Small business

4.3 Creating public/private partnerships in support of SMEs
Objective: To find new institutional ways of building bridges between the public and private sectors and to gear
up public support for private sector led SME development. 
Mechanisms to achieve this objective include:
• The establishment of trusts. To create a flexible form of funding a development trust can be established
as a vehicle for matching public with private funds. The trust status allows the managers a degree of
entrepreneurial freedom, moving beyond more tightly controlled project based funding to a strategic
development perspective. It also allows different stakeholders to join together their contributions.
• Procurement offices. Public and private interests can jointly establish procurement offices providing data
on supply needs of both the public sector and large firms. It can act as a quality gateway and advice
service to small businesses wishing to do business with public corporations and large private firms; 
• Programmes to encourage corporate social responsibility. Special tax incentives may be given to large companies
to encourage corporate social responsibility programmes in the form of support to local enterprise.
This can include making unutilised parts of their plant available for incubators or the secondment of
personnel to small enterprises. There may also be systems of matching grants to encourage private
sector involvement (in the form of physical, financial or human resources) in non-governmental local
enterprise development agencies; 
• ‘Patron’ type programmes. Where large companies, typically in their local region, are organised to provide
general advice (keeping accounts, cash flow management, suggestions on marketing/distribution)
and act as a ‘mentor’ to start-up or early stage small business. This usually involves no cost to the small
businesses and is seen by larger companies as a corporate contribution to the local economy and local
community.
• Ensuring that SMEs have maximum opportunities to provide services to the public sector by a careful
process of contracting out wherever possible;
• Encouraging public/private partnerships in supply chain development.
EFFECTIVE POLICIES FOR SMALL BUSINESS - © OECD 2004
4. Stakeholder Development
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In India, the Government of India, UNIDO and FIAT initiated a Partnership Programme for the Automotive Components
Industry in 1999, together with a wide range of Indian and foreign public and private sector participants. An assessment in
2001 showed that, in the participating SMEs, a 75 per cent reduction in production lead time and die and cast changeover
times as well as a 40 per cent reduction in production throughput time by reorganising work areas and product flows. A culture
of continuous improvement has emerged in the participating firms.