SMEs and Micros) in accordance with the criteria of theresearch, in order to facilitate the access to the servicesrendered by providers.

3. Joint advertising and promotion of the services renderedby service firms at a regional level EOMMEX will take the initiative, in co-operation with

the collective bodies of providers, to draw up a Code ofEthics.

EOMMEX will restructure and enrich the providersregistry.

Availability of the Registry on the Web and creation ofpages in Greek and in English.

Creation of a database at EOMMEX that will contain

information material necessary to the providers. TheDatabase will be linked with a common EuropeanDatabase.

4. Common One Stop Shop Information and Service Units Examination of the possibility of a linkage among the

existing European One Stop Information and ServiceUnits.

Informing and training the staff of these units forimproving the level of services and the exchange of bestpractices.

5. Comparative evaluation of best practices Best practices for SMEs

Best practice for providers Comparative evaluation for SMEs Comparative evaluation for providers

6. Within the framework of the National Conference for SMEs,organised by EOMMEX, the level of co-operation betweenSMEsand providers should be examined, as well as theprospects for a qualitative improvement of their co-operation.


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3.3 Ireland

Ireland: Supply sideStructure

Type ofproviders

The report mainly focuses its attention on public supportagencies and their services.

Historically, Chambers of Commerce never had a strong role The Public Agencies are:

1. Enterprise Ireland that provides support and service tothe key strategic functions of the firm: strategy assessmentand formulation, research, development and design,production and operations, marketing, human resourcesand finance.

2. City/County Enterprise boards. Established in 1993,these agencies provide a wide range of financialassistance involving a mixture of capital, employment andfeasibility study grants.

3. FS (Training and Employment Authority): another

agency that undertakes initiatives targeted to smallbusiness. Some of these initiatives are DiagnosticProgramme, Co-operative Development Unit andShannon Development exclusively designed for theShannon area.

Kind ofsuppliers andservicesoffered

Character. ofthe market(public vs.private)

Based on the report, we can break down the suppliers according tothe answers provided by firms with reference to their use ofdifferent types of consultants (even though these data do notprovide the actual breakdown of the various typologies):38% of firms interviewed use public institutions12% semi-public institutions25% private companies25% private individual consultants

Geographicprofile


There are no specific data on this point: however, the report statesthat firms look for providers practically everywhere:1) in the same country2) in the same region3) in other regions4) in foreign countries(differences can not be considered significant, due to the small sizeof the sample)

TotalturnoverPercentage ofGDP

Size andimportanceof the servicesector

Number ofEmployees

The data available is the number of small firms and VATregistrations over the past five years, without a breakdown for theservice sector. Overall, there is a sustained upward trend in thenumber of small businesses.


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Ireland: Supply side (Continued - 2)Averageturnover inEURO

Size of firms


Legal issues Specialregulations

There are a lot of public agencies for the service support of theSMEs at the national and regional level (please see above).


Methodsused bysuppliers tomakethemselvesvisible

Direct contacts resulted to be the most used method; presspublications (magazines) are used occasionally and the TV onlyrarely. Other methods considered by suppliers highly effective are:1. Incentives to customers to recommend the services2. Sponsoring of non profit activities..In any case, the majority of suppliers (63%) provides servicesbased on customers request.

Relationship

and co-operationsbetween theparts

SMEs complain about the fact that there is a lack of co-operation.

The majority of SMEs discusses the project with service providersupon completion of the project, but little emphasis is placed onassessing the overall service performance.


63% of providers do not have a specific fixed pricing policy: pricesare normally determined on a per hour basis. This is in contrast tothe requirements of SMEs which would prefer a fixed pricequotation.


Some of the problems service providers encounter include: SMEs do not realise the usefulness of support services SMEs do not have the necessary funds to afford support

services SMEs are too small to understand the services provided The supply is considered too generic and not targeted to the

firms needs.70% of service providers indicate that quality standards forservices are desirable.In particular, they would welcome quality standards in the trainingand technological area.

Visibility The most used mean of communication is direct contact, butsuppliers also sponsor non profit activities.Government promotional publications have significant dispersionlosses.

Capability ofmeeting thecustomerrequirements

Among the actual users (contrary to the expectations of non users see above), the opinion is that the service provided matches fairlywell the customers needs. 60 % of small business interviewed saidthat the service sufficiently matched their needs.

Presence ofself regulatedcode of ethic

Based on the report, there is not a set of self regulated code.However, there are quality standards that service providers applylike the compliance with ISO9001 regulations and selfdeveloped standards.


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Ireland: Demand SideStructure

Sector (mix) The services most required are (from the questionnaire, in order ofimportance):1) Loan Grants and Subsidies2) Trade Fairs3) Export Markets4) Promotion of Networks5) Conferences & Seminars6) Market Exploitation7) Technical Information8) Information Packages9) Supply Chain Development10) Technical information11) Business Planning

Existence onthe territoryTotalturnover

Percentage ofthe GDP

Size of the

demandsector

Number ofemployees

The only data available is that 235,000 new jobs were created since1996. This figure includes the service sector too, since the reportdoes not distinguish it separately.Overall, the trend is an ever increasing number of new employeesevery year.

Size of thefirms



Behaviour and DynamicsReasons forlooking forexternalsupport

The main reasons are:1. Lack of know how2. Lack of capabilities3. Lack of time4. expectation of higher quality services with the use of external

resourcesMethodsused to lookfor a serviceprovider

SMEs carry out active search for providers, and recommendationsby third parties and word of mouth are the most used methodsOnly few businesses identify the providers through advertising.

Need for a

EU qualitystandardsystem

It is strongly felt that a EU quality standard can contribute to the

improvement of the perception of quality and, consequently,expand the demand for services especially in the areas of training,technology and logistics


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Ireland: Demand side (continued - 2)Satisfaction

Mainproblems

SMEs require a professional, timely and effective approach, buthalf of the businesses investigated say that the main problem isthe definition of the quality required in the provision of theservices.Another big issue is the identification of a suitable provider. Lastbut not least, many firms do not have the necessary funds to hireproviders, do not know where to find them and a portion of thesample do not consider them reliable.

Howsuppliers areperceived bythe demand

The service is considered valuable (again, by the actual users).Moreover, relative to the quality level the cost of the service isconsidered fair by 70% of the business and high by 30% ofthem.

Ireland: RecommendationsBestpractices

It is recommended that a forum of EU members should beestablished in order to assess the feasibility and implications ofintroducing a European Quality Standard for Service Providers.

Proposals Since the main findings of this report are the difficulty in thedefinition of the quality required in the provision ofservices, the identification of the suitable service providersand the professionalism of the service provider incommunicating with the customer (SMEs say that they wouldincrease their use of consultants if they could be assured of thebenefits), the report suggests the need for a pre-set definitionof quality measures, together with a pre-defined pricingsystem.

The results of the study should be disseminated through theEnterprise Ireland (Technology Ireland) publication, in orderto increase the awareness of the findings.

Actions In particular, the results of the findings should be made availableto the Development Agencies e.g. Enterprise Ireland, IDA,Shannon Development, Udaras Na Gaeltachta, also in order todefine the Irish position in the development of a pan EuropeanInitiative on Quality Standards.


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3.4 Italy

Italy: Supply sideKind ofsuppliers andservices

delivered

Type ofproviders

In 1998, the professional service sector grew to take on 100,000new employees. In 1999 business grew 9%. The service sectormakes up 74% of the total (2.5 million units) and employs 68% of

the total workforce (4.4 million workers ). The laws are inadequatefor the sectors improvement and the taxation is particularlysevere.

Kind ofsuppliers andservicesdelivered

Characterist.of the market(public/priv.)

The market is characterised by a high fragmentation in the privatesector that is compensated by a significant and articulated presenceof public agencies.

Public1) Chambers of Commerce whose principal activities are:

Information (registering enterprises, etc.) Vocational training aimed at entrepreneurs, managers,

commercial agents Employment and enterprise creation

Financing Innovation Environment International relations Regional development for weak areas

2) Service Centres promoted by local administrators, Chamber ofCommerce and entrepreneurial associations. BICs are a goodexample of this category. The main support activities are: Basic information, data banks and promotional activities Legislation, technical and market information Business planning, advice on functional area and

development of business contacts SMEs management, start-ups and targeted training Promotion of networking, internationalisation

3) Entrepreneurs associations as Confindustria whose activities are basic information,

professional information, consulting, vocational training,financing.

National Confederation of Artisans, Small and MediumSized Enterprises.

Italian Confederation of Small and Medium SizeEnterprises

Private ConsultantsAs said earlier, the private sector is highly fragmented: 654,000out of 668,000 enterprises have less than 10 employees with anaverage number of 1.6 employees per business. It is interesting tonotice that large private consulting firms hold a large percentageof the market. The kind of services offered depends on the size ofthe business.

BanksThe services offered are: Fee consulting Management of exchange risks Factoring and leasingThe relationship with the SMEs is fragmented. A single businessuses three or four different Banks.

Underwriting syndicatesExport consortia


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Italy: Supply side (continued - 2)Geographicprofile


Also for this dimension it is convenient to make the distinctionbetween Public and Private.

PublicThe Chambers of Commerce are located in every single province;the problem is that the ratio between the number of firms and theChambers is different from province to province due to the various

development stages of the areas considered.As far as the service centres are considered, things are slightlydifferent, since their concentration is quite higher in the north thanin the centre and the south/islands. Anyway there is at least one ofthem in every region.

PrivateThe data regarding the geographical distribution of the servicecompanies does not tell us anything new, that is, the mainconcentration is in the more developed provinces of the north(Milan, Turin, Bologna, Modena, Vicenza, Brescia, Vicenza,Bergamo, Padova, Florence) and the centre (Rome).The dynamic data about the variation in service companies over

the last eight years show that many southern (and island)provinces are at the top of the list (Potenza, Caserta, Agrigento,Nuoro), but this is not enough to compensate for the unbalance inthe concentration of the services accumulated so far. Thegeographic concentration of supply shows a distinct mismatch withthe distribution of the demand expressed by SMEs.

Size andimportanceof the servicesector

Totalturnover

There are 2,500,000 business registered in this sector. Totalturnover of 70 billions of EURO. The trend is increasing.

Percentage ofGDP

Number ofEmployees

The number of employees in 1999 is 6,500,000. The trend isincreasing.

Size of thefirms

Averageturnover inEUROAveragenumber ofEmployees

The average size is just 1.8 employees per company if we considerthe service sector as a whole. The same fragmentation is found inthe support service sector with an average of 1.6 employees.

Legal issues Specialregulations

There are many regulations at national and regional levels thatgive incentives to SMEs for the acquisition of the promotedservices, the certification and the improvement of quality, theincrease in productivity, the diffusion of technology and

innovation, the improvement of safety in the workplace, etc.Contributions can amount up to 50% of the cost of specificservices.


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Italy: Supply side (continued - 3)Behaviour anddynamics



Chambers of Commerce and Trade Associations pursue thevisibility objective through the assistance of special intermediaryentities, which connect the productive sector to the institutional

organs.Similarly, the underwriting syndicates use agents.Banks count on direct relationships with clients and also on directmarketing and press advertisements.Private firms do not have an adequate strategy: they mostly counton direct relationships with customers and word of mouth amongstclients. This can be explained by the small size of most firms.


It is evident from the report that when the service is provided bythe Chambers of Commerce or other public institutions there is alack of personalisation. On the contrary, the private service sectorshave the advantages of a fairly personalised service, consequentlythe relationship with businesses tends to be less problematic.

Transparenc

y (price..)

The most used system to price services is a mixture of fixed

remuneration and commission on results. From the survey, lumpsums and per hour rates prove to be widely used as well.


The main problem from the supply side is the presence of naturalmonopolies (because of laws and other regulations) for accessingstate subsidies, and this does not make the relationship betweendemand and supply very easy.The problem can be summarised by this recurring description:the consultant is seen as somebody who is able to secure acontribution rather than a professional who can solve the firmsproblems.

Visibility A real strategy directly aimed at improving the visibility of

services offered is practically absent. This is partially due to theoverlaps between public and private provision and partially to theabsence of quality standards.As a result, the service offered by consultants, Service Centres andChambers of Commerce are little known.


The services offered fail in terms of adaptability to the specificneeds of the customers.

Presence ofself regulatedcode of

ethics


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Italy: Demand sideStructure

Sector (mix) In the report there is an in-depth description of the manufacturingsector, that is the most important one.


The North West is the geographical region with the greatestnumber of companies (more than 1,000,000) and number ofemployees (4,900,000).The North East and the Centre have similar characteristics both interms of companies and in terms of employees. The North Eastmake up 21% of the total workforce of 3,300,000.The South is the second in terms of number of companies (994,000entities 28%) but last in terms of employees (2,500,000).

Size of the

demand

sector

Totalturnover

Interesting to notice that 7,000 medium size firms areimplementing changes in terms of rationalisation, in order tocompete internationally. Moreover, 1,000,000 small businesses areorganising themselves in networks and districts, also in view ofsharing the costs of consulting services.

Percentage ofGDP

Number ofemployees

Size of the

firms


.


From the demand side it is estimated that there are 6.5 employeesper company. 88% of the businesses have less than 10 employees.



Not directly explained in the report. We can draw an assumptionby following the general classification borrowed in the report fromM. Porter: support services (financial, training, standardisation and

technical services). activities defined transversal (company organisation,

strategic planning, telecommunication systems). services connected to primary activities (organisation of

production, logistics, marketing).The smallest companies show a low demand for services and whenthey need them they try to internalise their provision. Similarbehaviour is observed within medium-size firms (more than 50employees) even though they use some transversal services.Companies with 10-50 employees make more frequent use ofservices than the other categories mentioned above.

Another classification of the needs for certain kind of services isbased on the stage of the development of the firms. At the start-upand growth stages firms make little use of primary services butrequire post-sales assistance, planning and design; at the maturitystage they demand management training, strategic planning andorganisation.


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Italy: Demand side (Continued - 2)Behaviour anddynamics (Continued)

Methodsused to lookfor a service

provider

Word of mouth is still the most used method for SMEs.


The report emphasises the difficulties in finding generalparameters that suit every support service. Consumer satisfactionand conformity to standards are considered as the bare operationalminimum. The SMEs interviewed said that standards do not reallymatter for the development of their sector. The problem stressed isthat these standards must not go in the direction of creating hardrules that define procedures: more attention should be paid onstructural aspects of the system (i.e. checking that every companyis part of a network, makes regular use of services and professionaltraining programmes, shares the culture and the ethics of theservice sector).

SatisfactionMainproblems

Private providers are considered too costly but the service isconsidered satisfactory compared to the expectations. It was foundthat it is difficult for SMEs to find the very specialised service theyneed, especially when the service requires a high level oftechnology and know how.Conversely, for the public service providers the main problems arethe lack of information on services performed, lack ofpersonalisation and unpleasantness in personal relationships.

How servicesare perceivedby thedemand

The companies interviewed have perceive that the quality level ofservices is middle-low.It is clear that the respondents: are not aware of the usefulness of a consultant consider them unnecessary do not have the necessary funds to hire them consider services too expensive do not consider them reliable do not know where to find providers.Such attitude depends on a negative perception of the return oninvestments in the purchase of consulting services, on mistrust ofexternal provision structures (especially the institutional, publicand associative ones; while Chambers of Commerce have acredit for competency) and on the low level of strategiccomplexity, which reduces the need for specialised services.


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Italy: RecommendationsBestpractices

SEPRI (Servizi promozionali per limpresa Promotional servicesfor the firm) is a support programme for SMEs run by ASSEFORIts aim is to facilitate the access to information and consultingservices in the areas of finance, control, marketing and companyorganisation.

In view of improving the visibility of suppliers a Directory ofprofessionals and firms that offer consulting and training tocompanies was created: the directory is freely accessible on anational level.

Proposals Service companies should connect themselves to aninternational network which controls the flow of informationas much as possible. It is believed that the quality of serviceswill tend to increase in direct proportion with the possibility ofaccessing a communication system that facilitates theexchange of information and the competition among suppliers.The network will act as a leveller in the quality of servicesupply, through the spontaneous interaction of service

companies and consultants. On the other hand, the definition of standards in relation to

specific services is to be avoided, in favour of more creativityand personalisation of services.

Investments in infrastructures and communication (especiallyfor data and information transmission) should facilitatemarketing activities.

Actions An important parameter that should be taken into consideration isthe geographical location of users, since the services required inunderdeveloped area are different from those in the moredeveloped ones.

The analysis of the mismatch between supply and demand shows anumber of critical areas, especially where the entrepreneurial spiritis strong and the needs of companies exceed the availability ofqualified providers.In order to improve the visibility and quality of services acommunication network must be made available so that firmscould know where and how to access the needed services. Thisnetwork should have the same operational standards acrossEurope, its own name and marketing activities. Moreover, thisnetwork should comply with quality procedures, in order to makesure that the information is reliable and exhaustive.The access to information about services should be free, in order toraise the level of exchange and contribute to the improvement ofthe system more rapidly.


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3.5 Sweden

Sweden: Supply sideStructure

Type ofproviders

Accounting firms, organisation and information consultants,technical consultants, PR-firms, staffing services, law firms, book-

keeping agencies, translation services, conference organisers etc.

Kind ofsuppliers and

servicessupplied Characteristic of themarket(public vs.private)

Public1) Nutek and Swedish Trade Council that are mainly concerned

with regional policy implementation, technology projectinitiation and programme co-ordination. The activity is mainlyadvisory on trade relations, export processes and customsregulations. In the survey 86% of interviewed firms nevercontacted these agencies.

2) Almi Business Partner and County Administrative Boardthathas a wide range of services such as advisory services,counselling and programmes for business and marketdevelopment, growth and financial support. 77% ofinterviewed firms never contacted Almi.

3) The Employment Service Agency and the municipalityproviders. Many firms contact these agencies due to the paststrict regulations in the labour market.

4) Universities and Science Parks. Useful for business advisorymatters and R & D programmes.77% of the firms never hadcontacts with these institutions.

Private1) Banks for advisory services, regarding mostly the financial

products: 20% of firms in the survey had several contacts overthe last three years.

2) Auditor/legal advisors: very much used as well. 70% of firmshave regular contacts.

3) Business associations at national level are used frequently. Itis not the same at the local level.

4) Chambers of commerce rarely used.5) Euro Info Centre, established in Sweden to inform and

support small firms and carry out specific programmes. 95%of the surveyed companies had never had contacts with theEICs.It was mostly exporting companies that had had contacts withthe EICs.

Geographicprofile


1. at the national level: Nutek and the Trade Council2. at the regional level: ALMI and County Administration

Board, the Universities and Science Parks

3. at the local level: Employment Agencies and Municipalities.Totalturnover

The total turnover is about 180 Million Euro for the public sectoronly. There was an increase of private firms over the last 4 years.

Percentage ofGDP

Size andimportanceof theservicessector Number of

Employees3,000 people are employed in the public sector. In addition, there

are other 2000 people working at the industry research institute.Averageturnover inEURO

Size of thefirms

Averagenumber of

EmployeesLegal issues Specialregulations

Public grants and the structural funds are managed by the publicsector agencies mentioned above.


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Sweden: Supply side (continued - 2)Behaviour anddynamics

Methodsused bysuppliers tomakethemselvesvisible

The methods used are different and depend on the sector. Almi, forinstance, prints and distributes via the regional offices and otherchannels general information material about the activities andspecific programmes and financial opportunities. Open door daysare organised with speeches and debates about business policies.The municipalities put a lot of marketing efforts on localnewspapers, information leaflets.The private sector uses various tools to keep a closer contact withcurrent and potential customers: participation in businessactivities, local projects, seminars, etc. Overall, personal contactsare often used.Worth mentioning is that all providers have a web site where onecan find general information about them.

Relationshipand co-

operationsbetween theparts

The Growth Agreements are cited as an example of co-operationbetween SMEs and service providers. Although all parties

participated in the process of forming the plan/agreement, thewidespread opinion is that the final draft for agreements are sogeneral that it is hard to identify the various contributions.Several providers mentioned the importance of co-ordination andco-operation between organisations.Several support service companies have contacts with thecustomers 24 hours a day via e-mail.


PerformanceMainproblems

There is a need for a more precise definition of the role of publicproviders.

Publicly financed information and/or counselling systems seldomare used. One conclusion is that providers should be located closeto their customers.

Visibility One of the main findings of this report is that it is easy to find theappropriate support provider and/or information. The only problemencountered with some firms was the access to the services.


Most service companies use questionnaires to find out what thecompanies think about the service. Respondents said that they donot use quality standard because customers do not ask for them,they are satisfied of the current quality of services.

Presence ofself regulated

code of ethic

The associations have their own code of conducts, which regulatesthe work of lawyer and accountants. Other trades have similar

codes, even if not that rigorous.


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Sweden: Demand sideStructure

Sector (mix) The manufacturing companies in the sample are the 39%; theservice-oriented firms are 61%. This is the only classificationavailable. A further classification shows that the services requiredby the manufacturing and service sector are:1) Auditing2) Education3) Book-Keeping4) Technical Support5) Marketing6) Sales7) Strategic Planning


The report splits Sweden into three regions:1) Stockholm2) rebro3) Vsternorrlandthese regions were chosen in order to represent the different types

of regional situations in Sweden.The number of companies are equally distributed on the territoryaccording to the above said classification. However SMEs knowthe regional and local providers and their services/programmesbetter than national ones.

Totalturnover

From a study quoted in the report, it is clear that the demand trendis upward.

Percentage ofGDP

Size of thedemandsector

Number ofemployees

The report does not provide precise figures and considers only thecompanies with 1-49 employees. Two sub samples are considered:1. 1-19 employees (52% of the total)

2. 20-49 employees, (48%)

Size offirmsAverageturnover inEURO

The average turnover for the SMEs involved in the survey isaround 4.8 Million EURO. This figure varies depending on theregion considered, the company size ad the industry. NOTE: thesurvey considered only firms with less than 50 employees.

Avg. numberof employees


Reasons forlooking forexternal

support

The report shows that services like auditing and book-keeping tendto be internalised as the size of the firms increases. Indirectly it isevident that one of the reasons for acquiring the service is the lack

of necessary competence within the firms.Methodsused to lookfor a serviceprovider

The methods used by companies are:1) Recommendations from other companies (80% of SMEs use

this strategy to find the service they need)2) Advertisements (65%)3) Other information material4) Databases5) Internet and direct contacts


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Sweden: Demand side (continued - 2)Behaviour anddynamics


Only 31% of companies said that there is a great need for EUstandards. 44% said that there is no need. This is quite in line withthe general satisfaction and perception of the services offered(please see below).Interesting to note that none of the service providers interviewedcomplies with quality standards.

SatisfactionMainproblems

90% of companies have no problems in finding a suitable serviceprovider.From the survey, however, it is evident that some problems occur.Mainly, some services seem to be:1) More expensive than planned (mentioned by one third of the

sample).2) Below expectations;3) Not professional enough (15% of the sample)4) Of low quality (13% of the sample)

How theservice isperceived bythe demand

The questionnaire asked companies to distinguish between theprivate and the public sector. On average both the services offeredby the public agencies and that offered by the private ones isconsidered valuable and useful. Only 20% of the sample perceivethe service not useful at all.


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Sweden: RecommendationsBestpractices

1. The Swedish Commission for SmallBusiness (a temporaryorganisation), was created with the aim of identifyingproblems and suggesting measures to create incentives forSMEs to grow and make easier the creation of new businesses.

2. TheRegional Growth Business is the main instrument for co-

ordinating and adjusting the policies and exploring newapproaches to the promotion of regional and local industrialdevelopment.

3. Universities not only carry out research and educate, but havethe "third task" of co-operating with the society and informabout their work. In this way, there is a greater exchangebetween companies and academy than before.

4. A gateway (internet portal) called "Answer Direct" wascreated by seven main public authorities. In this website SMEscan find useful information and useful links. Another goodpractice is the SMELINK, especially designed for SMEs togive them an overview of the market and more specific

information to make them stronger compared to largercompanies. Another example is the "Finance Database"especially useful for firms interested in financial aid and thosethat are in the start up phase of their life.

Proposals 1. Clarify the role of public providers to avoid overlapping.2. Adjust service supply to service demand and increase the

knowledge of services.3. Services concerning core functions like strategic planning,

marketing and sales must be process oriented and specificallydesigned for every company.

4. More effort must be made to match supply and demand ofinformation, possibly using databases and internet to increasethe knowledge of the existing service supply.

5. Utilise the positive SMEs experiences with public providers.6. Increase the efforts to facilitate the evaluation of results.

Actions Establish a forum for analysis and research of small businesspolicies. This forum should work as a hub for activities suchas theoretical development, distribution of research findings,policy evaluations, methodological development, workshops,benchmarking projects, etc.

Take advantage from the internet: the EU should start aproject with the main purpose of studying and developing IT-technologies aimed at linking support services to SMEsneeds. Most important in such project would be the activitiesof database management and database construction.

Set up a project with the purpose of overcoming the barriersbetween public and private support sectors and distributingknowledge and experiences concerning how certain industrieshave developed internal professional standards of conduct,quality and membership.


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4. Preliminary interpretation and suggested actions 18

4.1 Why this market is important

The European market of support services to SMEs is quite heterogeneous, in terms of bothdimensions and characteristics, in the five nations investigated by the research studies.

However, one important common trend seems to emerge: the market is significantly growing,both in quantitative and qualitative terms:

quantitatively, the number, frequency and variety of the activities outsourced by firms areincreasing

qualitatively, it is more and more frequent, especially in the most industrially developedcountries, the outsourcing of potentially high value added services.

Relatively speaking, the rate of growth is obviously higher in the countries in which the market iscurrently less developed.

The economic developments of the last decade (in particular, the increasing globalisation),combined with the characteristics of a manufacturing sector largely based on SMEs, seem to beone of the main reasons of this growth.

Taking into account the SMEs major characteristics:

lack of (financial and managerial) resources and significant difficulties in obtaining them a way of doing business that is much more entrepreneurial than managerial in particular, a strategic vision that does not go beyond the short-medium term on the other side, an extraordinary ability of seizing opportunities and, more recently, the willingness to create and/or being part of networks and alliances in

order to better face the increasing need for critical mass in the global markets,

the growth of support services seems to be one of the best ways of overcoming the currentweaknesses and facilitating the creation and consolidation of networks.

18 These notes are almost exclusively based on the findings presented in the research reports provided by the 5member States and only take in minimal consideration other research sources such as the classical studies onservice and service quality (Normann, The strategic management of services; Zeithaml, Parasuraman & Berry,Delivering quality service, etc.). However, contrary to the approach adopted in the previous two chapters, here wetry to provide also our own integrated view from an overall perspective.


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4.2 Why do SMEs need services

The identification of the actual reasons why firms look for external help is obviously important:the comparison between the typical and actual situations in which firms look for external help andthe reasons mentioned by the owners and managers of the same firms when interviewed, can

allow a better estimate of the extent to which firms are aware of their needs.

We see that situations that would command a significant planning activity (especially in order toreduce uncertainties) are frequently addressed as emergencies.

Furthermore, we see that the lack of consistency between expected and delivered service isone of the most frequent problems

Documents

Support Services to SMEs in Germany, Greece, Ireland, Italy and Sweden - A Comparative Study