Expert Meeting on Good Governance for SMEs
Geneva, 1 April 2004
Statement by Mrs. Brigita Schmögnerová,
Deputy Ministers, Entrepreneurs, Experts, Professors,
Ladies and Gentlemen,
On behalf of the United Nations Economic Commission for Europe I would like to welcome you all to this Meeting. The primary aim of the Expert Meeting on Good Governance for SMEs is to review the current governance practices and to analyse the models of SME-sector governance in advanced market economies, the new EU Member States as well as countries in transition. The Expert Meeting will explore the situation at the micro-level, how SMEs understand good governance, what their problems are, and what governments and non-governmental organizations can do to help them. The Meeting will also highlight the elements and importance of the business ethics aspects as well as Business and Corporate Social Responsibility.
As I emphasised yesterday at the opening session of the sixth Forum on Best Practice in Development of Entrepreneurship and SMEs in Countries in Transition: The Romanian and Slovak Experiences, adequate government policy should be focused on developing a business friendly environment, but at the same time targeted policies are needed, like (1) improving access of the SME sector to financing (risk capital, micro-lending, instruments for financing innovation), and (2) promoting good governance including social and environmental responsibility.
Governance at country level is about the importance of institutions, the interactions between different levels of government within a country, the interactions between the public, including non-governmental organizations. Governance at company level is about institutions within companies and interaction between its stakeholders. Among the major elements of governance policies are: transparency, accountability and responsibility. The World Bank researchers defined governance as “the exercise of authority through formal and informal traditions and institutions for the common good”. UNDP defines governance as “the exercise of political, economic and administrative authority to manage a nation’s affairs”.
Evidence suggests that good governance is an essential component of sustainable economic growth. In contrast, poor governance and slow economic development appear to be mutually reinforcing. It is increasingly evident that the quality of governance is a contributory factor to improved economic performance. Corporate scandals like Enron, Worldcom, Parmalat and the stock market crashes have intensified the issue of Good Corporate Governance. The key areas addressed included accounting standards and disclosure, auditing practices, protection of minority shareholders’ rights, rules for board of directors, management responsibility and remuneration. Discussions intensified immediately after the scandals and might have decelerated later, but GCG remains essential for the functioning of financial markets, economic growth and employment.
Today and tomorrow we are going to discuss good governance for SMEs at country level and a few aspects of good governance at SME level. Good governance for SMEs includes practices that could encourage the start-up of SMEs, methods that are useful for businesses to tackle the challenges of market. The development of SMEs is critical to the overall economic and sustainable growth of market economies. SMEs create jobs, employ workers laid off from the declining of restructured enterprises and generate government revenues.
We will also discuss business social responsibility. At the enterprise level the principles of business environmental and social responsibility are becoming more relevant. Let me draw your attention to initiatives like the Global Compact launched by the United Nations Secretary-General and the EU Green Book on Corporate Social Responsibility, which both promote the environmental and social responsibilities of business. Social and environmental responsibility means that enterprises in their profit-oriented actions take into consideration social and local/other environmental implications. This way enterprises can be an integrated part of the local communities helping them in the fulfilment of their achievements.
Ladies and Gentlemen, I express my appreciation to the Governments and the academic society of the UNECE region for convening this Forum. I would also like to thank the entrepreneurs and owners representing different businesses from hotel management to carpet weaving, from show manufacturing to human resource management, from more than thirty countries for their participation in this Meeting. I hope that we will have a very fruitful discussion.
Thank you for your attention.