47878 Economics of SMEs

2º Cycle in Economics
Academic 2022/2023 – 1st Semester
Final Test
19th December 2022

Departament of Economics, Management Test Duration: 2 hours with tolerance of 15 minutes

Industrial Engineering and Tourism

Answer to all the questions in a concise, objective and complete way.

Any attempt of fraud is punished by the annulment of the evaluation test.
The use of mobile phone or other devices is not allowed. All the devices must be turned off.
The illegible handwriting is not considered in the test correction.
In parentheses is the quotation of each question. B

(5,6) 1. i) Characterizes the New Competitive Paradigm and based on it ii) discuss the role of SMEs
in the current European economy and iii) its relation with the public policies of European
Union, iv) considering the specificities of SMEs, the importance of having an European
definition of SME, v) and the role of innovation on Schumpeterian paradox of “R&D in SMEs”.

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 (2,5) 2. Mark each one of the following statements as True (T) or False (F). For the one(s) you
considered False, justify your answer(s).

a) The Modern Paradigm explains that the relation between Competitiveness of SMEs and Economic
Growth is based in three arguments: SMEs enhance competition and entrepreneurship; SMEs are
more productive than LEs but some institutional failures can impede SME’s development, and SMEs
boosts employment because they are more labour intensive.

b) The Resources Based View presents the competitive success of a given industry as the result of four
interactive attributes that determine the environment in which companies compete, promoting or
preventing the creation of competitive advantages: Conditions of Factors; Conditions of Demand;
Related Industries and Support; and the Strategy, Structure and Rivalry of Companies.

c) According to Nelson and Winter (1982): the linear models of the innovation process involve feedback
loops between: research; the existing body of scientific and technological; knowledge; invention; the
potential market; and the various steps in the innovation process related to dynamic impact of
innovation.

d) A broader definition and, therefore, with a greater degree of adaptation, used by the OEDC in the
context of competitiveness, presents competitiveness as "the ability of companies, industries, regions
or nations create, when exposed to international competition, yields factors and employment levels
relatively high in a sustainable way.

e) The SME Perfumes Vosche, Lda, is a company with a registered capital of €500,000 euros (made in
99%), divided by several partners, €300,000 belong to the Vosche family, €120,000 to a large
company of capital and the remaining capital to the University Autonoma of Barcelona. The Perfumes
Vosche, Lda, in 2020 employed 200 persons, had an annual turnover of €43.520,000 and an annual
balance sheet of €25.105,300.

3. Consider that your grandfather left you a 60 years old SME in the business of canned sardines
(sardinhas enlatadas) named Marie Elisabeth, which experiment a decline in the sales in the last
five years. You are a very travelled person with a Master is Business Competitiveness in United
States and Erasmus mobility in France and England. Based on this starting point, answer the
following questions:

(2,7) 3.1. Consider the stages of the company's Life Cycle studied in classes, sets out the most common
financing typologies and problems that can arise at each stage; and considering that you want to financing
the SME you inherited, particularize which financing typologies will be the most adequate in the life cycle
stage that characterises this SME.

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(1,7) 3.2. Actually, you are the CEO of the SME, and you have decided to expand the business
geographically in Portugal and around the world. Based on what was addressed in the classes
about Demography of SMEs, refer to it applications to support the decisions that you have to take
in the way to create competitive advantages for your SME.

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(2,7) 3.3. In light of the major traditional theories of internationalisation applied to SMEs according to the
studied literature, explain the motivations and the main strategies of internationalisation of
Portuguese SMEs. Take the example of the SME described in 3. and say which one of the
theories you mentioned will best fits to it.

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(2,8) 3.4. Assuming that you want to internationalise (more) your business. Based on the increment of
competitiveness, define the central problematic of internationalisation strategy decision to be
applied in the internationalisation process of your business. (see the attached slide as appendix)

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(2,0) 3.5. Considering that your SME have the opportunity to belong to an industrial cluster, explain the
importance to the SME of belonging to an industrial cluster (take in account all the issues related
that were studied and give some examples about the benefits for your SME).

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