1

Introductionto the

SMEs Division of WIPOGuriqbal Singh Jaiya

DirectorSmall and Medium-SizedEnterprises Division

World Intellectual Property Organization

2

National Needsand Concerns§SustainableEconomicDevelopment§ Job creation,§ EconomicGrowth§ Equity

§Competitiveness: Sustainableincreasesinproductivity leadingto improvementsin thestandardsof living for theaverageperson;(Process;Timing; Relative;RapidTechnicalChange)

3

Vision§“Prosperity For All”

Poverty EradicationQuality of Life

§Empowerment (Tool of IP)§ Fish, Fishing, Better Fishing

4

Challenges§ Increasing Competition (Empowering

SMEs, including Micro-Enterprisesand Self-Employed, to Compete)

§ Service Economy (Focus ShiftedFrom Product to Service)

§ Digitization (ICT); New BusinessModels

§ Globalization; New Threats§ Knowledge Economy (Innovation:

New Ideas, Creative Expression)

5

Alignment

Aligning Organizational and Individual GoalsVision � Skills � Incentives � Resources � Action Plan Change

Skills � Incentives � Resources � Action Plan ConfusionVision � Incentives � Resources � Action Plan AnxietyVision � Skills � Resources � Action Plan Slow changeVision � Skills � Incentives � Action PlanFrustrationVision � Skills � Incentives � Resources False starts

6

Role and Importance of SMEs§ Theeconomicengineof mostcountriesfor

building sustainableprosperity (Employment)

§ Flexible,Responsive,Innovative,Imaginative

§ Transformationfrom standardizedmassproductionto post-Fordistmodelsof production

§ ServiceEconomy

§ ICTs andE-Commerce:Globalization/Exports

§ Privatizationof State-OwnedEnterprises

§ DevelopingandEmergingEconomies

7

Firm and Its Environment

8

What are SMEs?§ No generallyagreedor universally

applicabledefinition of SMEs.§ Numerousfactors, related to a given

socio-economicenvironment, influencethe definition of SMEs.

§ Public SectorVs Private Sector§ IndependentVs Franchisees§ Formal Vs informal§ Micro-enterprises

9

What are SMEs?

10

What are SMEs?Governmentsare using thresholdsof

from 10 (the Netherlands)to 500(the US) to define the categoryof‘small business’,but in somesenses,it doesnot matter much becausemore than 80% or soof all firms ineachcountry havelessthan 10employees.

11

What are SMEs?§ About 80% of all firms in most countries have

lessthan 10 employees:Rangesfrom 95% inUK, 94% in Spain and Finland, 79% in US.

§ SME employmentsharesin under-10employeefirm-size categoryvary considerablyacrosscountries. Irish firms with lessthan 10employeesaccountfor 85% of businesses,butlessthan 25% of employment,whereasSpanishfirms accountsfor 94% of firms andalmost 50% of employment.

12

Employment Share

§In the US,under 10-employeefirms make up almost 80% offirms, but employ only 12% ofthe private sectorworkforce.

13

Employment Share

14

Employment ShareofPublic Sector

§30% of total employmentinFinland, the Netherlands,andSwedenis in the public sector,comparedto lessthan 20% in theUS,Taiwan, Australia and Ireland.

15

16

In which sectors areSMEs found?

§A higher percentageof SMEs tendstobe in the Servicesand Constructionsectors,aswell asin PrimaryIndustries.

§The majority of new firms and ofemploymentgrowth are in theServicessector.

17

Job Creation and LossStatistics

§ SMEs havebeengeneratingnew jobs at afaster rate than large firms; the smaller thefirm-size, the higher the employmentcreation rates.

§ Small firms havebeencreating jobs at afaster rate than they havebeenlosing themand thus havebeenmajor contributors tooverall employmentgrowth (Australia,Canada,Finland, the Netherlands,the UK).

18

Job Creation and LossStatistics

§ New firms important to both grossand net jobcreation (USA, UK, Canada,Australia,Netherlands,and Finland). New firmsresponsiblefor a third of grossnew jobs in UK(1995-99period), 45% of grossnew jobs inAustralia (1997-98),and a third of grossnewjobs in USA (1995-96).Half of grossjob gain inNetherlandsfrom 1992-97from new,youngfirms lessthan five yearsof age.

19

Job Creation and LossStatistics

§ In Canada,75% of net employmentgainsfrom 1990-97camefrom newself-employment,three-quarters ofwhich wasattributable to theincreasein self-employedpersonswith no employees.

20

SME Density/Intensity

21

SME Density/Intensity

22

Why is EntrepreneurshipImportant?

23

Why is EntrepreneurshipImportant?

§Linking Entrepreneurshipand Innovation

§From Entrepreneur toIntrapreneur in SMEs

24

Are SMEs active in GlobalMarkets?

Divide SMEsinto threemaingroups:

§ SMEswhich areinternationallycompetitive,or ableto becomeinternationallycompetitive

(25%of manufacturingSMEs)

§ SMEslesslikely to beableto adaptandthusat risk (20%to 30%)

§ SMEswhich areinsulatedfrom theeffectsofglobalization(Rest;< 20%in nexttenyears)

25

Are SMEs active in GlobalMarkets?

26

Objective§ Strengthen the capacity of

governmental, private and civilsociety institutions worldwide toformulate and implement policies andstrategies for meeting the IP needsand concerns of SMEs.

§ Are SMEs able to identify their own IPneeds clearly enough to seek the bestremedies?

§ Are the remedies available,accessible, affordable, suitable to theneeds of SMEs?

27

Sub-Objectives§ Improving the policy framework and

business environment to make itconducive and easier for SMEs touse the IP system.

§ Improving competitiveness of SMEsby enabling SMEs to fully exploittheir innovative and creativepotential through an effective use ofthe IP system.

§

28

Two Broad Categoriesof PolicyApproachesto Promoting SMEs (1)

§ Market forces;substantiallevelingof theplayingfield; removepolicy distortionsin pricing,creditprovisionanda varietyof non-marketmechanismsthatfavorlarge-scaleenterprises.

§ ‘Structuralist’ approach; Proactiveformsof intervention;infant-industryargumentunderliesthis.

29

Two Broad Categoriesof PolicyApproachesto Promoting SMEs (2)

§ Both approachesagreeon the importanceof an appropriate macro environment forSME development.

§ In practice, the promotion of SMEs maywell require a creative synthesisof thesetwo seeminglycompetingpolicyapproaches.

30

Detailed Objectives• Stimulating researchinto the theory and practice of

the role of IP in fostering entrepreneurshipandSME development.

• Advocating the role of IP in the formation andgrowth of SMEs asa mechanismfor economicgrowth and development.

• Facilitating the creation and exchangeof knowledge,experienceand bestpracticesin using the IP systemfor the formation and developmentof SMEs.

• Co-operatingwith the various governmentalandprivate sectororganizationsdedicatedtoentrepreneurshipand SME development.

31

Detailed Objectives• Improving the managementof IP assets,techniques

and skills of entrepreneursand SMEs worldwide.

• Publishing the bestpapersthat add to the globalknowledgeand understanding of IP in SMEdevelopment.

• Organizing International Conferencesfor thedisseminationof research,experienceand bestpractice in the useof the IP systemby entrepreneursand SMEs.

• Co-operating with the various governmentalandprivate sectororganizationsdedicatedto SMEdevelopment.

32

Strategies(1)§ Partnerships§ Demystification§ New Audience§ New Areas§ Proactive§ E-Services

33

Strategies(2)§ Macro Environment:An environmentthat

supportsthedevelopmentanddiffusion ofnewtechnologiesfor andby SMEsto takeadvantageof theknowledge-basedeconomy

§ Ensuringthecost-effectivenessof SMEpoliciesandtheir consistencywith othernationalpolicies,aswell aswith existinginternationalprograms

34

Strategies(3)§ Strengtheningpublic-private partnerships

andpolitical andsocialdialogueinvolvingterritorial andinstitutionalactorsasa toolfor exchangeof information,utilization ofknowledgeandelaborationof policy.

§ Fosteran innovative and entrepreneurialculture, includingcontinuoustraining andlifelong learning.

35

SMEs' ability to manageinnovation be improved by:

§ facilitating the hiring and training of qualifiedpersonnel;

§ diffusing an innovation culture;

§ disseminatingtechnologicaland market informationand providing related assistance(e.g.throughimprovementsin relevant labor marketmechanisms,and linkagesbetweenenterprisesandeducationsystems,and betweenindustry and publicand university research).

Strategies(4)

36

Financial barriers to innovation in SMEs bereducedby:

§ i) facilitating the developmentof marketmechanismsfor equity financing, and relatedservices,especiallyfor innovative start-ups;

§ ii) promoting risk-sharing programs andmeasures,including financial support and taxincentivesto R&D and innovation; and iii)supporting initiatives which facilitate"partnerships for innovation" betweenentrepreneurs,public agenciesand financiers.

Strategies(5)

37

Strategies(6)

38

Strategies(7)§ High Growth SMEs

§ High TechnologySMEs

§ Clusters (Embryonic or Existing)

§ Export Oriented SMEs

§ SMEs Focussedon Quality; Productivity

§ SMEs Owned by Women; Youth; IndigenousPeoples

§ Public-Private Partnerships

§ E-Commerce

§ Networks of and for SMEs

§ New Institutional Forms (Incubators)

39

PARTNERSHIPS§Internal (WIPO)

§External»IGOs»Government»Private Sector»Civil Society(NGOs)

40

Audience and Partners1

§ SME Policy-makers - GovernmentSMEOfficials at international,national,regionalandlocal levels,etc.

§ SME Support Institutions - SmallBusinessCenters,EnterpriseAgencies,TradeAssociations,Chambers,etc

§ SME Financiers - in ClearingBanks,Micro-Finance,LoanSchemes,InvestmentFunds,Aid Agencies,etc.

41

Audience andPartners 2§ SME Educators - at Universities,Colleges,

BusinessSchools,JuniorSchools,TrainingCenters,etc.

§ SME Researchers - at Universities,BusinessResearchCenters,EconomicDevelopmentCenters,etc.

§ SME Practitioners - Advisers,Consultants,Counselors,Incubators,Mentors,Publishers,Trainers,etc.

42

DEMYSTIFICATION§Studies§Eventsand Expert Missions§Web Site§CD-ROM§MagazineArticles§Guides§Brochure§Newsletter

43

WIPO Guideson IP for SMEs

§ Trademarks§ Licensing IP§ Industrial Designs§ Patents§ Trade Secrets§ E-commerce§ Copyright

44

NEW AUDIENCE§ Bringing IP Issuesto SME Events§ Bringing BusinessPerspectiveto IP

Events§ New Networks and Partnership

(IGOs, SME Focal Points,SME SupportInstitutions, Chambersof CommerceandIndustry, SME Associations,SME ResearchInstitutions, and Civil Society,Private SectorInstitutions, Universities,Small BusinessAdvisors/Consultants,etc)

45

NEW AREAS§ IP for financing (venture capital, securitization)§ Accounting and valuation of IP assets;IP audit§ Fiscal policiesand IP (e.g.tax incentivesfor R&D

activities, patenting, licensing,etc.)§ IP servicesto SMEs by incubators, technologyparks,

chambersof commerceand SME associations§ Copyright and SMEs in the cultural industries

(MERCOSUR and Arab regional study on culturalindustries; Caribbean Music Industry Project)

§ IP needsof SMEs in biotechnology,agriculture,handicrafts, software

§ IP Insurance

46

Incubators and ScienceParks

§ Incubatorsprovideindividualsor smallenterprisesthesupportof space,equipment,technology,professionalmanpower,businessservices,andinformation.Incubatorsfacilitatedevelopmentof newproductsandnewtechnologyto establisha newbusinessandconductenterprisetransformationandupgrades.

§ Incubatorcentershavethepotentialto beanimportantplatformfor cross-industrycollaborationwithin theinnovationsystem

47

PROACTIVE§Original Content Creation§Surfing the Web§Links§BestPractices§CaseStudies

48

E-SERVICES§ Web Site Content§ SME-Mail§ E-Mail Newsletter§ DistanceLearning (Proposed)

§ DiscussionForum (Proposed)

49

EXTERNAL PARTNERS§ IP Offices§SME FocalPoints§WASME§ ILO§ ITC§APCTT

§UNCTAD§UNECA§UNECE§UNESCWA§UNIDO§UNESCO

50

IP Offices§Studies:Norway§NFAPs(Mongolia, Philippines)

•BaselineStudy•CustomizedMaterials•CustomizedWeb Site•Events