SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation, and Infrastructure
Institutions: Ministry of MSMEs | Ministry of Finance | NITI Aayog
The OECD report, “Unleashing SME Potential to Scale Up,” focuses on “scalers”—SMEs that grow by one-third over a three-year period—and their disproportionate contribution to job creation, economic growth, and competitiveness. Scalers contribute about as much to job creation as large firms, making them vital drivers of economic dynamism. The central message is that while all types of SMEs (regardless of size, age, or location) can scale up, the likelihood is higher for some, necessitating a dual policy approach.
Governments must pursue two parallel strategies: setting favourable framework conditions and broad-based support for all types of SMEs to encourage organic growth, and implementing targeted interventions aimed at supporting those SMEs that show high growth potential. The report, which mapped over 2,500 policies across 17 countries, identifies key areas for policy intervention to address market and institutional failures that hinder scaling:
Access to Scale-Up Finance: Supporting alternative financing methods like asset-based finance, hybrid debt-equity instruments, and venture capital, as scalers often increase financial buffers before growing.
Digitalisation and Data Governance: Helping SMEs turn data into value, as scalers are typically more digitalised and data-driven.
Innovation Networks and Skills: Investing in skills development and connecting SMEs to knowledge networks, global value chains (GVCs), and international markets.
Policy Coordination: Requiring a “whole-of-government” approach because public action to foster scale-up often falls outside the core SME policy domain, requiring better coordination across infrastructure, finance, and innovation ministries.
The OECD also had also released two other reports focused on SMEs recently:
Workforce and AI: Assessing how Generative AI helps SMEs compensate for labor and skill shortages, while noting that SMEs associate the technology with increased skill needs, posing preparation challenges.
Sustainability: Providing a blueprint for scaling up financial and non-financial support for SME sustainability, recognizing that SMEs are critical for meeting climate goals but face major barriers in accessing green finance.
What are Scalers (in the context of SMEs)? → Scalers are defined as Small and Medium-sized Enterprises (SMEs) that exhibit high growth, often measured as firms with at least 10 employees that grow at a yearly rate of 10% or more in either employment or turnover over three consecutive years.
Follow the full report here: Unleashing SME Potential to Scale Up | OECD