Key Aspects of Competitiveness: Focus on European Small and Medium-Sized Enterprises

Abstract

Business entities’ competitiveness can be derived from lower costs and consequently from lower prices or it can be derived from higher-quality products and services. A company’s competitiveness on both price and quality is inevitably related to innovation. The problem area of competitiveness has gradually broadened from the corporate level and thus innovations have become an inevitable aspect of national economies and have achieved rising importance. The European policy’s primary interest in overtaking the competitiveness of the world’s most-developed economies arises out of the Lisbon Strategy for growth and jobs. To some extent, innovations are the essential prerequisite for sustaining the viability and competitiveness of business entities across their economic size categories. Nevertheless, there are both objective and subjective factors that either limit corporations’ innovation potential or even eliminate their innovation activities. These factors are defined as barriers to innovation. Almost all of the studies on barriers to innovation consistently highlight one barrier or more specifically, a group of barriers—i.e., financial barriers—as the most serious. National governments spend huge amounts of money to improve countries’ competitiveness by providing SMEs with access to financial resources, which are intended to be the key aspect of domestic companies’ competitiveness. The question is whether these investments to “national innovativeness” have the intended effect, whereas the results of research on innovative performance have proven that profits are preserved in enterprises and innovations are financed, particularly from internal financial resources.