Microsoft and Hult International Business School have a report out today looking at small and medium-sized enterprises (SMEs) across Europe. In Good Company combines an ethnographic study with a pan-European survey of almost 13,000 SMEs.

Perhaps unsurprisingly, it shows that the owners of business see growth and success in different ways:

“The survey showed that while growth is often a goal for SMEs, their focus is on achieving this in a controlled, fun way, rather than striving for the ‘hyper-growth’ that common wisdom about SMEs suggests. While making money clearly is a goal (37%), 43 per cent of SMEs actually define growth as refining a craft– the quality of their products – and the strength of their connection with customers – all while having fun and enjoying themselves along the way.”

 

 

As is so often the case, it gets interesting when you split the data by country.

 

 

Without wishing to overgeneralize, it's noticeable that small business owners in the more developed economies of the Netherlands, Finland, Belgium, Denmark and Germany don't prioritize making money to the same extent as small business owners in the relatively less developed economies of Russia, Kazakhstan, Czech Republic and Hungry. Although it should be pointed out that it's not a zero-sum choice. The highest pursuit of passions was among Greek small business owners (65%), but Greek small business owners were also the third most keen on making money (57%).

John Adams's letter to Abigail Adams (May 12, 1780) springs to mind:

"I must study Politicks and War that my sons may have liberty to study Mathematicks and Philosophy. My sons ought to study Mathematicks and Philosophy, Geography, natural History, Naval Architecture, navigation, Commerce, and Agriculture, in order to give their Children a right to study Painting, Poetry, Musick, Architecture, Statuary, Tapestry, and Porcelaine."

We should celebrate the fact that small business owners in developed markets have the freedom to follow their passions. It's the spoils of success and doesn't necessarily preclude making money. However, this can't be divorced from the ongoing debate around productivity. As Michel Van der Bel, President EMEA of Microsoft states in his Foreword:

“In spite of a positive economic outlook for Europe generally, we are still facing an issue with productivity (which is the cornerstone of economic growth) and SMEs can play a vital role in addressing it.”

Permanent changes in productivity are driven by technological change. How ambitious our small businesses are at embracing technological innovation will be fundamental to our net economic growth and standard of living.

 

 

Interestingly, business owners in developing markets seem to have more digital ambition than those in developed markets (even though you might expect that many would be more digitally advanced and thus more likely to already have moved over from paperwork to computer). Perhaps it's another example of developing economies lacking the drags of legacies of more developed economies.

But ultimately, whatever country you reside in, I think there's every reason to be optimistic about the combination of entrepreneurs and technology to make our lives better. As Nathan Goldschlag and Alexander Tabarrok conclude in their paper on Is Entrepreneurship in Decline?:

"[N]early 2 billion people are equipped today with a supercomputer networked to the world around it and to other supercomputers. The ability of small entrepreneurs from virtually anywhere in the world to tie into this network of vast computational power must alone be a tremendous boost for entrepreneurship."