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Relations of GDP growth and development of SMEs in Poland
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Procedia Computer Science 159 (2019) 2470–2480
23rd International Conference on Knowledge-Based and Intelligent Information & Engineering 23rd International Conference on Knowledge-Based Systems and Intelligent Information & Engineering Systems
Relations of GDP growth and development of SMEs in Poland Relations of GDP growth and development of SMEs in Poland Maciej Woźniakaa, Joanna Dudaaa, Aleksandra Gąsiorbb, Tomasz Bernatbb* Maciej Woźniak , Joanna Duda , Aleksandra Gąsior , Tomasz Bernat * a a
Faculty of Management, AGH University of Science and Technology, Gramatyka 10, Kraków 30-067, Poland b Faculty of Management, AGHManagement, University ofUniversity Science and Gramatyka Kraków 30-067, Poland Faculty of Economics and of Technology, Szczecin, Mickewicza 64,10, Szczecin 71-101, Poland b Faculty of Economics and Management, University of Szczecin, Mickewicza 64, Szczecin 71-101, Poland
Abstract Abstract Micro, small and medium enterprises play a very important role in economic development of a country, what is the reason that Micro, andtomedium a very In important in economictodevelopment a country, what is the reason they that they aresmall subject so manyenterprises studies andplay analyzes. additionrole to contributing the creation of the Gross Domestic Product, they are subject to so role many and analyzes. In addition to contributing to the creation of the Gross Domestic Product, they also play a key social asstudies they reduce unemployment. also playof a key social role they reduce unemployment. The aim the article is toasevaluate the relations between the components of gross domestic product (GDP) and the development The aim and of the article is to evaluate the(SMEs) relationsinbetween thethe components of grossTo domestic (GDP) and the development of small medium-sized enterprises Poland in years 1996-2016. achieveproduct this goal, we conducted a literature of small presented and medium-sized (SMEs)the in importance Poland in the achieve this goal, of wethe conducted a literature review, statisticalenterprises data confirming of years these1996-2016. enterprises To in the development economy, such as: review, presentedindicator statistical(calculated data confirming importance of these enterprises in theinhabitants), developmentSME of the economy, such as: entrepreneurship as thethe number of SME enterprises per 1000 participation in total entrepreneurship (calculated the number SME We enterprises per 1000this inhabitants), SME participation employment and indicator SME participation in as generating valueofadded. have presented data for selected EU countries.inIntotal the employment and participation value added. Wecollected have presented thisSMEs, data forwhich selected EU countries. In the further part of theSME work, we conductina generating statistical analysis of data for Polish allowed us to verify further part set of in thethework, weThe conduct a are statistical analysis collected hypotheses article. results presented at the of enddata of the article. for Polish SMEs, which allowed us to verify the hypotheses set in the article. The results are presented at the end of the article. © 2019 The Author(s). Published by Elsevier B.V. © 2019 The Authors. Published bybyElsevier B.V. © 2019 The Author(s). Published Elsevier B.V. This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) Peer-review under responsibility of KES International. Peer-review under responsibility of KES International. Peer-review under responsibility of KES International. Keywords: GDP, SME, SME development, GDP relations to SME Keywords: GDP, SME, SME development, GDP relations to SME
1. Introduction 1. Introduction Small and medium enterprises play crucial role in economic development of many countries. Hence, there are Small and medium enterprises play crucial in economic many two countries. Hence, there are many scientific publications concerning SMEs.role Source literature development distinguishes of between main research streams. many scientific publications concerning SMEs. Source literature distinguishes between two main research streams. The first describes the influence of SMEs on economic growth and development in a broader context whereas the The first describes the influence of SMEs on economic growth and development in a broader context whereas the
* Corresponding author. * Corresponding E-mail address:author. [email protected] E-mail address: [email protected] 1877-0509 © 2019 The Author(s). Published by Elsevier B.V. 1877-0509 © 2019 The article Author(s). by Elsevier license B.V. (https://creativecommons.org/licenses/by-nc-nd/4.0/) This is an open access underPublished the CC BY-NC-ND This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) Peer-review under responsibility of KES International. Peer-review under responsibility of KES International.
1877-0509 © 2019 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) Peer-review under responsibility of KES International. 10.1016/j.procs.2019.09.422
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second concentrates on the opposite relationships – influence of the corporate environment on SMEs development. Constant changes in the global world of economy, science, technology, IT and telecom mobilize the growth of entrepreneurship and companies. In the era of new economy competition propels the economic development of any country. The knowledge of how corporate environment influences the growth and operations of enterprises creates an opportunity for success on the markets. Therefore, the aim of the article is the evaluation of relations between the components of Gross Domestic Product (GDP) and development of small and medium-sized enterprises (SMEs) in Poland in the years 1996-2016. In order to achieve the aim we did the literature review, identified the gaps and set the hypotheses. Then, we collected the data and conducted the statistical analysis, we presented the conclusions at the end of the paper. 2. Influence of the corporate environment on the growth and operations of enterprises Development and operations of enterprises highly depend on the corporate environment in which they function. Source literature provides many definitions of corporate environment depending on the academic approach of the authors. In the paper the following definition has been assumed: “corporate environment is a set of different social, political, economic, legal, organizational, technological, cultural and demographic conditions of a national and global character, which have a direct and indirect influence on the actions of the enterprises. On the one hand, they create opportunities for development, on the other, they impose certain restrictions”[1]. This definition is broad and shows that the development and operations of enterprises depend on many factors (legal, social, economic). In the analysis of corporate environment many classifications can be distinguished. Most common division is the following: Close environment (microenvironment) is composed of competitors, partners, clients, suppliers, recipients and national policies. Distant environment (macro environment) is composed of economic, legal, political, social, cultural, technological and international sector. Elements of macro environment are: 1. 2. 3. 4. 5. 6. 7. 8.
Level and growth of GDP Credit and financial policy (interest rates and money supply) Fiscal politics and fiscality level Unemployment rate and labor policies Pace of general price growth Conditions of the money and capital market Competitiveness and innovativeness level R&D level
Therefore, the aim of this article is to evaluate the relations between the components of Gross Domestic Product (GDP) and development of small and medium-sized enterprises (SMEs) in Poland in the years 1996-2016. GDP factor has been chosen because it is the basic criteria for economic level evaluation of a country. 3. Literature review EU programs supporting the development of small- and medium-sized enterprises in Europe (for instance, Entrepreneurship and Innovation, Intelligent Energy, or ICT Policy) and the amount of support (€3.6 bn) earmarked by the EU[7] are evidence of the significance of SMEs to many economies. The awareness of their role in the development of global and regional economies is rising as well. A number of authors have published their research into this issue for example Ayyagari, Beck, Demirguc-Kunt[4]. They describe the contribution of the small- and medium-sized enterprise sector to the employment and per capita Gross Domestic Products of 55 countries worldwide. They examine factors determining the size of the SME, including the ease of market entry and exit, labor legislation, access to bank crediting, and support of aid programs (including EU assistance). They all ignore micro-enterprises. Exclusively, it is manufacturing enterprises that are analyzed. They prove the hypothesis that a large sector of small- and medium-sized enterprises arises in a competitive business environment that encourages
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new, innovative companies to enter the market. They also find no evidence to support the idea that a large SME sector is a consequence of economic slump and difficult barriers preventing an exit from that sector. Similar conclusions were reached by Ayyagari et al.[4], who tested two mutually exclusive hypotheses. The first says that a large small- and medium-sized enterprise sector may be a result of high costs of exiting and financing (support programs). The second states that this sector may be a result of low entry barriers and better availability of crediting. The authors failed to find evidence to support the first yet corroborated the second hypothesis. Research into the role and significance of the SME sector was also conducted by Beck et al.[5], who explored the relationships between the nature of small- and medium-sized industrial enterprises and growth of per capita GDP as well as changes of income inequalities and relief of poverty. They demonstrated the existence of such a relationship. Beck et al.[5] also showed a dependence among the development of small- and medium-sized enterprises, the economic development of a country, and the counteraction of poverty. They also demonstrated that a substantial share of SMEs is characteristic of well-developed economies but is not the main reason for their economic success. Schiffer and Weder[16] conducted research in 10,000 companies from OECD countries and countries such as Latin America and the Caribbean, Eastern Asia and the Pacific, South Asia and Africa. The companies were asked to assess the following barriers to their development: sources of financing, infrastructure, amount of taxes and legal regulations, political instability, inflation, currency rates, functioning of the judiciary, corruption, street crime, organized crime, anti-corruption government practices. The authors showed that there is a relationship between the size of the enterprise and the strength of the barriers felt- smaller enterprises perceive more barriers than large ones. This once again confirms that SMEs need support to be competitive on the market. Hallberg[6] also wrote about the contribution of the SMEs sector to employment and gross GDP growth. He investigated the impact of such factors as ease of entry and exit from the market, labor law, access to credit and state support for the development of SMEs. Similar research was conducted by Pruša[21] showing that in the Czech Republic, small and medium enterprises produce one-third of Gross Domestic Product, about 53% of gross value added and employ nearly two-thirds of all employees. The influence of SMEs on growth and development of economy was described by many authors like Murilataea at al.[11], Offor[12] or Opafunso and Adepoju[13]. Opafunso i Adepoju[13] proved that SMEs are a very important tool used by developed countries to gain economic growth and development. Historical facts show that even in the end of the 19th century cottage industries (especially SMEs) played a major role in economic development[2]. Muritala et al.[11] have also shown that SMEs influence on the growth and development can be seen through Greater utilization of local raw materials, employment generation, encouragement of rural development, development of entrepreneurship, mobilization of local savings, linkages with bigger industries, provision of regional balance by spreading investments more evenly, provision of avenue for self-employment and provision of opportunity for training managers and semi-skilled workers. Many authors (e.g.: Anyanwu [1], Ayozie and Latinwo[3], Kuteyi[10], Muritala at al.[11]) revealed a distinct effect of SMEs on their country’s development as they create employment and contribute to the gross domestic product (GDP). The authors examine not only the relationship between SMEs and economic growth but also the effects of corporate environment on SMEs development. Pietrewicz[15] wrote about fiscal policy proving that the reasons for worse development conditions for companies should not be sought inside the fiscal policy but in the other macroeconomic areas. Main reasons are restrictive money and exchange policy. Woźniak and Lisowski[19] also examined the relationship between the fiscal instruments and investments of SMEs. The conclusion was that the smaller enterprise, the stronger relationship. National economy influences the development of SMEs. Its stability, transparency, continuity, provisioning of the basic economic freedoms and rights are the main determinants for SMEs development[22]. The author examined the influence of social and economic factors on SMEs operations via indicators like GDP, inflation rate, unemployment rate and reference rate. She has proven that national economic development measured by GDP per capita, unemployment rate, inflation and export rate has a positive influence on SMEs sector[22]. On the other hand, research conducted by Otugo et al.[14] revealed a certain paradox. Authors have shown that the development of SMEs, despite expectations, has not led to employment generation, encouragement of rural development, development of entrepreneurship, mobilization of local savings and linkages with bigger industries.
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Unfortunately, the reverse is the case. Inhabitants of rural areas still must deal with low development, inability to access capital, low level of standard of living, increase in unemployment and underemployment. Although SMEs were seen as drivers for economic growth, in Nigeria despite strong support for SMEs the economic growth is still low. This shows that despite many authors examining the area there are still gaps to be filled. Taking the literature review into consideration, we decided to set the following hypotheses: H1: There is a positive relationship between GDP as well as its components and the development of SMEs. H2: There is a positive relationship between GDP as well as its components and the development of smallsized enterprises. H3: There is a positive relationship between GDP as well as its components and the development of mediumsized enterprises. 4. SMEs in Poland and European Union As can be seen from the literature review presented above, there is a relationship between the size of the SMEs sector and the development of the GDP. Small and medium-sized enterprises have a significant contribution to nonfinancial business economy in Poland, what is presented in Table 1. The number of Polish SMEs is the same as the average for EU-28. However, there are more microenterprises in Poland – the difference is over 2%. The share of SMEs employment is close to the EU average (68.4%). Furthermore, micro enterprises provide more than one third of all jobs. SMEs generate 52.5% of value added. However, it is lower than the EU average: 56.8%. The important fact is also that more than 50 % of SMEs value added and employment comes from the following sectors: wholesale and retail trade and manufacturing. Table 1. The main indicators of SMEs development in Poland in comparison to the European Union Class size
Number of enterprises Poland
Number of persons employed
EU-28
Poland
Value added
EU-28
Poland
EU-28
Number
Share
Share
Number
Share
Share
Billion Euro
Share
Share
Micro
1 535 595
93,5 %
93,0 %
3 235 347
36,8 %
29,8 %
35,3
18,4
20,9 %
Small
58 203
3,6 %
5,8 %
1 218 976
13,9 %
20,0 %
26,5
13,8
17,8 %
Medium
14 735
0,9 %
0,9 %
1 559 771
17,8 %
16,7 %
39,1
20,4
18,2 %
SMEs
1 608 533
99,8 %
99,8 %
6 014 094
68,4 %
66,6 %
100,9
52,5
56,8 %
Large
3 188
0,2 %
0,2 %
2 772 820
31,6 %
33,4 %
91,1
47,5
43,2 %
Total
1 611 721
100,0 %
100,0 %
8 786 914
100,0 %
100,0 %
192,1
100,0
100,0 %
Moreover, self-employment accounted for 17.7 % of overall employment in 2016. It was 3.8% higher than the EU average. In 2014 about 9.5 % of all firms were high-growth enterprises. That was close to the EU average (9.2%). The information and communication sector has the highest share of high-growth firms (13.6%). Furthermore, this indicator was even higher in the EU as a whole (15 %). However, more detailed data are needed. Therefore, we have presented below data showing the number of SMEs in selected EU countries per 1000 inhabitants. According to the table number 2, the Czech Republic is ranked first, with over 95 SMEs per 1,000 inhabitants. Slovakia is in second place with more than 81 SMEs, per 1,000 inhabitants. This is much above the EU average, where there are 21 SMEs per 1000 inhabitants. Poland is below the EU average and is ranked 23th. This means that despite the fact that every year there are some support connected with setting up and running a business, a lot of work should be put in to reduce barriers to running a business.
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Table.2. The number of SMEs in Poland and other countries of the UE in 2016[8] Number of enterprises in
Number of
Number of
enterprises
inhabitants
Czech Republic
1016896
10627448
95,68581281
1
Slovakia
445725
5443583
81,88081269
2
Countries
relations to 1 000
Rank
inhabitants
Portugal
832220
10813834
76,95882885
3
Greece
793946
10775557
73,68027472
4
Sweden
702010
9723809
72,19495981
5
Slovenia
138699
1988292
69,75786253
6
Netherlands
1133067
16877351
67,13535791
7
Malta
28987
460297
62,97455773
8
Luxembourg
32125
520672
61,69911192
9
Italy
3716347
61680122
60,25193984
10
Belgium
610796
10449316
58,45320402
11
Cyprus
49947
854 802
58,43107527
12
2679720
47737941
56,1339669
13
Spain
70448
1257921
56,00351691
14
Norway
292781
5258000
55,6829593
15
Hungary
Estonia
550292
9919128
55,47786055
16
Lithuania
192212
3505738
54,82782798
17
Latvia
115278
2165165
53,24213166
18
Ireland
245059
4832765
50,70782461
19
Bulgaria
335379
6924716
48,43216675
20
24379469
512596403
47,56074927
21
France
3054021
66259012
46,09216026
22
Poland
European Union - 28 countries
1691597
38346279
44,11371961
23
Finland
228027
5268799
43,27874341
24
Austria
322822
8223062
39,2581255
25
Denmark
217897
5569077
39,12623223
26
United Kingdom
2109936
63742977
33,10068182
27
Croatia
147091
4470534
32,90233337
28
Germany
2455924
80996685
30,32129031
29
Romania
463951
21729871
21,35084005
30
Bosnia and Herzegovina
65607
3507000
18,70744226
31
Switzerland
147091
8420000
17,4692399
32
Another important indicator describing the importance of SMEs in the economy is the number of employees in these enterprises in relation to the total number of employees. The data are presented in the table number 3. The conclusion is that at in all EU countries the SME sector plays an important role. However, the highest number of employees in these entities are in Greece (87%) and Cyprus (83%). Poland (68%) is ranked 17th, slightly above the EU average. In 2010-2016, the indicators did not show any changes and remained at the same or similar level in all countries.
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Table. 3 Employees in SMEs in relation to the whole employment in years 2010-2016[8] Countries
2016
2015
2014
2013
2012
2011
2010
Rank (2016)
Austria
69%
69%
69%
68%
68%
68%
68%
16
Belgium
69%
69%
70%
70%
70%
69%
69%
13
Bosnia and Herzegovina
72%
72%
71%
71%
71%
71%
71%
12
Bulgaria
75%
75%
75%
75%
76%
75%
75%
7
Croatia
69%
69%
69%
68%
68%
68%
69%
14
Cyprus
83%
84%
84%
84%
84%
83%
83%
2
Czech Republic
67%
68%
69%
69%
70%
69%
70%
19
Denmark
64%
64%
64%
65%
65%
65%
65%
26
Estonia
79%
78%
78%
78%
78%
78%
79%
3
EU (28 countries)
67%
66%
67%
67%
67%
67%
67%
18
Finland
66%
66%
65%
64%
63%
63%
63%
23
France
63%
61%
61%
61%
63%
63%
63%
29
Germany
63%
63%
63%
62%
63%
63%
63%
28
Greece
86%
86%
86%
86%
87%
87%
87%
27
Hungary
70%
70%
70%
70%
70%
71%
72%
12
Ireland
63%
63%
63%
63%
63%
63%
63%
28
Italy
79%
79%
79%
80%
80%
80%
80%
4
Latvia
79%
79%
79%
78%
79%
77%
77%
5
Lithuania
76%
76%
75%
76%
76%
76%
75%
6
Luxembourg
67%
68%
69%
69%
68%
68%
68%
20
Malta
78%
80%
78%
79%
79%
79%
78%
6
Netherlands
65%
66%
66%
66%
67%
67%
67%
24
Norway
68%
68%
67%
67%
68%
68%
69%
18
Poland
68%
68%
68%
69%
69%
69%
68%
17
Romania
65%
65%
66%
67%
66%
66%
66%
25
Slovakia
72%
72%
71%
70%
70%
71%
72%
11
Slovenia
73%
74%
73%
73%
72%
72%
72%
9
Spain
72%
73%
73%
73%
74%
74%
75%
9
Sweden
65%
65%
66%
65%!
65%
65%
65%
26
Switzerland
67%
67%
67%
67%
67%
67%
67%
22
United Kingdom
54%
53%
53%
53%
53%
54%
53%
31
Another indicator of the importance of SMEs in the economy is their share in generating value added (Tab. 4). At the top of the ranking are Malta (79%) and Estonia (76%). Poland is below the EU average of 27 countries (51%). In the years 2010-2016 these indicators did not change and remained at the same or similar level in all countries. Table. 4. The share of value added contributed by SMEs[8] Countries
2016
2015
2014
2013
2012
2011
2010
Rank (2016)
Austria
63%
63%
63%
62%
60%
61%
61%
11
Belgium
62%
62%
62%
61%
62%
61%
61%
12
Bosnia and Herzegovina
66%
66%
65%
65%
65%
65%
65%
7
Bulgaria
63%
65%
65%
65%
62%
59%
59%
10
Croatia
61%
58%
58%
55%
55%
55%
55%
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7
Cyprus
75%
77%
77%
77%
77%
78%
78%
3
Czech Republic
55%
55%
55%
55%
56%
56%
55%
20
Denmark
61%
61%
61%
61%
62%
62%
62%
14
Estonia
76%
76%
75%
75%
75%
74%
75%
2
EU (28 countries)
56%
56%
57%
58%
58%
58%
58%
19
Finland
61%
61%
60%
61%
60%
59%
59%
17
France
55%
55%
55%
55%
58%
58%
58%
22
Germany
55%
54%
54%
54%
53%
53%
53%
21
Hungary
54%
53%
54%
54%
54%
54%
54%
24 27
Ireland
49%
49%
49%
49%
49%
49%
49%
Italy
67%
67%
67%
68%
68%
68%
68%
Latvia
69%
70%
71%
70%
69%
68%
68%
5
Lithuania
68%
68%
69%
69%
68%
66%
63%
6
Luxembourg
65%
65%
69%
71%
71%
69%
69%
8
Malta
79%
79%
78%
76%
75%
71%
71%
1
Netherlands
62%
62%
63%
62%
63%
63%
63%
13
Norway
70%
70%
70%
59%
59%
71%
72%
4
Poland
51%
51%
52%
52%
50%
51%
51%
26
Romania
52%
52%
51%
50%
50%
50%
50%
25
Slovakia
55%
53%
55%
59%
61%
63%
61%
23
Slovenia
65%
64%
64%
63%
63%
63%
63%
9
Spain
61%
62%
62%
62%
63%
63%
65%
15
Sweden
60%
60%
60%
60%
58%
59%
57%
18
United Kingdom
48%
51%
52%
53%
51%
51%
50%
28
5. Methodology The definition of SMEs varies between countries. In Poland, in line with the recommendation of the European Commission, there are there main criteria: headcount and turnover or balance sheet. The details are presented in Table 5. Table 5. Definition criteria of small and medium-sized enterprises in Poland[7] Enterprise category
Headcount
Turnover
<250
Up to 50 ml Euro
Up to 43 ml Euro
small
<50
Up to 10 ml Euro
Up to 10 ml Euro
micro
< 10
Up to 2 ml Euro
Up to 2 ml Euro
Medium-sized
or
Balanced sheet total
In order to verity the hypotheses, the authors decided to conduct statistical analysis. First, we calculated correlation which is a measure of the relation between two or more variables. Correlation coefficients can range from -1.00 to +1.00 and the value of -1.00 represents a perfect negative correlation while a value of +1.00 represents a perfect positive correlation. We chose the most widely-used type - Pearson r. This coefficient is also called linear correlation. It determines the extent to which values of two variables are proportional to each other[20]. Pearson correlation assumes that they are measured on at least interval scales and is calculated as follows:
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(1) Then, we chose the level of significance which is a primary source of information about the reliability of the correlation. We decided to use the following level of significance: p < 0.05. The reason is that this level is the most frequent in economic sciences. In the second stage of analysis, for the statistically significant results, we did the respective scatterplot. It visualizes a correlation between two variables and helps to avoid among others the problem of the outliers. They are infrequent observations, which have a significant influence on the value of the correlation coefficient. They represent a random error that should be controlled. Even a single outlier is capable of considerably changing the value of the correlation coefficient. Outliers may artificially increase the value of this indicator. However, they can decrease the value of a "legitimate" correlation, too. In connection to the above, it is always recommended to examine the respective scatterplot. If the sample size is relatively small, then including or excluding specific data points that are not as clearly "outliers” may have very important influence regression line and the correlation coefficient. One may state that they are not outliers but rather extreme values. There is but no widely accepted method to remove outliers automatically. Therefore, the authors decided to identify the outliers by examining a scatterplot of each important correlation. Eventually, we decided to collect the following data for the years 1996-2016 published by the Polish Agency for Enterprises Development: a. b. c.
the number of active companies broken down by the size of the enterprises. the number of employees in the companies broken down by the size of the enterprises the contribution of companies to GDP broken down by the size of the enterprises.
Moreover, we collected the following data about GDP, published by the Central Statistical Office. a. b. c. d. e.
Gross Domestic Product (in constant prices) the value of private consumption the value of business investment the value of government spending the value of export – although net export is the last component of GDP, we decided to choose only export as this indicator should be more important for development of SMEs
6. Statistical analysis Table 6 presents the significant correlations between GDP and the number of SMEs. All coefficients are positive. However, in case of micro and small-sized enterprises, they range from about 0.65 (government spending) to 0.7 (business investment). According to Wach[17], that means strong relationships. There are similar results in case of all SMEs, although the coefficients are a little higher. One can observe very strong relationship between GDP and its components and the number of medium-sized enterprises[18]. It is connected with the fact that the correlation coefficient range from approximately 0.8 (export) to 0.85 (business investment and government spending). Therefore, we observe positive relationship between both GDP as well as all components and the number of SMEs, however, it is stronger in case of medium-sized enterprises than micro and small-sized companies. Moreover, the magnitude is higher for business investment what should not be surprising (Tab.6).
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Table 6. The significant correlations between GDP and the number of SMEs in Poland in the years 1996 – 2016[9] Variable GDP Private consumtion Government spending Business investment Export
Number of micro and Number of medium-sized small-sized enterprises enterprises 0,686859 0,689973 0,647914 0,708128 0,688627
0,834184 0,853734 0,857729 0,855526 0,807480
Number of all SMEs 0,690047 0,693311 0,651546 0,711397 0,691562
Note: p < 0.05.
The similar situation is observed in case of relationship between GDP as well as its components and the number of employees in SMEs – table 2. Furthermore, the relationship can be perceived as strong for two variables. The correlation coefficient ranges from about 0.5 (government spending) to 0.64 (business investment) in case of micro and small-sized enterprises. These numbers are higher for all SMEs but are no more than 0.7 – the only exemptions is for business investment (roughly 0.76). However, the relationships between GDP as well as its components and the number of employees in medium-sized companies are very strong. The correlation coefficient range from 0.72 (export) to almost 0.79 (business investment). Nevertheless, one can state that there is positive relationship between GDP and the number of employees in SMEs. The correlations coefficients are lower than in case of the number of SMEs (Tab.7). Table 7. The significant correlations between GDP and the number of employees in SMEs in Poland in the years 1996 – 2016[9] Employees in micro and Employees in mediumEmployees in Variable small-sized enterprises sized enterprises all SMEs GDP 0,528109 0,754243 0,673404 Private consumtion 0,518723 0,776248 0,677520 Government spending 0,492444 0,766844 0,656787 Business investment 0,645154 0,789368 0,762675 Export 0,521934 0,725934 0,656677 Note: p < 0.05.
There are different situation in case of the last relationship. The significant correlations coefficients are for the contribution to GDP of all SMEs and medium-sized companies but not for micro and small-sized enterprises. In the first group they range from approximately 0.65 (government spending) to 0.63 (private consumption). The correlation coefficients for medium-sized companies are just a little higher, however, the maximum is for export. One can state that there is positive relationship between GDP as well as its components and the contribution of all SME and medium-sized enterprises. The relationship can be perceived as strong (Tab.8). Table 8. The significant correlations between GDP and the contribution to GDP of SMEs in Poland in the years 1996 – 2016[9] Contribution of micro and Contribution of mediumContribution Variable small-sized enterprises sized enterprises of all SMEs 0,319048 0,635386 0,611204 GDP 0,361493 0,589052 0,635804 Private consumtion 0,298679 0,573197 0,562811 Government spending 0,307601 0,657021 0,608531 Business investment 0,291176 0,660023 0,592542 Export Note: p < 0.05.
7. Conclusions From the review of static data presented in the tables, it can be noticed that the position of Poland against the background of other countries of the EU is as follows. Two of the three indicators analyzed are below the EU average. They are the number of enterprises per 1000 inhabitants (23 place) and the share of the SMEs sector in
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generating value added. In this ranking Poland is at a very low place: 27th. Only in relation to the number of employees employed in the SMEs sector takes the 17th place, which is one position above the EU average. After the literature review one can state that the relationship between Gross Domestic Product and development of small and medium-sized enterprises is of great importance. In connection to the above the authors decided to verify three hypotheses: H1: There is a positive relationship between GDP as well as its components and the development of all SMEs. The results of statistical analysis support the hypothesis. There is a positive relationship between both GDP as well as all components and the number of SMEs. It is but stronger in case of medium-sized enterprises than micro and small-sized companies. Furthermore, the magnitude is higher for business investment what should not be surprising. H2: There is a positive relationship between GDP as well as its components and the development of small-sized enterprises. The results of statistical analysis also support the hypothesis. There is positive relationship between GDP and the number of employees in SMEs. It is also stronger in case of medium-sized enterprises than micro and smallsized companies. The magnitude is higher for business investment, too. The correlations coefficients are but lower than in case of the number of SMEs. H3: There is a positive relationship between GDP as well as its components and the development of medium-sized enterprises. The results of statistical analysis support the hypothesis but in some parts: all SMEs as well as medium-sized enterprises. However, it has to be rejected in case of micro and small enterprises. The relationship can be perceived as strong. References [1]
Anyanwu A. (2001). Small and medium enterprises (SMES) In Nigeria: Problems and prospects, Ph.D. Thesis. St. Clements University.
[2]
Aremu M.A. (2010). Small and Medium Scale Enterprises as a Means of Employment Generation ND Capacity Building in Nigeria, A paper Presented at the International Conference on Management and Enterprise Development on, “Intellectual and New Strategies for Sustainability Development of the Third World” Held at Conference Center, University of Ibadan, Ibadan, Nigeria, October 5-8.
[3]
Ayozie D.O. and Latinwo H.K. (2010). Entrepreneurial developments and small scale industry contribution to Nigerian national
[6] [7]
development: A marketing Interface. Information Management and Business Review, 1(2), 51‒68. Ayyagari M. Beck T. and Demirguc-Kunt A. (2007) Small and Medium Enterprises Across the Globe. Small Business Economics. Beck T., Demirguc-Kunt A. and Levine R. (2005). SMEs. Growth. and Poverty: Cross-Country Evidence. Journal of Economic Growth, 10(3), 199‒229. Hallberg K. (2001) A Market-Oriented Strategy for Small and Medium-Scale Enterprises, IFC Discussion Paper no 48. http://ec.europa.eu/commission/index_en, 4.06.2019
[8]
https://ec.europa.eu/eurostat/web/structural-business-statistics/data/main-tables, 06.06.2019
[9]
https://stat.gov.pl, 2.05.2019
[4] [5]
[10] Kuteyi, D. (2013). Multiple charges stifle smes’ growth The nation newspapers, Nov. 18. [11] Muritala, T. A., Awolaja, A. M. and Bako, Y. A. (2012). Impact of small and medium enterprises on economic growth and development. American Journal of Business and Management, 1(1), 18‒22. [12] Offor, S. U. (2012). The impact of small and medium scale industries on the economic growth of Nigeria (1986 - 2010). A project submitted in partial fulfillment of the requirements for the award of bachelor of Science (B.Sc.) Degree in Economics. [13] Opafunso, Z. O., and Adepoju, O. O. (2014). The impact of small and medium scale enterprises on economic development of Ekiti State, Nigeria. Journal of Economics and Sustainable Development, 5(16), 115‒122. [14] Esther, O. N., David, E. T., and Scholastica, E. U. (2018). Effect of Small and Medium Enterprises on Economic Growth in Nigeria. Sumerianz Journal of Business Management and Marketing, 1(2), 73‒78. [15] Pietrewicz M.( 2002). Makroekonomiczne uwarunkowania rozwoju przedsiębiorczości w Polsce, [in:] Instrumenty finansowe w pobudzaniu aktywności gospodarczej Polski, J. Ostaszewski (ed.), SGH, Warszawa.
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[16] Schiffer M, Weder B (2001) Firm size and the business environment: Worldwide survey results. Discussion paper 43, World Bank/International Finance Corporation. ISBN: 0-8213-5003-X. [17] Wach K., Regionalne otoczenie małych i średnich przedsiębiorstw, Wyd. UEK, Kraków 2008. [18] Wilmańska A. (ed), Raport o stanie sektora małych i średnich przedsiębiorstw w Polsce w latach 2008-2009, Polska Agencja Rozwoju Przedsiębiorczości, Warszawa 2010. [19] Woźniak, M., & Lisowski, R. (2017). Relationship between fiscal instruments and investments of industrial SMEs and LEs in Poland. Managerial Economics, 17(2), 261. [20] www.statsoft.com, 2.05.2019. [21] Pruša J. (2010). Productivity of Czech Small and Medium Enterprises: Lagging Behind Their Potential, Journal of Industry Competition and Trade, 10(3), 343‒363. [22] Misztal A. (2015). Sytuacja gospodarcza Polski a rozwój małych i średnich przedsiębiorstw, Gospodarka w Praktyce i Teorii, 3(40), 65‒78.
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Procedia Computer Science 159 (2019) 2470–2480
23rd International Conference on Knowledge-Based and Intelligent Information & Engineering 23rd International Conference on Knowledge-Based Systems and Intelligent Information & Engineering Systems
Relations of GDP growth and development of SMEs in Poland Relations of GDP growth and development of SMEs in Poland Maciej Woźniakaa, Joanna Dudaaa, Aleksandra Gąsiorbb, Tomasz Bernatbb* Maciej Woźniak , Joanna Duda , Aleksandra Gąsior , Tomasz Bernat * a a
Faculty of Management, AGH University of Science and Technology, Gramatyka 10, Kraków 30-067, Poland b Faculty of Management, AGHManagement, University ofUniversity Science and Gramatyka Kraków 30-067, Poland Faculty of Economics and of Technology, Szczecin, Mickewicza 64,10, Szczecin 71-101, Poland b Faculty of Economics and Management, University of Szczecin, Mickewicza 64, Szczecin 71-101, Poland
Abstract Abstract Micro, small and medium enterprises play a very important role in economic development of a country, what is the reason that Micro, andtomedium a very In important in economictodevelopment a country, what is the reason they that they aresmall subject so manyenterprises studies andplay analyzes. additionrole to contributing the creation of the Gross Domestic Product, they are subject to so role many and analyzes. In addition to contributing to the creation of the Gross Domestic Product, they also play a key social asstudies they reduce unemployment. also playof a key social role they reduce unemployment. The aim the article is toasevaluate the relations between the components of gross domestic product (GDP) and the development The aim and of the article is to evaluate the(SMEs) relationsinbetween thethe components of grossTo domestic (GDP) and the development of small medium-sized enterprises Poland in years 1996-2016. achieveproduct this goal, we conducted a literature of small presented and medium-sized (SMEs)the in importance Poland in the achieve this goal, of wethe conducted a literature review, statisticalenterprises data confirming of years these1996-2016. enterprises To in the development economy, such as: review, presentedindicator statistical(calculated data confirming importance of these enterprises in theinhabitants), developmentSME of the economy, such as: entrepreneurship as thethe number of SME enterprises per 1000 participation in total entrepreneurship (calculated the number SME We enterprises per 1000this inhabitants), SME participation employment and indicator SME participation in as generating valueofadded. have presented data for selected EU countries.inIntotal the employment and participation value added. Wecollected have presented thisSMEs, data forwhich selected EU countries. In the further part of theSME work, we conductina generating statistical analysis of data for Polish allowed us to verify further part set of in thethework, weThe conduct a are statistical analysis collected hypotheses article. results presented at the of enddata of the article. for Polish SMEs, which allowed us to verify the hypotheses set in the article. The results are presented at the end of the article. © 2019 The Author(s). Published by Elsevier B.V. © 2019 The Authors. Published bybyElsevier B.V. © 2019 The Author(s). Published Elsevier B.V. This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) Peer-review under responsibility of KES International. Peer-review under responsibility of KES International. Peer-review under responsibility of KES International. Keywords: GDP, SME, SME development, GDP relations to SME Keywords: GDP, SME, SME development, GDP relations to SME
1. Introduction 1. Introduction Small and medium enterprises play crucial role in economic development of many countries. Hence, there are Small and medium enterprises play crucial in economic many two countries. Hence, there are many scientific publications concerning SMEs.role Source literature development distinguishes of between main research streams. many scientific publications concerning SMEs. Source literature distinguishes between two main research streams. The first describes the influence of SMEs on economic growth and development in a broader context whereas the The first describes the influence of SMEs on economic growth and development in a broader context whereas the
* Corresponding author. * Corresponding E-mail address:author. [email protected] E-mail address: [email protected] 1877-0509 © 2019 The Author(s). Published by Elsevier B.V. 1877-0509 © 2019 The article Author(s). by Elsevier license B.V. (https://creativecommons.org/licenses/by-nc-nd/4.0/) This is an open access underPublished the CC BY-NC-ND This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) Peer-review under responsibility of KES International. Peer-review under responsibility of KES International.
1877-0509 © 2019 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) Peer-review under responsibility of KES International. 10.1016/j.procs.2019.09.422
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second concentrates on the opposite relationships – influence of the corporate environment on SMEs development. Constant changes in the global world of economy, science, technology, IT and telecom mobilize the growth of entrepreneurship and companies. In the era of new economy competition propels the economic development of any country. The knowledge of how corporate environment influences the growth and operations of enterprises creates an opportunity for success on the markets. Therefore, the aim of the article is the evaluation of relations between the components of Gross Domestic Product (GDP) and development of small and medium-sized enterprises (SMEs) in Poland in the years 1996-2016. In order to achieve the aim we did the literature review, identified the gaps and set the hypotheses. Then, we collected the data and conducted the statistical analysis, we presented the conclusions at the end of the paper. 2. Influence of the corporate environment on the growth and operations of enterprises Development and operations of enterprises highly depend on the corporate environment in which they function. Source literature provides many definitions of corporate environment depending on the academic approach of the authors. In the paper the following definition has been assumed: “corporate environment is a set of different social, political, economic, legal, organizational, technological, cultural and demographic conditions of a national and global character, which have a direct and indirect influence on the actions of the enterprises. On the one hand, they create opportunities for development, on the other, they impose certain restrictions”[1]. This definition is broad and shows that the development and operations of enterprises depend on many factors (legal, social, economic). In the analysis of corporate environment many classifications can be distinguished. Most common division is the following: Close environment (microenvironment) is composed of competitors, partners, clients, suppliers, recipients and national policies. Distant environment (macro environment) is composed of economic, legal, political, social, cultural, technological and international sector. Elements of macro environment are: 1. 2. 3. 4. 5. 6. 7. 8.
Level and growth of GDP Credit and financial policy (interest rates and money supply) Fiscal politics and fiscality level Unemployment rate and labor policies Pace of general price growth Conditions of the money and capital market Competitiveness and innovativeness level R&D level
Therefore, the aim of this article is to evaluate the relations between the components of Gross Domestic Product (GDP) and development of small and medium-sized enterprises (SMEs) in Poland in the years 1996-2016. GDP factor has been chosen because it is the basic criteria for economic level evaluation of a country. 3. Literature review EU programs supporting the development of small- and medium-sized enterprises in Europe (for instance, Entrepreneurship and Innovation, Intelligent Energy, or ICT Policy) and the amount of support (€3.6 bn) earmarked by the EU[7] are evidence of the significance of SMEs to many economies. The awareness of their role in the development of global and regional economies is rising as well. A number of authors have published their research into this issue for example Ayyagari, Beck, Demirguc-Kunt[4]. They describe the contribution of the small- and medium-sized enterprise sector to the employment and per capita Gross Domestic Products of 55 countries worldwide. They examine factors determining the size of the SME, including the ease of market entry and exit, labor legislation, access to bank crediting, and support of aid programs (including EU assistance). They all ignore micro-enterprises. Exclusively, it is manufacturing enterprises that are analyzed. They prove the hypothesis that a large sector of small- and medium-sized enterprises arises in a competitive business environment that encourages
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new, innovative companies to enter the market. They also find no evidence to support the idea that a large SME sector is a consequence of economic slump and difficult barriers preventing an exit from that sector. Similar conclusions were reached by Ayyagari et al.[4], who tested two mutually exclusive hypotheses. The first says that a large small- and medium-sized enterprise sector may be a result of high costs of exiting and financing (support programs). The second states that this sector may be a result of low entry barriers and better availability of crediting. The authors failed to find evidence to support the first yet corroborated the second hypothesis. Research into the role and significance of the SME sector was also conducted by Beck et al.[5], who explored the relationships between the nature of small- and medium-sized industrial enterprises and growth of per capita GDP as well as changes of income inequalities and relief of poverty. They demonstrated the existence of such a relationship. Beck et al.[5] also showed a dependence among the development of small- and medium-sized enterprises, the economic development of a country, and the counteraction of poverty. They also demonstrated that a substantial share of SMEs is characteristic of well-developed economies but is not the main reason for their economic success. Schiffer and Weder[16] conducted research in 10,000 companies from OECD countries and countries such as Latin America and the Caribbean, Eastern Asia and the Pacific, South Asia and Africa. The companies were asked to assess the following barriers to their development: sources of financing, infrastructure, amount of taxes and legal regulations, political instability, inflation, currency rates, functioning of the judiciary, corruption, street crime, organized crime, anti-corruption government practices. The authors showed that there is a relationship between the size of the enterprise and the strength of the barriers felt- smaller enterprises perceive more barriers than large ones. This once again confirms that SMEs need support to be competitive on the market. Hallberg[6] also wrote about the contribution of the SMEs sector to employment and gross GDP growth. He investigated the impact of such factors as ease of entry and exit from the market, labor law, access to credit and state support for the development of SMEs. Similar research was conducted by Pruša[21] showing that in the Czech Republic, small and medium enterprises produce one-third of Gross Domestic Product, about 53% of gross value added and employ nearly two-thirds of all employees. The influence of SMEs on growth and development of economy was described by many authors like Murilataea at al.[11], Offor[12] or Opafunso and Adepoju[13]. Opafunso i Adepoju[13] proved that SMEs are a very important tool used by developed countries to gain economic growth and development. Historical facts show that even in the end of the 19th century cottage industries (especially SMEs) played a major role in economic development[2]. Muritala et al.[11] have also shown that SMEs influence on the growth and development can be seen through Greater utilization of local raw materials, employment generation, encouragement of rural development, development of entrepreneurship, mobilization of local savings, linkages with bigger industries, provision of regional balance by spreading investments more evenly, provision of avenue for self-employment and provision of opportunity for training managers and semi-skilled workers. Many authors (e.g.: Anyanwu [1], Ayozie and Latinwo[3], Kuteyi[10], Muritala at al.[11]) revealed a distinct effect of SMEs on their country’s development as they create employment and contribute to the gross domestic product (GDP). The authors examine not only the relationship between SMEs and economic growth but also the effects of corporate environment on SMEs development. Pietrewicz[15] wrote about fiscal policy proving that the reasons for worse development conditions for companies should not be sought inside the fiscal policy but in the other macroeconomic areas. Main reasons are restrictive money and exchange policy. Woźniak and Lisowski[19] also examined the relationship between the fiscal instruments and investments of SMEs. The conclusion was that the smaller enterprise, the stronger relationship. National economy influences the development of SMEs. Its stability, transparency, continuity, provisioning of the basic economic freedoms and rights are the main determinants for SMEs development[22]. The author examined the influence of social and economic factors on SMEs operations via indicators like GDP, inflation rate, unemployment rate and reference rate. She has proven that national economic development measured by GDP per capita, unemployment rate, inflation and export rate has a positive influence on SMEs sector[22]. On the other hand, research conducted by Otugo et al.[14] revealed a certain paradox. Authors have shown that the development of SMEs, despite expectations, has not led to employment generation, encouragement of rural development, development of entrepreneurship, mobilization of local savings and linkages with bigger industries.
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Unfortunately, the reverse is the case. Inhabitants of rural areas still must deal with low development, inability to access capital, low level of standard of living, increase in unemployment and underemployment. Although SMEs were seen as drivers for economic growth, in Nigeria despite strong support for SMEs the economic growth is still low. This shows that despite many authors examining the area there are still gaps to be filled. Taking the literature review into consideration, we decided to set the following hypotheses: H1: There is a positive relationship between GDP as well as its components and the development of SMEs. H2: There is a positive relationship between GDP as well as its components and the development of smallsized enterprises. H3: There is a positive relationship between GDP as well as its components and the development of mediumsized enterprises. 4. SMEs in Poland and European Union As can be seen from the literature review presented above, there is a relationship between the size of the SMEs sector and the development of the GDP. Small and medium-sized enterprises have a significant contribution to nonfinancial business economy in Poland, what is presented in Table 1. The number of Polish SMEs is the same as the average for EU-28. However, there are more microenterprises in Poland – the difference is over 2%. The share of SMEs employment is close to the EU average (68.4%). Furthermore, micro enterprises provide more than one third of all jobs. SMEs generate 52.5% of value added. However, it is lower than the EU average: 56.8%. The important fact is also that more than 50 % of SMEs value added and employment comes from the following sectors: wholesale and retail trade and manufacturing. Table 1. The main indicators of SMEs development in Poland in comparison to the European Union Class size
Number of enterprises Poland
Number of persons employed
EU-28
Poland
Value added
EU-28
Poland
EU-28
Number
Share
Share
Number
Share
Share
Billion Euro
Share
Share
Micro
1 535 595
93,5 %
93,0 %
3 235 347
36,8 %
29,8 %
35,3
18,4
20,9 %
Small
58 203
3,6 %
5,8 %
1 218 976
13,9 %
20,0 %
26,5
13,8
17,8 %
Medium
14 735
0,9 %
0,9 %
1 559 771
17,8 %
16,7 %
39,1
20,4
18,2 %
SMEs
1 608 533
99,8 %
99,8 %
6 014 094
68,4 %
66,6 %
100,9
52,5
56,8 %
Large
3 188
0,2 %
0,2 %
2 772 820
31,6 %
33,4 %
91,1
47,5
43,2 %
Total
1 611 721
100,0 %
100,0 %
8 786 914
100,0 %
100,0 %
192,1
100,0
100,0 %
Moreover, self-employment accounted for 17.7 % of overall employment in 2016. It was 3.8% higher than the EU average. In 2014 about 9.5 % of all firms were high-growth enterprises. That was close to the EU average (9.2%). The information and communication sector has the highest share of high-growth firms (13.6%). Furthermore, this indicator was even higher in the EU as a whole (15 %). However, more detailed data are needed. Therefore, we have presented below data showing the number of SMEs in selected EU countries per 1000 inhabitants. According to the table number 2, the Czech Republic is ranked first, with over 95 SMEs per 1,000 inhabitants. Slovakia is in second place with more than 81 SMEs, per 1,000 inhabitants. This is much above the EU average, where there are 21 SMEs per 1000 inhabitants. Poland is below the EU average and is ranked 23th. This means that despite the fact that every year there are some support connected with setting up and running a business, a lot of work should be put in to reduce barriers to running a business.
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Table.2. The number of SMEs in Poland and other countries of the UE in 2016[8] Number of enterprises in
Number of
Number of
enterprises
inhabitants
Czech Republic
1016896
10627448
95,68581281
1
Slovakia
445725
5443583
81,88081269
2
Countries
relations to 1 000
Rank
inhabitants
Portugal
832220
10813834
76,95882885
3
Greece
793946
10775557
73,68027472
4
Sweden
702010
9723809
72,19495981
5
Slovenia
138699
1988292
69,75786253
6
Netherlands
1133067
16877351
67,13535791
7
Malta
28987
460297
62,97455773
8
Luxembourg
32125
520672
61,69911192
9
Italy
3716347
61680122
60,25193984
10
Belgium
610796
10449316
58,45320402
11
Cyprus
49947
854 802
58,43107527
12
2679720
47737941
56,1339669
13
Spain
70448
1257921
56,00351691
14
Norway
292781
5258000
55,6829593
15
Hungary
Estonia
550292
9919128
55,47786055
16
Lithuania
192212
3505738
54,82782798
17
Latvia
115278
2165165
53,24213166
18
Ireland
245059
4832765
50,70782461
19
Bulgaria
335379
6924716
48,43216675
20
24379469
512596403
47,56074927
21
France
3054021
66259012
46,09216026
22
Poland
European Union - 28 countries
1691597
38346279
44,11371961
23
Finland
228027
5268799
43,27874341
24
Austria
322822
8223062
39,2581255
25
Denmark
217897
5569077
39,12623223
26
United Kingdom
2109936
63742977
33,10068182
27
Croatia
147091
4470534
32,90233337
28
Germany
2455924
80996685
30,32129031
29
Romania
463951
21729871
21,35084005
30
Bosnia and Herzegovina
65607
3507000
18,70744226
31
Switzerland
147091
8420000
17,4692399
32
Another important indicator describing the importance of SMEs in the economy is the number of employees in these enterprises in relation to the total number of employees. The data are presented in the table number 3. The conclusion is that at in all EU countries the SME sector plays an important role. However, the highest number of employees in these entities are in Greece (87%) and Cyprus (83%). Poland (68%) is ranked 17th, slightly above the EU average. In 2010-2016, the indicators did not show any changes and remained at the same or similar level in all countries.
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Table. 3 Employees in SMEs in relation to the whole employment in years 2010-2016[8] Countries
2016
2015
2014
2013
2012
2011
2010
Rank (2016)
Austria
69%
69%
69%
68%
68%
68%
68%
16
Belgium
69%
69%
70%
70%
70%
69%
69%
13
Bosnia and Herzegovina
72%
72%
71%
71%
71%
71%
71%
12
Bulgaria
75%
75%
75%
75%
76%
75%
75%
7
Croatia
69%
69%
69%
68%
68%
68%
69%
14
Cyprus
83%
84%
84%
84%
84%
83%
83%
2
Czech Republic
67%
68%
69%
69%
70%
69%
70%
19
Denmark
64%
64%
64%
65%
65%
65%
65%
26
Estonia
79%
78%
78%
78%
78%
78%
79%
3
EU (28 countries)
67%
66%
67%
67%
67%
67%
67%
18
Finland
66%
66%
65%
64%
63%
63%
63%
23
France
63%
61%
61%
61%
63%
63%
63%
29
Germany
63%
63%
63%
62%
63%
63%
63%
28
Greece
86%
86%
86%
86%
87%
87%
87%
27
Hungary
70%
70%
70%
70%
70%
71%
72%
12
Ireland
63%
63%
63%
63%
63%
63%
63%
28
Italy
79%
79%
79%
80%
80%
80%
80%
4
Latvia
79%
79%
79%
78%
79%
77%
77%
5
Lithuania
76%
76%
75%
76%
76%
76%
75%
6
Luxembourg
67%
68%
69%
69%
68%
68%
68%
20
Malta
78%
80%
78%
79%
79%
79%
78%
6
Netherlands
65%
66%
66%
66%
67%
67%
67%
24
Norway
68%
68%
67%
67%
68%
68%
69%
18
Poland
68%
68%
68%
69%
69%
69%
68%
17
Romania
65%
65%
66%
67%
66%
66%
66%
25
Slovakia
72%
72%
71%
70%
70%
71%
72%
11
Slovenia
73%
74%
73%
73%
72%
72%
72%
9
Spain
72%
73%
73%
73%
74%
74%
75%
9
Sweden
65%
65%
66%
65%!
65%
65%
65%
26
Switzerland
67%
67%
67%
67%
67%
67%
67%
22
United Kingdom
54%
53%
53%
53%
53%
54%
53%
31
Another indicator of the importance of SMEs in the economy is their share in generating value added (Tab. 4). At the top of the ranking are Malta (79%) and Estonia (76%). Poland is below the EU average of 27 countries (51%). In the years 2010-2016 these indicators did not change and remained at the same or similar level in all countries. Table. 4. The share of value added contributed by SMEs[8] Countries
2016
2015
2014
2013
2012
2011
2010
Rank (2016)
Austria
63%
63%
63%
62%
60%
61%
61%
11
Belgium
62%
62%
62%
61%
62%
61%
61%
12
Bosnia and Herzegovina
66%
66%
65%
65%
65%
65%
65%
7
Bulgaria
63%
65%
65%
65%
62%
59%
59%
10
Croatia
61%
58%
58%
55%
55%
55%
55%
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7
Cyprus
75%
77%
77%
77%
77%
78%
78%
3
Czech Republic
55%
55%
55%
55%
56%
56%
55%
20
Denmark
61%
61%
61%
61%
62%
62%
62%
14
Estonia
76%
76%
75%
75%
75%
74%
75%
2
EU (28 countries)
56%
56%
57%
58%
58%
58%
58%
19
Finland
61%
61%
60%
61%
60%
59%
59%
17
France
55%
55%
55%
55%
58%
58%
58%
22
Germany
55%
54%
54%
54%
53%
53%
53%
21
Hungary
54%
53%
54%
54%
54%
54%
54%
24 27
Ireland
49%
49%
49%
49%
49%
49%
49%
Italy
67%
67%
67%
68%
68%
68%
68%
Latvia
69%
70%
71%
70%
69%
68%
68%
5
Lithuania
68%
68%
69%
69%
68%
66%
63%
6
Luxembourg
65%
65%
69%
71%
71%
69%
69%
8
Malta
79%
79%
78%
76%
75%
71%
71%
1
Netherlands
62%
62%
63%
62%
63%
63%
63%
13
Norway
70%
70%
70%
59%
59%
71%
72%
4
Poland
51%
51%
52%
52%
50%
51%
51%
26
Romania
52%
52%
51%
50%
50%
50%
50%
25
Slovakia
55%
53%
55%
59%
61%
63%
61%
23
Slovenia
65%
64%
64%
63%
63%
63%
63%
9
Spain
61%
62%
62%
62%
63%
63%
65%
15
Sweden
60%
60%
60%
60%
58%
59%
57%
18
United Kingdom
48%
51%
52%
53%
51%
51%
50%
28
5. Methodology The definition of SMEs varies between countries. In Poland, in line with the recommendation of the European Commission, there are there main criteria: headcount and turnover or balance sheet. The details are presented in Table 5. Table 5. Definition criteria of small and medium-sized enterprises in Poland[7] Enterprise category
Headcount
Turnover
<250
Up to 50 ml Euro
Up to 43 ml Euro
small
<50
Up to 10 ml Euro
Up to 10 ml Euro
micro
< 10
Up to 2 ml Euro
Up to 2 ml Euro
Medium-sized
or
Balanced sheet total
In order to verity the hypotheses, the authors decided to conduct statistical analysis. First, we calculated correlation which is a measure of the relation between two or more variables. Correlation coefficients can range from -1.00 to +1.00 and the value of -1.00 represents a perfect negative correlation while a value of +1.00 represents a perfect positive correlation. We chose the most widely-used type - Pearson r. This coefficient is also called linear correlation. It determines the extent to which values of two variables are proportional to each other[20]. Pearson correlation assumes that they are measured on at least interval scales and is calculated as follows:
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(1) Then, we chose the level of significance which is a primary source of information about the reliability of the correlation. We decided to use the following level of significance: p < 0.05. The reason is that this level is the most frequent in economic sciences. In the second stage of analysis, for the statistically significant results, we did the respective scatterplot. It visualizes a correlation between two variables and helps to avoid among others the problem of the outliers. They are infrequent observations, which have a significant influence on the value of the correlation coefficient. They represent a random error that should be controlled. Even a single outlier is capable of considerably changing the value of the correlation coefficient. Outliers may artificially increase the value of this indicator. However, they can decrease the value of a "legitimate" correlation, too. In connection to the above, it is always recommended to examine the respective scatterplot. If the sample size is relatively small, then including or excluding specific data points that are not as clearly "outliers” may have very important influence regression line and the correlation coefficient. One may state that they are not outliers but rather extreme values. There is but no widely accepted method to remove outliers automatically. Therefore, the authors decided to identify the outliers by examining a scatterplot of each important correlation. Eventually, we decided to collect the following data for the years 1996-2016 published by the Polish Agency for Enterprises Development: a. b. c.
the number of active companies broken down by the size of the enterprises. the number of employees in the companies broken down by the size of the enterprises the contribution of companies to GDP broken down by the size of the enterprises.
Moreover, we collected the following data about GDP, published by the Central Statistical Office. a. b. c. d. e.
Gross Domestic Product (in constant prices) the value of private consumption the value of business investment the value of government spending the value of export – although net export is the last component of GDP, we decided to choose only export as this indicator should be more important for development of SMEs
6. Statistical analysis Table 6 presents the significant correlations between GDP and the number of SMEs. All coefficients are positive. However, in case of micro and small-sized enterprises, they range from about 0.65 (government spending) to 0.7 (business investment). According to Wach[17], that means strong relationships. There are similar results in case of all SMEs, although the coefficients are a little higher. One can observe very strong relationship between GDP and its components and the number of medium-sized enterprises[18]. It is connected with the fact that the correlation coefficient range from approximately 0.8 (export) to 0.85 (business investment and government spending). Therefore, we observe positive relationship between both GDP as well as all components and the number of SMEs, however, it is stronger in case of medium-sized enterprises than micro and small-sized companies. Moreover, the magnitude is higher for business investment what should not be surprising (Tab.6).
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Table 6. The significant correlations between GDP and the number of SMEs in Poland in the years 1996 – 2016[9] Variable GDP Private consumtion Government spending Business investment Export
Number of micro and Number of medium-sized small-sized enterprises enterprises 0,686859 0,689973 0,647914 0,708128 0,688627
0,834184 0,853734 0,857729 0,855526 0,807480
Number of all SMEs 0,690047 0,693311 0,651546 0,711397 0,691562
Note: p < 0.05.
The similar situation is observed in case of relationship between GDP as well as its components and the number of employees in SMEs – table 2. Furthermore, the relationship can be perceived as strong for two variables. The correlation coefficient ranges from about 0.5 (government spending) to 0.64 (business investment) in case of micro and small-sized enterprises. These numbers are higher for all SMEs but are no more than 0.7 – the only exemptions is for business investment (roughly 0.76). However, the relationships between GDP as well as its components and the number of employees in medium-sized companies are very strong. The correlation coefficient range from 0.72 (export) to almost 0.79 (business investment). Nevertheless, one can state that there is positive relationship between GDP and the number of employees in SMEs. The correlations coefficients are lower than in case of the number of SMEs (Tab.7). Table 7. The significant correlations between GDP and the number of employees in SMEs in Poland in the years 1996 – 2016[9] Employees in micro and Employees in mediumEmployees in Variable small-sized enterprises sized enterprises all SMEs GDP 0,528109 0,754243 0,673404 Private consumtion 0,518723 0,776248 0,677520 Government spending 0,492444 0,766844 0,656787 Business investment 0,645154 0,789368 0,762675 Export 0,521934 0,725934 0,656677 Note: p < 0.05.
There are different situation in case of the last relationship. The significant correlations coefficients are for the contribution to GDP of all SMEs and medium-sized companies but not for micro and small-sized enterprises. In the first group they range from approximately 0.65 (government spending) to 0.63 (private consumption). The correlation coefficients for medium-sized companies are just a little higher, however, the maximum is for export. One can state that there is positive relationship between GDP as well as its components and the contribution of all SME and medium-sized enterprises. The relationship can be perceived as strong (Tab.8). Table 8. The significant correlations between GDP and the contribution to GDP of SMEs in Poland in the years 1996 – 2016[9] Contribution of micro and Contribution of mediumContribution Variable small-sized enterprises sized enterprises of all SMEs 0,319048 0,635386 0,611204 GDP 0,361493 0,589052 0,635804 Private consumtion 0,298679 0,573197 0,562811 Government spending 0,307601 0,657021 0,608531 Business investment 0,291176 0,660023 0,592542 Export Note: p < 0.05.
7. Conclusions From the review of static data presented in the tables, it can be noticed that the position of Poland against the background of other countries of the EU is as follows. Two of the three indicators analyzed are below the EU average. They are the number of enterprises per 1000 inhabitants (23 place) and the share of the SMEs sector in
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generating value added. In this ranking Poland is at a very low place: 27th. Only in relation to the number of employees employed in the SMEs sector takes the 17th place, which is one position above the EU average. After the literature review one can state that the relationship between Gross Domestic Product and development of small and medium-sized enterprises is of great importance. In connection to the above the authors decided to verify three hypotheses: H1: There is a positive relationship between GDP as well as its components and the development of all SMEs. The results of statistical analysis support the hypothesis. There is a positive relationship between both GDP as well as all components and the number of SMEs. It is but stronger in case of medium-sized enterprises than micro and small-sized companies. Furthermore, the magnitude is higher for business investment what should not be surprising. H2: There is a positive relationship between GDP as well as its components and the development of small-sized enterprises. The results of statistical analysis also support the hypothesis. There is positive relationship between GDP and the number of employees in SMEs. It is also stronger in case of medium-sized enterprises than micro and smallsized companies. The magnitude is higher for business investment, too. The correlations coefficients are but lower than in case of the number of SMEs. H3: There is a positive relationship between GDP as well as its components and the development of medium-sized enterprises. The results of statistical analysis support the hypothesis but in some parts: all SMEs as well as medium-sized enterprises. However, it has to be rejected in case of micro and small enterprises. The relationship can be perceived as strong. References [1]
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