Working Paper for Firm Size, Market Entry and Growth (D2.4)

SMEs use in their operations intangible assets (IA) on a large scale. Access to market and hindrances for growth may not be prohibited only by absence of R&D, whereas by lack of organizational capital or information and communication technology (ICT) competence.

This study reviews findings showing that SMEs do not on average use IAs in a profitable way, while SMEs produce IA knowledge spillovers that are important for technical improvement in all firms. The paper shows that, low profit derived from innovations characterize low-market-share firms. It is suggested that a “negative selection mechanism” explains the high productivity growth relative to the low profits.

The paper also reviews literature on opportunities for growth through ICT, which complements the important role that SMEs have in knowledge spillovers.

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