Why Small Businesses Make A Big Difference
Interview with Soumitra Dutta, Dean of Saïd Business School, University of Oxford
- SMEs account for around 90% of all firms and are responsible for 50% of employment globally
- Their potential for economic and social impact must not be underestimated or underappreciated
- Business schools such as Oxford Saïd are doing more to support SMEs and help them grow
Big businesses grab the headlines. From Apple and Amazon to UnitedHealth and Unilever, the world’s conglomerates and corporate heavyweights turn over billions of dollars each year, with huge workforces behind them.
So when we think of business we seldom have in mind small and medium sized enterprises, or SMEs. And that’s understandable. After all, it’s organisations like Microsoft, Merck and McDonalds that make the world go round, right?
“SMEs represent a huge proportion of firms that exist worldwide, as well as that of the global workforce,” says Soumitra Dutta, Dean of Saïd Business School at The University of Oxford.
“It is they that keep things ticking over.”
He’s right. According to The World Bank, SMEs account for around 90% of all firms and are responsible for 50% of employment globally, as well as up to 40% of GDP in emerging markets. A report from McKinsey published in 2022 revealed that in Malaysia, while mid-sized businesses represent a mere 2% of all firms in operation, they account for 40% of the country’s GDP.
“While smaller in size, SMEs comprise a powerful and dispersed group. It’s their impact that we must look to,” Dutta says. “Their potential for economic and social impact must not be underestimated or underappreciated.”
So, why are SMEs so often overlooked? “It’s all about the metrics we leverage,” explains the dean at Oxford Saïd.
For Dutta, SMEs are not the only victims of antiquated measures of value – bodies spanning countless sectors, despite their immense potential for impact, have all too often been consigned to the minor leagues courtesy of how they weigh up against a narrow set of barometers. And this, he notes, has a bearing on how we perceive leadership among these organisations.
“Take a business school, for example, and, in turn the role of a Dean,” he elaborates. “If we were to use only few metrics – the number of employees or students, which in the case of Saïd Business School, is little more than a few thousand each year, or annual revenue then the role of a Dean might seem modest. But, when you think about the impact that a business school can have via each of its stakeholders, the responsibility of leading each of those potential change-makers has real weight.”
The Global Education Editor at The Financial Times, Andrew Jack recently summarised the challenges around recognising the value of social impact in the FT’s Responsible Business Education Awards, noting:
“Metrics have their limits… Some topics are difficult to quantify easily, comparably and comprehensively. The same applies within education, which has a pivotal role in training the next generation of managers and entrepreneurs.”
But such potential brings with it great pressure. “As a leader of an organisation tasked with educating the current and future business communities, you have to ask yourself difficult questions: ‘Are we doing enough?’ And, importantly, ‘Are we ensuring that we, as a business school, are reflecting the need that the world has from us?’”, Dutta says.
In an interview with Forbes, Soumitra Dutta discusses the role of MBA graduates to make a difference in the world, and be conscious that their Oxford education comes with responsibility and mindfulness of others.
“You have to believe in your product, believe in your service,” he adds. “But you must also be brutally honest with yourself. Always.”
Despite SMEs accounting for around 99% of firms and 70% of all jobs in OECD countries, between February 2020 and April 2021, close to 80% of these businesses across 32 countries lost between 30% and 50% of revenues. Many have called for more support to be offered to small businesses in the wake of mounting pressure posed by the COVID pandemic, as well other contemporary challenges including rising costs, economic uncertainty and an energy crisis. But challenges remain in providing adequate help.
“Despite their value being pretty well-documented, it’s always been hard to serve these kinds of businesses. Many have struggled to offer support to SMEs – businesses schools included,” Dutta says.
“Every SME deserves to benefit from world class teaching that helps them to grow effectively. They are the entrepreneurial heartland of the business community, not just in the UK but all over the world.” But the dean of Oxford Saïd insists that the challenge many of them face is not creating a business but growing it.
“They don’t easily fit the global business school formula, and I don’t think business schools have focused enough on them. Now, more than ever, I would like to see us, and other business schools, increase focus in this area. Our work with the Goldman Sachs Foundation is impactful and we are grateful for their collaboration. Given the right support at the right time, SMEs are a powerful force for job creation and improved productivity.’
Delivered in partnership with Goldman Sachs, Saïd Business School currently offers a full-funded executive programme for leaders of small businesses across the UK. Since its launch in 2010, the Goldman Sachs 10,000 Small Businesses UK programme has supported over 2,000 SME leaders across the UK, offering participants an array of educational opportunities, from access to world-leading academics to peer-to-peer mentoring.
“It has a clear aim: to create jobs and economic opportunities,” Soumitra Dutta says. “Oxford Saïd isn’t alone in the support it offers to SMEs – nor should it be. Schools must do more.”
For Dutta, it all leads back to impact: “SMEs have the potential to deliver significant impact within their communities, and business schools have both the resources and know-how to support these firms.”
“At Oxford Saïd, we’ve made it an area of focus because it’s clear from both a personal standpoint, as well as an institutional stance we have a responsibility to do what we can to make the world a better place. SMEs have demonstrated their potential for impact, so we must support these firms. In doing this, we’ll be able to maximise the good we do.”