EMCC European Monitoring Centre on Change

Restructuring in SMEs in Europe

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Restructuring in SMEs is less visible and less publicised than that in larger firms. This can be problematic as small and medium-sized enterprises (SMEs) are the backbone of the European economy, accounting for more than 99% of European enterprises and about two-thirds of private sector employment.

Restructuring is likely to have different manifestations in SMEs than in larger firms, though little is known about the details of restructuring in SMEs and its outcomes. This EU-wide research study investigated the relevance of different forms of restructuring for SMEs, the drivers of change, the main characteristics, success factors and constraints of SME restructuring as well as the effects of restructuring on companies and employees.

Some key findings

  • Internal restructuring, business expansion and bankrupty/closure are the most common forms of restructuring in SMEs.
  • Restructuring in SMEs tends to be carried out in a reactive, unplanned way and without formal restructuring plans.
  • Once restructuring is underway, decisions are taken quickly and flexibly.
  • The owner/manager has a core role in SME restructuring, supported by various internal and external stakeholders. It is not common for staff representatives to be involved as the majority of SMEs have no formal staff representation structure.
  • In the short-term, the economic and employment situation in smaller firms is more stable than in larger enterprises; over time however, effects on smaller companies may be more severe and longer-lasting.
  • While external factors driving restructuring are common regardless of company size, in SMEs the internal drivers are different - including factors such as the personal ambition of the owner, limited resources and dependance on a few clients or suppliers.
  • Policy makers should consider improvements in the design of support services to SMEs (by offering more comprehensive packages, easier access through one-stop-shops, reframing eligibility criteria); and the content  (prioritising access to finance, and tools for the anticipation of change within the company).

Project outputs

National reports for the EU27 countries