ABSTRACT
Small-and medium-sized enterprises (SMEs) are increasingly considered as the backbone of economic growth and economic integration. Sustained competitiveness for small firms in an internationalized economic and financial environment is primordial for European as well as Asian countries. The chapter explores the causes of development channel differences and their consequences for policy makers and researchers of economic development. It enlarges the debate on the criteria appropriate in the area of SME development policy, by questioning the transferability of economic policies to geographical areas with different cultural dimensions. Policy design was to be monitored by the European Commission, to act only as a complement and to coordinate the existing national policies. Political economy, long vanished, can be reborn as economics of cultural networks. The inclusion of social networks in business activities is considered as being a market failure in the worst case, and in the best, as a malfunctioning of economic institutions.
