Small business

8.2.2 Governing principles
Objective: To state the main principles guiding the government in its SME policy.
Major principles that may influence the government’s support to SME development include:
• Principles relating to the criteria for intervention in the workings of the market such as:
EFFECTIVE POLICIES FOR SMALL BUSINESS - © OECD 2004
65

---

- Gaps in information for small firms (markets, supplies, finance availability, sources of assistance);
- Unfair competition, monopoly or restrictions on entry into certain sectors (intervention that causes
displacement, for example subsidies to entry costs into a sector that threatens and generates
unfair competition for existing businesses, should therefore be avoided);
- Excessive costs of compliance with regulation (planning, legislation governing the use of labour and
redundancy procedures, etc.).
• Developing the enterprise culture in society;
• Adding value to public investment;
• The role of the private sector (for example: private sector leadership in SME development wherever
possible, with an indication what this will mean in general);
• The role and status of public and private partnership;
• The creation of markets and sustainable institutions and programmes for business services and
support;
• The role of central government support for regional and local initiatives;
• The development of an appropriate regulatory environment;
• The co-ordination of the work of different government departments impacting on different aspects of
SME development, covering in particular processes of communication, partnering and joint venturing.
How these principles are interpreted and realised depends on the policy approach of governments as
well as the reality of the present stage of transition and development – the conditions prevailing in the OECD
countries are not necessarily found elsewhere. In the People’s Republic of China, for example, they would
need to fit the Government’s notion of a socialist market economy as well as the more pragmatic tasks of
effectively privatising large sections of collective and previously state owned enterprises. They would also
need to reflect the balance of power between local and national authorities and Chinese ways of doing things,
and build on the considerable local achievements in SME development. 
EFFECTIVE POLICIES FOR SMALL BUSINESS - © OECD 2004
8. The Structure of the Plan