Governance for SMEs

Much of what has been written on governance is written from a larger, corporate perspective. Helen Carrington and Axel Kravatzky co-authored this paper in 2019 with lead authors Vladislava Ryabota and Alexey Volynets, both from the International Finance Corporation (IFC, part of the World Bank). 

The key point of this paper is the introduction of the IFC Governance Methodology for SMEs which is designed to support the evolution of the SMEs through various stages of development. At each stage of development the needs of the organization are different, the risks are different, and therefore a different set of governance approaches are appropriate. 

Four stages of SME development or evolution

  • Stage 1: Start-up
  • Stage 2: Active growth
  • Stage 3: Organizational development
  • Stage 4: Business expansion

Governance for SME Sustainability and Growth

The paper lays out the IFC's governance methodology for SMEs. For every stage of SME evolution, there are key governance risks that are addressed across five dimensions:

  1. Culture and commitment to good governance
  2. Decision making and strategic oversight
  3. Risk governance and internal controls
  4. Disclosure and transparency
  5. Ownership

The factors are brought together in the SME Governance Matrix. 

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Axel Kravatzky

Dr Axel Kravatzky helps governance and strategy leaders innovate with fresh, high standard 21st Century approaches. He is purpose-driven, experienced and highly qualified (BSc, MSc, PhD from LSE). His passion for working with teams and leaders to make an impact goes back his education at UWC. He is currently Syntegra's partner leading the governance and strategy practice, lead educator and guide at TailoredGovernance.com and GovernanceMandates.com, as well as co-convenor and editor of ISO/TC309/WG1 Governance of Organizations. You can also find him recharging energy in the outdoors - preferably mountains or the sea.


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