Hitotsubashi Institute for Advanced Study (HIAS) Research Center for Regional and SME Policy (HIAS SME)

OKAMURO, Hiroyuki
Director
Research Center for
Regional and SME Policy
Hitotsubashi Institute for
Advanced Study

Small and medium enterprises (SMEs) play an important role in national and regional economies in the world. They make up over 99% of all enterprises in most countries. In Japan, 70% of workers are employed by SMEs. They contribute not only to employment, but are also looked upon to serve as the driving force for competition, innovation, and regional revitalization. SMEs are not only numerous; they are also diverse. In many cases, they form a division of labor with the major companies in the market and complement the role played by these big companies, thus contributing to the regional economy. It is not an exaggeration to say that the vitality and growth of regional economies depends on the SMEs in each region.

On the other hand, SMEs are facing various constraints and difficulties. They have scarce business resources, such as capital, labor, and technology, and are also restricted in their efforts to raise external capital due to the imperfections of the capital market. With the aging of top management, many SMEs are facing successor problem, thus business succession is an important issue. Furthermore, entrepreneurship has been sluggish for a long time in Japan, with the number of business closures consistently exceeding that of startups, raising concerns about declining economic vitality. For this reason, various policies have been implemented so far to mitigate the disadvantages suffered by SMEs and support entrepreneurship. Emphasis has also been placed on measures to support R&D in SMEs and enhance their growth and productivity.

However, due to constraints of company and policy data, there have been insufficient policy evaluation studies so far to find out how effective such policies are, whether they are designed properly, and how to make better policies. The HIAS SME aims to serve as a joint-research hub with the Ministry of Economy, Trade and Industry (METI) for empirical studies on SMEs, and SME policy in particular.