International Conference

on the Foundation of
WUSME - WORLD UNION OF SMEs
21. – 23.04.2010 in the Republic of San Marino

Opening Statement
of the General Secretary
Conference Committee
Prof. Dr. Norbert W. Knoll-Dornhoff

Mr. Chairman, Honourable Secretaries of State, Excellencies,

Distinguishes Delegates, Ladies and Gentlemen,

Let me start by expressing on behalf of the members of the

Conference Committee chaired by Dr. Gianfranco Terenzi my
gratitude to the Government of the Republic of San Marino and in
particular to the honourable Secretary of State for foreign affairs, Mrs.
Antonella Mularoni, for hosting this conference and for the valuable
support in organising it together with my esteemed colleagues from
the CESA foundation.

I also wish to thank the distinguished delegates from SME supporting

organisations from all continents for their patience, particularly when
the date of the conference had two times to be postponed due to
various time constraints and for not hesitating to endure the burden of
the long and strenuous travel to San Marino.
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Whilst this conference venue, located in the beautiful and secure

capital of our host country, San Marino, is a most comfortable and
delightful place, the world outside is still suffering from a number of
crises, not only economically in their nature. Many of the
achievements in recent years made to facilitate business of SMEs in
the world, to reduce poverty in less privileged economies have
seriously been jeopardised by shrinking demand for SMEs export
products, increasing prices for energy and food, falling commodity
prices, significant reductions in foreign investment and a general
liquidity shortage. The strong interdependence among the worlds’
economies made this a literally global economic crisis and human
tragedy. However, we have no reason be too pessimistic. We can
already see a light blue stripe on the horizon as economies are
starting to recover, as our entrepreneurs are again back at business
with new grand ideas and innovations: Green industries, new waste
to energy and environment protection technologies, health care
facilities, products and services, fight against the climate change,
agro-industry are only some examples of many others.

In a difficult global economic environment, it is more important than

ever to put into place strong fundamentals reinforcing economic
growth and development and it is more important than ever to
establish a global World Union of SME supporting Organisations and
Institutions as the basis for an effective and sustainable SME oriented
policy focusing at practicable actions instead of well-intentioned
declarations that could never really help SMEs to overcome difficult
times and particular situations.
Time is ripe for a new WUSME House !

Mr. President, Distinguished Delegates,

Now building jointly together the new house for SMEs Institutions
world wide, that is exactly the main target of this Conference.
 -3-

You, distinguished delegates, you are the able architects and

engineers of the new WUSME House and my humble self and my
colleagues as your staff members will actively endeavour to be good
construction workers and facilitators for our new House: Together we
will make our new home dynamically develop and prosper in the
future.

The pillars of competitiveness and the windows with view to the future.

But which materials shall we use for our new WUSME House? What
is the stuff economic development and prosperity is made of ?

I am now offering you to present my brief statement in 4 sections:

Section I. The Foundation (theory and values)

Section II. The Pillars and Windows (Competitiveness and Ease of
Doing Business)
Section III. The Rooms (Actions, in particular access to finance)
Section IV. The Roof and Staircases (how shall the conference
Proceed – modalities of operation)

Section I. The Foundation of our House

Entrepreneurship theory and values
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In very simple terms, entrepreneurial theory (see paper from Louis

Jacques Filion, HEC, The University of Montreal Business School
“Entrepreneurship to Entreprenology” ,download:
http://sbaer.uca.edu/research/icsb/1997/06.pdf )

is based on

a) The Economists

• the popular belief that entrepreneurship originated from the

science of economics alone. A careful reading of the first two
authors usually identified as the pioneers of the field - Cantillon
(1755) and Say (1803; 1815; 1816; 1839) - reveals that they were
interested not only in the economy but also in the managerial
aspects of enterprises, business development and business
management.

• However, it was Schumpeter who really launched the field of

entrepreneurship, by associating it clearly with innovation.
Josef Alois Schumpeter
(see: http://en.wikipedia.org/wiki/Joseph_Schumpeter)
"The essence of entrepreneurship lies in the perception and
exploitation of new opportunities in the realm of business ... it always
has to do with bringing about a different use of national employ and
subjected to new combinations." (Schumpeter, 1928)

• If we were to summarize the main economic trends of

thought on entrepreneurship, we would probably accept the
standpoint of Baumol (1993), who proposed two categories of
entrepreneurs: the entrepreneur-business organizer and the
entrepreneur-innovator.

b) The Behaviourists
One of the first authors from this group to show an interest in
entrepreneurs was Max Weber (1930). He identified the value
system as a fundamental element in explaining entrepreneurial
-5-

behavior. He viewed entrepreneurs as innovators, independent

people whose role as business leaders conveyed a source of formal
authority. However, the author who really launched the contribution
of the behavioral sciences to entrepreneurship was undoubtedly
David C. McClelland. McClelland did not define entrepreneurs in the
same way as the rest of the literature. His definition was as follows:
“An entrepreneur is someone who exercises control over production
that is not just for his personal consumption. According to my
definition, for example, an executive in a steel-producing unit
in the USSR is an entrepreneur." (McClelland, 1971; see also 1961:
65)

The foundation of WUSME shall be the Mission Statement that had

been published in the homepage
st th
http://www.wusme.eu.tt (documents) 1 DRAFT of 20 May 2009.

WUSME´s Values have been formulated as follows:

QUOTE:
The UNION trusts in the principles of freedom and responsibility of
entrepreneurs and in developing the environment and social
conditions world wide by market mechanisms and social partnership.
The implementation of the principle of subsidiarity, the limitation of
bureaucratic obstacles to economic development and the protection
of free competition based on efficiency are the main targets of the
UNION.
UNQUOTE

Mr. Chairman, Distinguished delegates,

you will have noticed that I have underlined the terms which
according to recent findings of economic research appear to be of
paramount importance for international comparisons of economies
and the evaluation and assessment of reforms of given or new
institutions that are responsible for the development of SMEs. These
are

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• Economic Freedom and “Ease of Doing (SMEs) Business”

• Competitiveness and effectiveness of an economy as the main
prerequisite for increasing the GDP per capita (PPP) and to
reduce poverty.

SME - relevant statistics and entrepreneurship research have

breathtakingly improved in the last decade.

The main sources of these data and findings are:

• Doing Business Reports of the WORLD BANK and the IFC (The
International Finance Corporation of the World Bank)

investigating the regulations that enhance business activity and those

that constrain it. Doing Business presents quantitative indicators on
business regulations and the protection of property rights that can be
compared across 183 economies — from Afghanistan to Zimbabwe —
and over time. Regulations affecting 10 stages of the life of a
business are measured: See Chart 1
 -7-

Source: DOING BUSNINESS REPORT – World Bank and IFC

 -8-

• The Global Competitiveness Reports,

published by the World Economic Forum within the framework of the
Global Competitiveness Network.

Competitiveness is been defined as the set of institutions,

policies, and factors that determine the level of productivity of
a country.

The level of productivity, in turn, sets the sustainable

level of prosperity that can be earned by an
economy. In other words, more-competitive economies
tend to be able to produce higher levels of income for
their citizens. The productivity level also determines the
rates of return obtained by investments in an economy.
Because the rates of return are the fundamental drivers
of the growth rates of the economy, a more-competitive
economy is one that is likely to grow faster in the medium
to long run. SMEs, as recent studies show that entrepreneurial
activity is related to growth in GDP and more specifically, it suggests
that entrepreneurs play an important part in recovering from
economic recessions.
The pillars of competitiveness are shown in Chart 2
• Source: The Global Competitiveness Report 2009 – 2010 (World Economic Forum)
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• GEM The Global Entrepreneurship Monitor (GEM) - Leading

Sponsoring Institution and Founding Institution: Babson College,
Babson Park, MA, United States

Is the world’s leading research consortium dedicated

to understanding the relationship between
entrepreneurship and national economic development.
For the past ten years GEM reports have been the
only source of comparable data across a large variety
of countries on attitudes toward entrepreneurship,
start-up and established business activities, and
aspirations of entrepreneurs for their businesses.

Chart 3 Amount to start a business – GEM 2009

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Section II. The Pillars (competitiveness) and

Windows (institutions) of the WUSME House
A small case study: The ranking of your Country
by using available indexes. Doing Business – Competitiveness – GDP
(PPP)

In order to show the current position of an economy and their

development in relation to other economies in the world, I have listed
the Countries where your Organisations are based. By using the data
of the mentioned indexes, I have linked it with the GDP (Gross
Domestic Product) per capita (PPP – Purchasing Power Parity in
USD). The results show, which economies and their SMEs are
climbing up the development staircase. But most crucial: These
indexes show which economies are still stuck in the “poverty trap”,
e.g. their GDP (PPP) stagnating on the lowest level, a clear indication
where urgent international help and reforms are needed.
Chart 4 - Ease of Doing Business Ranking 2006 and 2010 – World Bank Group
Chart 4 indicates the following: The higher a bar is the more difficult it
is in an economy for SMEs to do business. Some economies have
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between 2006 and 2010 effected reforms of one or more of the 10

institutions and subsequently improved their ranking. In other
economies it became more difficult for SMEs to do business.

WUSME will in future assist economies were reforms are urgently

needed.

Another example for diagnosing the current status of an economy

represents Chart 5. where we have linked the Doing Business ranks
with the development of GDP (PPP). It shows clearly that too many
economies in the world are still far behind the the rich Countries and
that the gap is over time rather widening instead of shrinking: These
less privileged economies are still stuck in the “poverty trap”.

Mr. Chairman, Distinguished Delegates,

Let me finish this section by drawing you kind attention to recent

empirical findings (Entrepreneurship and the Business Cycle,
Prof. P.D. Koellinger, and Prof. A.R. Thurik , Erasmus School of Economics,
Erasmus University, Rotterdam) that might fundamentally change
economic policy in regard to entrepreneurship and SMEs. There are
presently about half a billion entrepreneurs worldwide that
significantly contribute to economic growth and development. Only a
few years ago leading economists stated: "Entrepreneurial activity is
related to growth in GDP and..... If your economy is doing well, you're
going to have a higher level of entrepreneurial activity, all else being
equal”. Recent studies, however, showed that entrepreneurship – on
average across countries - is a leading indicator of the cycle and
causes increases of GDP. This suggests that entrepreneurs have an
essential role in explaining business cycle dynamics. And, more
specifically, it suggests that entrepreneurs play an important part in
recovering from economic recessions.

These observations point to an important function of entrepreneurship

particularly in times of economic recessions: an impulse of
entrepreneurial activity is typically followed by economic
recovery and a decrease in unemployment.

Chart 6
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Section III. The Rooms (Actions, in particular access

to finance)
Without rooms a house remains empty. I call the rooms of our
WUSME House “Action Rooms”. For this conference we intend to
open 5 of such rooms:

Action Room No.1 Access to Finance for SMEs.

Though this room will need a longer time to be ready, I recommend

you to focus on the following furnitures:

• Micro-financing
• EIB financing for SMEs
• Equity capital via Initial Public Offerings
• Emergency and Development Funds for SMEs: The CTL –
• Currency Transaction Levy and the SMETFED – SME
• Trust Fund for Emergency and Development.

In the course of this conference we will have the opportunity to

discuss SME financing in more details and agree on modalities of
further procedure.

Permit me, however, to make here a few remarks regarding micro-

financing:

Micro financing has proven a critical tool in the fight for survival of
SMEs in times of a crisis and for further development. Access to a
range of micro finance services, savings, loans, and money
transfers— enables poor families to invest in enterprise and in better
nutrition, improved living conditions, and the health and education of
their children.

Micro enterprises and small businesses account for the major share
of the private sector and employment in many developing countries.
 -13-

As a response, IFC and German development bank KfW have

launched the Micro finance Enhancement Facility, a short- to
medium-term facility of up to $500 million with initial contributions of
$150 million from IFC and $130 million from KfW.

The MEF is expected to provide refinancing to more than 100 strong

micro finance institutions in up to 40 countries. It will support lending
to as many as 60 million low-income borrowers in many of the world's
poorest countries.

It shall be the aim of our World Union to establish an own Micro

finance Institution, the SMETFED – the SME Fund for Emergency and
Development. Basic funds shall derive from the proceeds of the CTL-
the Currency Transaction Levy in co-operation with regional banks.
See the note of the General Secretary which is published in our
homepage. SMETFED shall also work together with FED, the EIB
and other Institutions which enhance micro
financing of SMEs world wide.

My esteemed Colleagues will in the course of the Conference speak

about the following actions:

Action Room No. 2: SME – University and Research Centre.

Prof. Dr. Tajudin Alias, Malaysia, IUE Internattional University of
Entreprenology, Honolulu, Hawaii, USA

Action Room No. 3: Quality Standards

Mr. Dennis Hughey, USA

Action Room No. 4: Consultative and/or Observer Status at UN –

Organizations, e.g. UNIDO, OECD, UNESCO, ILO......
Mr. Robert Holtz, WASME Representative at UNESCO, Paris

Action Room No. 5 WUSME Exchange, interactive website

Mr. Őrn Thorvardarson, MBA, Iceland
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Mr. Chairman, Distinguished Delegates,

we are already on the staircase of our WUSME House at

Section IV. Further procedures
Our new World Union shall consist of Member Organisations,
Institutions and Office Bearers. For the start and for the registration of
WUSME in San Marino we must, therefore, elect the

• Steering Committee, which is the “Government” of WUSME

• 5 Vice Presidents who shall represent WUSME in the
Continents
• Secretary General who shall be responsible for the execution of
the Steering Committee's decisions and
• Working Groups to furnish our Action Rooms.

Mr. Chairman, Distinguished delegates and esteemed guests,

there are indeed strong indications for being optimistic about

WUSME's potential for achieving our goals to be set in this
Conference. Can it be done? Yes, I am confident that success is at
hand.

Together we can make a difference. The difference will be driven by

innovative thoughts, actions and deeds.

Thank you for your attention.