LIST OF ACRONYMS AND ABBREVIATIONS
CHAPTER 2: SMEs IN THE GLOBAL WORLD
2.2 DEFINITION OF THE CONCEPT OF SMEs
2.2.3 SME definitions in selected countries
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TABLE 7. QUANTITATIVE DEFINITION OF SMES BY COMESA
Size of enterprise Number of employees
Micro enterprise 5–9 employees
Small enterprise 10–50 employees
Medium enterprise 150 employees
Source: COMESA (2013: 6)
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TABLE 8. SME DEFINITION IN THE U.S.
All manufacturers and service providers
not involved in exporting
Exporting businesses Farms
Number of
employees Less than 500
Most High Value
Less than 500 Less than 500 Less than 500 Annual
Income Does not apply Not more than
$7 million
Not more than $25 million
Not more than
$250 000 Sources: USITC (2010: 3); OECD (2013: 253b); OECD (2014: 360)
In Russia, micro enterprises have 1 to 15 full-time employees, while small enterprises have between 15 and 100 employees, total assets of between US$100 000 and US$3 million, and annual sales of between US$100 000 and US$3 million (EIB, 2013; OECD, 2013a; OECD, 2014). Medium enterprises in Russia have between 100 and 300 employees, total assets between US$3 million and US$15 million, and total annual sales between US$3 million and US$15 million (Mityay, 2012; EIB, 2013; OECD, 2014).
India makes use of capital assets in the classification and definition of SMEs, which are categorised into the manufacturing and services sectors and have different capital investment thresholds (Ravi, 2009; WBG, 2012; RBI, 2013). From 2006 to 2013, a micro enterprise in the manufacturing sector was defined as having assets worth up to US$62 500, a small enterprise as having assets from US$62 500 to US$1.25 million, and a medium enterprise as having assets ranging from US$1.25 million up to US$2.5 million (EIBA, 2012; RBI, 2013;
IMMSME, 2014). In 2014, the definitions changed due to the amendment of India’s Micro Small and Medium Enterprises Development (MSME) Act of 2006. A new act, the MSME (Amendment) Act of 2014, came into force. From 2014 to date, a micro enterprise in the manufacturing sector has assets worth less than US$92 000, small enterprises have assets ranging from US$92 000 to US$1.84 million, and medium enterprises have assets ranging from US$1.84 to US$5.52 million (IMMSME, 2014).
Prior to July 2014, a micro enterprise in India’s services sector had assets worth up to US$25 000, a small enterprise in the same sector had assets ranging from US$25 000 to US$0.5 million, and a medium enterprise had assets ranging from US$0.5 million to US$1.5
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million (Ghatak, 2012; SME World, 2013; Thornton, 2013b). After the MSME (Amendment) Act of 2014, micro enterprises in India’s services sector now have assets worth less than US$36 800, small enterprises have assets ranging from US$36 800 to US$0.92 million, and medium enterprises have assets ranging from US$0.92 million to US$2.76 million (IMMSME, 2014).
Malaysia classifies SMEs according to the size of operation in terms of the number of employees or the annual sales turnover (NSDC, 2005; Muhammad & Labuan, 2010; Senik et al., 2010; Hashim, 2012; Moorthy et al., 2012; Katua, 2014). Malaysian SMEs are categorised into manufacturing, and services and other sectors (SME Corp. Malaysia, 2013a;
Katua, 2014). A small enterprise in the manufacturing sector must have an annual sales turnover of between RM300 000 (US$89 820) and RM15 million (US$4.49 million) or have between 5 and 75 full-time employees (NSDC, 2013a). Medium enterprises in the same sector must have an annual sales turnover of between RM15 million (US$4.49 million) and RM50 million (US$14.97 million) or between 75 and 200 full-time employees (NSDC, 2013a;
Katua, 2014). In the services and other sectors, small enterprises have an annual sales turnover of between RM300 000 (US$89 820) and RM3 million (US$898 200) or between 5 and 29 full-time employees (SME Corp. Malaysia, 2013a). A medium-sized enterprise in the same sector has an annual sales turnover of between RM3 million (US$898 200) and RM20 million (US$5 988 million) or between 30 and 75 full-time employees (NSDC, 2013a; Katua, 2014).
In the South African context, a micro enterprise is an entity that has fewer than 5 employees, has an annual income of between R200 000 (US$20 000) and R500 000 (US$50 000) or has assets that are worth less than R100 000 (US$10 000), while small enterprises have fewer than 20 employees, have an annual turnover of between R2 million (US$200 000) and R25 million (US$250 000) and have assets of up to R500 000 (US$50 000), depending on the industry (SANCR, 2011; Mohutsiwa, 2012; Tangwo, 2012). Medium enterprises have between 100 and 200 employees, an annual turnover of between R4 million (US$400 000) and R50 million (US$5 million) and assets worth between R2 million (US$200 000) and R18 million (US$1.8 million) (Fatoki & Odeyemi, 2010; Fatoki & Garwe, 2010; SANCR, 2011). These SMEs must be separate and distinct entities and are managed by one or more owners (SANCR, 2011; Tangwo, 2012).
The Zambian Ministry of Commerce, Trade and Industry classifies enterprises in terms of the value of their assets (excluding land and buildings), their annual income and the size of their labour force (Mumba, 2014). A micro enterprise has a total asset value of US$15 000, an annual income of US$30 000 and a maximum of 10 employees. A small enterprise involved
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in manufacturing and processing has a total asset value ranging from US$15 000 to US$30 000. Small enterprises in the trade and services sectors have assets worth up to US$30 000. Small enterprises in both sectors have an annual income of between US$30 000 and US$45 000, and employ between 11 and 49 workers. Medium enterprises in manufacturing and processing have assets worth between US$40 000 and US$90 000, while those in the trade and service sectors have assets of between US$30 000 and US$55 000.
Medium enterprises in these two sectors have an annual income of between US$30 000 and US$150 000 and have 51 to 100 employees (Zambian Ministry of Commerce, Trade and Industry, 2008, cited in Mumba, 2014).
The various definitions of SMEs discussed above are summarised in Table 9.
TABLE 9. STATISTICAL DEFINITIONS OF SMES IN SELECTED COUNTRIES
Country Category of enterprise
Number of employees
Annual income
(US$) Assets (US$)
UK
Micro < 10 ≤ $3.3 million ≤ $3.3 million Small < 50 ≤ $16.7 million ≤ $16.7 million Medium < 250 ≤ $83.3 million ≤ $71.7 million
Russia
Micro 1–15 < $100 000 < $100 000 Small 15–100 ≤ $3 million ≤ $3 million Medium 100–300 ≤ $15 million ≤ $15 million
Malaysia (manufacturing
Sector)
Micro < 5 < RM300 000
Small From 5 to less than 75
From $89 820 to less than $4.49
million
___
Medium From 75 to less than 200
From $4.49 million to not
more than
$14.97 million
___
Malaysia (services & other
sectors)
Micro < 5 < $89 820 ___
Small From 5 to less than 30
From $89 820 to less than $0.9
million
___
29 Medium From 30 to
less than 75
From $0.9 million to not more than $5.98
million
___
India (manufacturing
sector)
Micro ___ ___ Up to$92 000
Small ___ ___
From above$92 000
up to $1.84 million
Medium ___ ___
From more than $1.84 million up to
$5.52 million
India (Service enterprises)
Micro ___ ___ Up to $36 800
Small ___ ___
From above
$36 800 to
$0.92 million
Medium ___ ___
From more than $0.92 million to
$2.76 million
South Africa
Micro < 5
From less than
$20 000 to
$50 000 depending on the
industry
Less than
$10 000
Small < 20
From less than
$200 000 to
$2 500 000
From less than
$15 000 to$50 000
Medium < 200
From less than
$400 000 to $5 million
From less than
$200 000 to
$1.8 million
Zambia
Micro ≤ 10 US$30 000 US$15 000
Small (manufacturing
& processing, and trade &
11to 49 workers
US$30 000 to US$45 000
US$15 000 to US$30 000
30 services
sectors) Medium (manufacturing
& processing)
50 to 100 workers
US$55 000 to US$150 000
US$40 000 to US$90 000 Medium (trade
& services sector)
50 to 100 workers
US$55 000 to US$150 000
US$30 000 to US$55 000 Sources: Adapted from SANCR (2011: 24); EIBA (2012: 96); WBG (2012: 20, 96); OECD (2013: 6b); RBI (2013: 2–3); SME Corp. Malaysia (2013b: 2); IMMSME (2014: 14); Mumba
(2014: 3); Russian Statistics Office, cited in OECD (2014: 271)
It is clear that different countries use different indicators to define SMEs (Katua, 2014).
Definitions therefore vary from country to country (Pandya, 2012, cited in Mitanoski et al., 2013), with each country or region using a definition that suits its needs, circumstances and expectations. Thus, giving a universal definition of SMEs is not an easy task (Inyang, 2013).