Defining Small Business Sector: There is no specific definition for the SMEs, but some definitions are very

depending on criteria such as number of employees and turn over. In 1971 Bolton Report (Dawes &
Haydock in Frank, 1999) defined SMEs on the basis of number of employees, turn over and an economic
definition that was based on the essential characteristics of the small firms. These characteristics were, a
small share of the market, operates independently and owner managed organisation. European Union
also categorised macro, small and medium businesses based on no. of employees. According to the
European Union (E.U) Type of the firm Number of employees Micro 1-9 Small 10-99 Medium 100-499 In
Sweden a company is usually classified as a small and medium sized enterprise when it has up to 200
employees (SCB, 1998 in Jennie & Zetterwall). It is true that vibrant small business can make a significant
impact on the local economy. In the Sweden 20% of total export come from the small and medium sized
enterprises with less than 200 employees (NUTEK, 1994 in 12 Jennie & Zetterwall). Many firms have
limited ambitions to growth but provided an important source of employment in the local communities
and give independence and status to their owners. At the same time size, flexibility and fast
responsiveness of small businesses allow them to react quickly to change into competitive environment.
Small firms are also seen as a key source of innovation, providing new types of product and services, and
new way of delivering old services (Dawes & Haydock cited in Frank, 1999).