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SME support factors needed to scale up

By Ivana Rae Almora and Delia Rujing Xu


The growth and scale-up of a business are parts of the objectives of regional authorities in supporting SMEs. Authorities must respond to SME needs adequately in order to identify and resolve key obstacles that obstruct industry sector on their path to development, taking into account the conditions of the current worldwide markets. 

The sudden Covid-19 crisis has caused a radical change in the operating model of SMEs. The pandemic has resulted in a tremendous impact on the development of SMEs and triggered an unprecedented policy response in Europe and throughout the world. Compared to the global average trend, the Eurozone economy as a whole declined in 2020 and sees a slow rebound in 2021. The EU is estimated to recover in 2021 with a growth rate of 3.6 to 4.2%. According to the State of Small Business Wave 6 Report25, 58% of SMEs in Europe have experienced a decline in sales.  

As observed in the study entitled “Business Scaling up needs: A comparative analysis study” published under the framework of the Interreg Europe Scale Up project, before Covid-19, traditional factors that affected the growth and scale up of SMEs were innovation, the lack of skilled workers, difficulty in access to finance and globalisation. After Covid-19, as lockdowns and restrictions led to a surge in online demand and overall business downturn, digitalistion and policy support stand alongside the previous elements as crucial factors.  

The economic situation, development of SMEs and measures to support SMEs in Murcia, Hessen, Attica, Lazio, Lubelskie and Nottingham- before and after Covid-19 are analyzed in the study to contextualize the long-term changes brought about by the pandemic as well as to see what regional development and local government agencies have done to adapt to these changes.

Pre-Covid factors affecting SME development were observed to be Innovation, Financial Assistance and Digitalisation. This trend is also remarked from an EU perspective as Innovation and Access to Finance have been identified as factors affecting the scale up of SMEs before the pandemic. 

In the timeframe of 2020-2021, all six regions saw their economies decline by 5-10%, almost the same rate as the GDP of the countries in which they are located. However, the development of SMEs vary from region to region as some experienced growth as in the case of Lubelskie and Nottingham while the rest of the regions experienced a decline and slowing down of the growth of SMEs in their regions. Similar to pre-Covid factors, Innovation, Financial Assistance and Digitalisation are observed as the main areas which the abovementioned regions prioritize to help SMEs. Meanwhile from an EU perspective, Innovation and Policy Support have been identified as factors currently affecting the scale up of SMEs.   

Based on the analysis of the report, we believe that for SMEs and governments, Financial Policy, Digitalisation and Labor should be the key areas of focus after Covid-19. We give recommendations for these three areas to bring SMEs in line with the changing times. If positive actions are taken in response, the business economy will climb to a new peak. 

Click here to read the comparative analysis in full.