Introduction: Small Medium Enterprises: the backbone of European economy

Marco Polo, an innovative system for the

innovation and social integration. SME are considered the focus for the transition to a knowledge based economy, as set by the Strategy of Lisbon.

The “European Charter for Small Enterprises” approved by the Feira European Council on 19 and 20 June 2000 urges the creation of a friendly environment for the development of the small medium enterprises as the situation “can be improved by action to stimulate entrepreneurship, to evaluate existing measures, and when necessary, to make them small- business-friendly, and to ensure that policy-makers take due consideration of small business needs”.

By considering all aspects, the European Council is committed to work along the following lines for action, that take into consideration the SME needs:

● Education and training for entrepreneurship

● Cheaper and faster start-up

● Better legislation and regulation

● Availability of skills

● Improving online access

● More out of the Single Market

● Taxation and financial matters

● Strengthen the technological capacity of small enterprises

● Successful e-business models and top-class small business support Develop stronger, more effective representation of small enterprises’

interests at Union and national level

Same consideration are made by the OECD [3] that push for the policies for a conducive entrepreneurial business environment and targeted support programmes to enhance the role of SMEs in global value chains.

1.2 SME and tourism

In 2006 [4] almost the 90% of the European 1.8 million enterprises operating in the tourism industry were located in the EU15 and Spain, France, Italy Germany and the UK hosts the largest number among all.

Considering the concentration of tourist enterprises per 10.000 inhabitants, it is registered that the highest value is in Cyprus followed by Greece, Malta and Portugal.

The investigation of the structure of the sector leads to dual structure that can be summarised by the following topics:

● demand is global while supply of goods and services is local;

● limited number of large company organise tourism to different destinations and a large group of small companies is in charge of delivering services at destinations;

● big companies are in charge of organising, transport and information while small companies are in charge of welcoming, hospitality and leisure.

Source: Processed from DG Enterprises, September 2009

The EU tourism industry [5] generates more than 5% of the EU GDP, with about 1,8 million enterprises employing around 5,2% of the total labour force (approximately 9,7 million jobs). When related sectors are taken into account, the estimated contribution of tourism to GDP creation is much higher: tourism indirectly generates more than 10% of the European Union’s GDP and provides about 12% of the labour force.

According to the DG Enterprises study [4], micro-enterprises are the largest number of companies involved in the tourism industry accounting a 90% of share and they are characterised by employing less than 10 individuals and, in general, tourist companies employ an average of 5,5 person.

Despite of the large domination in numbers of the small enterprises, medium and large sized contributes considerably on the total employment.

Graph 1 Dual structure on tourism industry

1.3 Linkages with other sectors

Tourism is an industry where linkages with other sectors are very important.

The induced business that benefit from the positive impacts of the tourism industry are several.

The “Study on competitiveness of EU tourism industry” [4] describes three of this. The first is “attractions” that gathers culture, amusement parks, festival museum and gastronomy, but we can also include local productions.

This class interest this paper as it includes several small enterprises involved in the agricultural and gastronomic business that benefit from the tourist local consumptions of goods along with the handcraft enterprises that supplies goods for tourist business and to tourists as souvenirs.

“Transport” benefits from the traffic generated locally by the tourist flows and “restaurants and cafés” that don’t attract tourism themselves but, once the tourist are there, they will use them.

The High Level Group on Tourism and Employment [6] in 1998 estimated the turnover share generated by tourism including the complementary and ancillary services in which tourism impacts, as described in figure 2.

Graph 2 Turnover share generated by tourism

Source: Conclusions and Recommendations of the High Level Group on Tourism and Employment, October 1998, European Commission

The list of business and sectors that benefit from the tourism is very large as gastronomic, souvenir industry, retail business, publishers, cosmetics, clothing, consultants, et cetera.

As stated above and considering that goods and services are mostly supplied by local small enterprises, it is correct to affirm that tourism generates benefits for the local development.

As mentioned by the University of Cambridge [7], “… when an area develops as a tourist destination, the local economy benefits because new jobs are created and visitors bring more business to local shops and restaurants. The income generated can then be used to improve local services, whether by developing better transport and infrastructure, or by providing more facilities for residents and visitors, such as leisure centres, shopping areas and entertainment or attractions.

This is known as the multiplier effect”.

An area benefits directly and indirectly from the tourists expenditure.

Hotels and other leisure facilities are impacted directly but other business benefits from the presence of tourists in the area: shops, banks, small industries as they are suppliers of the tourist enterprises.

However, “ ... a portion of the visitor’s payment to the hotel is lost to the area, through tasation paid by the hotel to the government, or to the suppliers outside the local area. This is known as leakage from local economy”