Can the business associations of the SME sector be restored? Stagnation and/or differentiation?
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The authors consider the productivity and ROA, ROI, ROIC and other financial ratios of Hungarian joint SMEs between 1995 and 2003, and the results of an inquiry into 812 SMEs to assess how the development capacity of Hungarian SMEs may increase in the next few years. Comparing the most important profitability ratios of SMEs and large companies, the former have improved in the last decade, but the growth rate has been much lower than average in the SME sector, where the rate of return has remained below the yield on short and long-term bank deposits as well. This small return of capital has seriously damaged the economic positions and slowed the growth of SMEs, whereas large companies have been able to enjoy both higher returns and huge tax exemptions as well. The poorness of the return on capital in the SME sector was proved by an inquiry made by the authors in 2006 and 2007 into 812 Hungarian joint companies. Nonetheless, over 80 per cent of the SMEs were profitable. The data drawn from the research show that the SME sector has had less scope for development than large companies, so that the contribution of SMEs to accelerating Hungarian economic growth remains limited.
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