Small Firms, Competitiveness and Innovation: A Complicated Picture. A Brief Analysis on EU and Romania

Firms’ setting up, growth and discontinuity, their effects on the economy and society are one of the most addressed areas in business economics. Their impact on employment, market concentration and competition, survival, economic outputs and innovation are sufficient reasons to consider them as crucial topics of interest. Investment in research & development, innovation and digitalisation are essential for firms’ consolidation, and, especially, for small and medium-sized enterprises (SMEs). However, numerous researches and studies indicate that the introduction of innovative business practices, openness to digitalisation are not common practices for most SMEs even in developed countries, although many of these firms are aware of the positive effect of innovation in improving their financial performance and turnover’s growth.  Our analyses at the European Union (EU) level, and, respectively, of a EU member state with modest results in innovation (namely Romania) highlights a complex and complicated picture, in which progress in entrepreneurship, start-ups, support for the setting up of new firms and their consolidation may be easily compromised by the limited interest and involvement in innovation and digitalisation of small firms, and the considerable potential for development of the SME sector may gradually dissipate.