Micro-, small, and medium-size enterprises (MSMEs) are critical to the global economy, accounting for 90 percent of all businesses, yet they are less productive than large companies in emerging and advanced economies. The productivity gap varies among countries, Olivia White, a senior partner and a director of the McKinsey Global Institute, and coauthors explain. In Kenya, for example, MSMEs are 6 percent as productive as large companies, representing a 94 percent productivity gap. Among advanced economies, MSMEs in the United Kingdom have the narrowest gap in productivity, at 16 percent.
Image description:
A series of area squares compares micro-, small, and medium-size enterprise (MSME) productivity with large-company productivity, as a percentage of large-company productivity and percentage-point gap (difference between the productivity of large companies and MSMEs). Another set of area squares compares the productivity of emerging-economy MSMEs with that of advanced-economy MSMEs. On average, emerging-economy MSME productivity is ~29% of large-company productivity, while advanced-economy MSME productivity is ~60% of large-company productivity. The full data set for emerging-economy MSMEs shows Kenya at 6 percent of large-company productivity, Nigeria at 12%, India at 26%, Indonesia at 25%, Mexico at 47%, and Brazil at 56%. The full data set for advanced-economy MSMEs shows the US at 47% of large-company productivity, Poland at 50%, Australia at 53%, Japan at 52%, Italy at 55%, Spain at 60%, Germany at 61%, Portugal at 66%, Israel at 69%, and the US at 84%.
Source: Country-level economic and business censuses; Eurostat; International Labour Organization Department of Statistics; labor surveys; MSME surveys; OECD; S&P Global Market Intelligence; McKinsey Global Institute analysis.
End of image description.
To read the report, see “A microscope on small businesses: Spotting opportunities to boost productivity,” May 2, 2024.