What is an SME?

This article also covers the questions:

  • What are the numbers of SMEs in the UK?
  • Are IP rights important to SMEs?

What is an SME?

SME stands for a small or medium-sized enterprise and is defined by two criteria: turnover and employment.  An SME has turnover between £3 – 65 million pounds sterling, and employs fewer than 250 people.  Of 4.8m UK SMEs at the start of 2008, 74% had no employees and, of those with employees, 84% were classed as micro-enterprises (1-9 employees).

Importance of IP rights to SMEs

The use of IP by firms is commonly used as an indicator of innovation.  It has been found that SMEs are far more IP intensive than larger enterprises, and within the SME category the numbers of patents and trademarks fall with increasing firm size.  The study by Rogers et al, commissioned by UK IPO and UK Trade and Investment, tracked IP activity of all the British registered firms (3 million as of 2007, according to the FAME database).  It was found that, over 5 years, IP active SMEs constituted 4.8% of the total number of British SMEs.  “IP active” means firms which have registered IP rights.  A higher percentage of large firms than SMEs are IP active, and this can be attributed to larger firms having financial resources to exploit IP, and the feeling of “less risk” to their businesses.