It is very fashionable to declare that SMEs (small and medium enterprises) are more important than large companies. Maybe because the big companies are a target of recurrent fantasies of anti-capitalist? In any case, politicians like to declare that they will help SMEs . This Seller is sexy, and nobody can blame them come. Have they provided reason?
The underlying argument is that SMEs create more jobs than large firms . Yet a study conducted by three U.S. researchers shows that this statistical fact is greatly exaggerated. They claim that small businesses create many jobs of course, but mainly because a large proportion of these firms are young. However, companies that have just been created are highly likely to hire. In fact, looking at the relationship between firm size and the number of jobs created, we are victims of a statistical artifact. In reality, this is not the size that counts but rather the age.
So contrary to what politicians say, this is not the small businesses that are "the backbone of growth" or whatever else slogan rotten, but Young companies.
Second, the study authors say this may not be very wise to judge the importance of a category of business by simply looking at job creation. For while ups create many jobs, they also destroy much! Within five years, 40% of jobs created by start-ups are destroyed, which moderates the balance a bit. The reason is that young companies are often an opportunity to start new risky projects undertaken by entrepreneurs a little too confident in their chances of success and the risk of failure is high. The jobs do not count among the most stable.
Should we all refrain from supporting start-ups? No, because the economy grows by a process of trial and error. Young businesses, although they are likely to disappear quickly, are responsible for many innovations sources of growth. It is impossible to have a lot of innovative companies without at the same time many companies trying to innovate but that break the mouth.
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