Although there have always been small and medium size enterprises (SMEs) in each
development period of trade and industry, as Humphrey (1995) argues, for a long time they
were "an inefficient part of the manufacturing industry and if they were supported the
grounds were more social than economic" (p.22). However, rapid technological
developments, growth of the service sector, growth of the third world competition and
declining international competitiveness, crisis in raw materials and energy prices, changes in
the expectations of people from mass standardised goods to crafted ones (Storey 1995) have
questioned the understanding of large firms dominating of the “Fordist” production system,
as the most effective tool for development.
All these developments resulted in a new production structure, flexible production that is
based on continuous innovation (Japanese kaizen system) and more participation of multi-
skilled workers at each production process (Kaplinsky 1995), the requirements of which
were seemed to be met by the SMEs in terms of their flexibility in size and operations. For
the first time, David Birch, coining the term of "job generation" has claimed that small firms
created most of the jobs in the USA (1979). Consequently, after the 1970s they become a
focal point of scientific and policy interest. The following revival of role of SMEs has been
stimulated either through horizontal linkages among them benefiting from the external
economies or through vertical linkages with large firms, subcontracting.
However, in Turkey, the recognition of importance of SMEs took 20 years for both policy
and scientific manners. Although from the establishment of republic in 1923, "state
capitalism was seen as a supplementary agent for industrial accumulation and private
business development" (Ozcan 1995, p.51), the implementation of government schemes to
stimulate the development of private sector is the major continuous policy from the 1960s.
However, they were far from neither in a sectoral concentration nor size classes. After the
1990s, there emerged some schemes that are directly oriented to SMEs. Mainly, 1996 was
dedicated to SMEs and to increase the efficiency of SMEs, the government launched
different incentive programs changing from research and development to participation in
international fairs. Leaving the development of these policy approaches in one side, for the
scientific manners it can be said that most of the academic studies are focused on micro
economic issues. The description of their roles in macro economics and regional
development as well as their spatial characteristics have not been well documented.