Why Small Businesses Make a Big Difference

Why Small Businesses Make a Big Difference

Interview with Soumitra Dutta, Dean of Saïd Business School, University of Oxford

Big companies grab the headlines. From Apple and Amazon to Reliance and Tata, the world’s conglomerates and corporate heavyweights turn in billions of dollars each year, with a massive workforce behind them.

So when we think of business, we rarely have small and medium-sized enterprises or SMEs in mind. And that is understandable. After all, it’s organizations like Microsoft, Bharti Airtel and Unilever that make the world go round, right?

Wrong.

“SMEs represent a large proportion of the companies that exist around the world, as well as the global workforce,” says Soumitra Dutta, dean of the Saïd Business School at the University of Oxford. “They are the ones who make things work.”

He is right. According to the World Bank, SMEs account for around 90% of all businesses and are responsible for 50% of employment globally, as well as up to 40% of GDP in emerging markets. A McKinsey report released in 2022 revealed that in Malaysia, while medium-sized businesses account for just 2% of all businesses in operation, they account for 40% of the country’s GDP.

“Although they are smaller, SMEs are a powerful and dispersed group. It is their impact that we need to watch,” says Dutta. “Its potential for economic and social impact should not be underestimated or belittled.”

So why are SMEs so often overlooked? “It’s all about the metrics we leverage,” explains Oxford Dean Saïd, who graduated from IIT Delhi with an engineering degree and then completed his MS and PhD in Computer Science at Berkeley.

For Dutta, SMEs aren’t the only victims of outdated value measures: organizations spanning myriad sectors, despite their immense potential for impact, have too often been relegated to the minor leagues courtesy of how they stack up against an overall barometer strait. And this, she points out, influences how we perceive leadership among these organizations.

“Take a business school, for example, and, in turn, the role of a dean,” he explains. “If we were to use just a few metrics: the number of employees or students, which in the case of Saïd Business School, is just over 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 through each of its stakeholders, the responsibility of leading each of those potential change agents carries real weight.”

But with such potential comes great pressure. “As the leader of an organization tasked with educating today’s and tomorrow’s business communities, you have to ask yourself the tough questions: ‘Are we doing enough?’ And, more importantly, ‘Are we making sure that we as a business school reflect the world’s need for us?’” says Dutta.

In our Forbes interview, Soumitra Dutta discusses the role of MBA graduates in making a difference in the world and being aware that their Oxford education comes with responsibility and care for others.

“You have to believe in your product, believe in your service,” he adds. “But you also have to be brutally honest with yourself. Always.”

Despite the fact that SMEs represent around 99% of companies and 70% of all jobs in OECD countries, between February 2020 and April 2021, close to 80% of these companies in 32 countries they lost between 30% and 50% of revenue. Many have called for more support for small businesses in the wake of increasing pressure from the Covid pandemic, as well as other contemporary challenges such as rising costs, economic uncertainty and an energy crisis. But challenges remain in providing the right help.

“Although its value is fairly well documented, it has always been difficult to serve this type of business. Many have had trouble offering support to SMEs, including business schools,” says Dutta.

“All SMEs deserve to benefit from world-class teaching that helps them grow effectively. They are the entrepreneurial heart of the business community, not just in the UK but around the world.” But the dean of Oxford Saïd insists that the challenge many of them face is not to create a business but to make it grow.

“They don’t fit easily into 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 their focus in this area. Our work with the Goldman Sachs Foundation is impressive, and we are grateful for your partnership. With the right support at the right time, SMEs are a powerful force for job creation and productivity enhancement.’

Delivered in association with Goldman Sachs, Saïd Business School currently offers a fully funded executive program for small business leaders across the UK. Since its launch in 2010, the Goldman Sachs 10,000 Small Businesses UK program has supported more than 2,000 SME leaders, offering participants a range of educational opportunities, from access to world-leading academics to peer-to-peer mentoring.

“It has a clear objective: to create jobs and economic opportunities,” says Soumitra Dutta. “Oxford Saïd is not alone in supporting SMEs, nor should it be. Schools need to do more.”

For Dutta, everything leads to impact: “SMEs have the potential to make a significant impact within their communities, and business schools have the resources and knowledge to support these companies.”

“At Oxford Saïd, we have made it a focus area because it is clear, from both a personal and an institutional point of view, that we have a responsibility to do everything we can to make the world a better place. SMEs have shown their potential for impact, so we must support these companies. By doing this, we will be able to maximize the good we do.”

More information on the latest business thinking and management thinking can be found at BlueSky Thinking.

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Disclaimer

The opinions expressed above are those of the author.



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