A microscope on small businesses: The productivity opportunity by country

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Micro-, small, and medium-size enterprises (MSMEs) are crucial to global economies, accounting for two-thirds of business employment in advanced economies and almost four-fifths in emerging economies, contributing to half of all value added [10][14] - Enhancing MSME productivity could yield significant economic value, with potential increases of 5% of GDP in advanced economies and 10% in emerging economies if MSMEs reach top-quartile productivity levels [10][11] - The productivity gap between MSMEs and large companies varies significantly across countries and sectors, with MSMEs in Kenya being only 6% as productive as large companies, while those in the UK are at 84% [46][54] Summary by Sections 1. Small Businesses Power the Economies of Today and Tomorrow - MSMEs create substantial value, contributing roughly half of global GDP, with shares exceeding 60% in countries like Portugal and Kenya, while being less than 40% in the US and India [25][27] - MSMEs are significant job creators, accounting for about 40% of all employment and 70% of employment in the business sector, with figures as high as 96% in Kenya [25][33] 2. Boosting MSME Productivity Could Yield Significant Value - The productivity of MSMEs is about half that of large companies, with significant variation across countries and sectors [45][46] - The productivity gap is larger in emerging economies compared to advanced ones, with microenterprises lagging further behind [46][47] 3. Looking Through a Microscope to Fill the Gaps - A detailed analysis reveals that MSME productivity varies widely across subsectors and countries, with specific subsectors driving the majority of the productivity gap [11][12] - Stakeholders must develop targeted productivity strategies that consider the unique challenges faced by MSMEs in different contexts [12] 4. Creating Value Through Networks and Interactions - MSMEs and large companies can benefit from improved productivity through collaborative networks, with evidence showing that productivity improvements in one can lead to gains in the other [11][12] 5. Seven Examples of Win-Win Domains - The report highlights specific sectors where MSMEs can thrive and contribute to overall economic growth, emphasizing the importance of tailored strategies for different industries [11] 6. Delivering a Win-Win Future - The future of MSMEs hinges on their ability to adapt and scale, with a focus on enhancing productivity and fostering collaboration with larger enterprises [11][12]