Firms, although have the same economic purpose in any geographic or economic space would represent a very different world. Even in the context of integrating each company has its identity is its numerous features, which show in this respect their diversitbusiness, SMEs, competitiveness, efficiency, integration

Ghita Tanase Paul

Virjan Daniela

English

Research Papers in Economics

306 
 
THE ROMANIAN COMPANY IN THE EUROPEAN SYSTEM 
 
Paul Tănase Ghiță 
Academy  of  Economic  Studies  of  Bucharest,  Faculty  of  Economics  Romana  Square  no.6 
daniela_virjan@yahoo.com 0723068120 
Vîrjan Daniela 
Academy  of  Economic  Studies  of  Bucharest,  Faculty  of  Economics  Romana  Square  no.6 
daniela_virjan@yahoo.com 0721525984 ; 021/3191900-int.293 
 
Firms, although have the same economic purpose in any geographic or economic space would represent a 
very different world. Even in the context of integrating each company has its identity is its numerous 
features, which show in this respect their diversity, depending on which distinguish groups of smaller firms 
or larger, in which the peculiarities are considered sufficiently obvious to generate differences which 
induce significant economic impacts both nationally and globally. In all their businesses in the European 
Union  has  an  essential  role  in  ensuring  the  production  of  goods  and  services  to  the  population  and 
economy in this part of the world and not only are the most important source of entrepreneurial skills, 
innovation  and  jobs.  World  firms  from  the  European  Union  exists  and  operates  with  two  speeds  -  a 
European (single) and other national-European different more or less from one country to another. 
 
Keywords: business, SMEs, competitiveness, efficiency, integration 
JEL Classification:  
 
The European Union, as any integrationist group, has been conceived and exists mainly as an 
answer to the numerous issues of this part of the world’s countries and people. But the said issues 
are not limited to being internal to each country, but also zonal-regional and international-global. 
The solving or attenuation of the issues confers numerous economical advantages and maybe 
more to member countries, thus confirming the hopes that stood at the base of the incorporation 
demarche. In such context, which is sometimes more complex and more difficult than we had 
sketched, the economical units of Romania enroll with what they have their own but also in 
common with the companies whose incorporation already is more or less recent history. Acting 
in such a frame, the companies of Romania gear more and more into the web of direct and 
indirect  relations  own  to  the  European  economical  space  which  evolves  towards  a  specific 
identity, own, characterized by the tendency of creating and strengthening a unit founded on 
diversity. 
Forasmuch diversity is founded on peculiarities, we first observe that companies in our country 
position  themselves  in  the  European  economy  by  advertising  several  of  their  socially  and 
economically  relevant  characteristics.  By  comparing  to  the  state  of  other  EU  members  we 
observe  that  our  country’s  economical  units  together  achieve  an  average  per  inhabitant  and 
employee output which places us on one of the final places compared to companies in other 
countries of the EU. The idea that their size does not allow better parameters is being discussed 
and from this situation also comes the their relatively low competitive capacity. Their efficiency 
as a whole does not rise to the level of the European countries averages, though this does not 
apply to all Romanian companies, few actually being in good shape. 
Compared by categories in accordance to the juridical and statistical definition adopted by the 
EU, Romanian companies mostly cluster in the categories of small and medium companies. The 
percentage of large and very large companies in the total of companies in our country visibly puts 
us  below  the  average  European  level  and  extremely  low  compared  to  those  belonging  to 
developed  countries.  We  stress  these  aspects  in  the  idea  of  a  qualitative  vision,  known  that 
qualities too (good or bad) can often be quantified by number, quantity. The effect of scale 
economy, at least the potential effect, is directly proportional to the size of the company but their 
way of administrating, their management can better or worse fructify it. And because under this 307 
 
aspect we are not well positioned, we can conclude that we have much space to increase our 
efficiency, which space we must make better use of, especially in large companies. It would of 
course  be  a  grave  mistake  for  small  and  medium  companies  to  neglect  this  object,  which 
companies represent the majority and their actual total contribution would be sensibly greater 
than large and very large companies. 
Quite interesting is the fact that this negative efficiency delay is present at all levels of Romanian 
companies (very large, medium and small) but the greatest of differences mostly affect small and 
medium  companies.  Making  up  for  these  delays,  coming  close  to  the  efficiency  levels  of 
companies in the richer countries of the EU remains simply an issue of time, unfortunately this 
applies to longer or shorter periods of time, not from day to day or year to year. The European 
funds which benefit Romanian companies are truly important towards acting in this direction but 
not enough and especially depend on the proper use of these funds and us increasing efficiency in 
the domains we suffer most. 
Most interesting is that in the EU the highest efficiency rates are registered in large and very 
large  companies  (with  250  or  more  workers)  whom  cover  32%  of  the  total  work  force  and 
produce 43% of all added value. The number of large and very large companies account in the 
total of European companies as 0.2%. But in Romania the companies which belong to this class 
represent less than 1% of all and produce more than 55% of all added value and 37% of the brute 
product of the financial exercise. Given the great difficulties with which our country’s SMEs, 
including fund management, with a low crediting rate, assessed to around 24% of that of the EU, 
where they go up to 78%-80%. The most frequently encountered reasons to why SMEs crediting 
is difficult are : the quasi-inexistence of business consultation, bureaucracy, high taxation, low 
levels of fiscal deductions for investment. We would also point out that the average size of 
Romanian companies is, both totally and by all 4 categories officially known, inferior to the 
European average – in terms of capital, personnel, turnover, profit, added value, a.o. This falling 
behind is especially worrying in regard of investment volumes and direct export. Of course, the 
superiority  of  European  companies  is  obvious  but  this  does  not  rule  out  the  results  of  the 
empirical studies which prove that there also are Romanian companies belonging to all classes 
which are working fine in terms of just about all we have mentioned here. 
In terms of a prevailing type of enterprise micro, macro, medium or large in the total employed 
population, the situation is as follows: Austria, Belgium, France, Greece, Italy, Spain and Sweden 
are  prevailing  micro,  Denmark,  Ireland  ,  Luxembourg  and  Portugl  are  prevailing  SMEs,  in 
Finland, Germany, Netherlands and UK are prevailing large enterprises, etc.. In the EU, SMEs 
have  a  role  in  employment,  and  the  most  important  place  of  micro  that  fare  enjoying  the 
increased attention of governments in the economic policy that thay promotes. 
Taking into account the level of economic development and the position of Romania as a country 
situated at the threshold between the small and medium enterprises, which is much closer to the 
upper  limit  of  small  countries,  companies  or  enterprises  are  taken  in  consideration  by  their 
resemblances,  and  differences  in  relation  to  the  other  EU  countries.  They  have  a  specific  
transformation process and a noticeable dynamic in order for them to be included in the idea of 
diversity. We can mention some specific issues: the slower formation of more modern features by 
firms  today,  a  much  less  dynamic  in  terms  of  their  number  in  the  last  decade  (formation, 
disappearance, concentration, centralization, mergers, etc.). ; the number of Romanian companies 
copied faithfully the evolution of the economy cycle, the share of large firms and very large in 
the total number of firms is much smaller than in the EU, the share of private firms mostly lies 
clearly below the level of EU in five essential economic indicators in 2004, small and medium 
enterprises recorded higher levels than large ones and very high turnover (57%) and the result of 
gross exercise (63%), etc.. 
In Romania, the current types of SMEs have appeared in two ways: by the privatization of state 
companies  and  by  the  free  initiative  of  individuals  or  associations  of  people  (of  Romanian 308 
 
nationality and / or foreign) that, to satisfy their interests and have taken corresponding risks. 
Concerning  the  concept  of  SME it  is  used  in  the  same  sense  and  with essentially  the  same 
characteristics as in the EU, were also same legal criteria were adopted, but the statistics still 
lingers some inconsistencyes, that probably will disappear soon or will be very much closer to the 
EU. However, we have a specificity that is not encountered in other countries :, there aren’t (at 
least officially) enterprises with zero employees, because the law does not aloow it, SMEs are 
required to have at least one employee, and in recent years proposals have been advanced by the 
government  that starting  of  2006,  micro-enterprises must  have  at  least  5 employees,  but  the 
discontent which it generated, led to secondary concern  and abandon. 
The total number of existing active enterprises grew; over 99% are SMEs, and the turnover which 
they have achieved is at 57.5% of the total national economy. Also, the class size of SMEs, small 
enterprises are the most numerous and have a share of 88% in all existing enterprises in Romania 
and 89% in SMEs. The Share of this class of enterprises in the total turnover of companies in the 
country according to their calculations, is reaching approximately 34%, and in the turnover of 
SMEs amounted to 58%. As a weird spot of our economy, small enterprises realized sales of own 
activities, which reached a share  of 96% of the turnover of large enterprises (with over 500 
employees). The conclusion is obvious - SMEs are prevalent, the are in an undisputed number, 
but their contribution to economic activity is at lower weights of most European countries. 
Overall dynamics of SMEs, in a sense, hide a very complex evolution of types of activities or 
economic sectors. The Number of SMEs registered in constructions has an annual growth rate of 
over 23 percent, while agriculture growth rate was 9,2%, 9% in industry and in services 13%. As 
a result of such dynamics important changes were made in the number of SMEs by sector of 
which the most significant are : 
  - From all SMEs, the most numerous are those which operate in the services which also 
  includes wholesale and retail trade, whose share fell from 80.6% in 2000 to 72.5% in 
2007;  
  -  Rapid  growth  of  construction  under  the  expansion  of  urban  and  residential 
infrastructure,   Sapard modernization and others determined the doubling number of the share 
of SMEs in   this sector in the total SME;  
  -  the  Number  of  small  and  medium  enterprises  in  the  industrial  sector  developed 
maintaining   its share at the same percentage values for the whole period;  
  - Agriculture has undergone a slow and sinuous evolution regrading the number of SMEs 
  which resulted in reducing their share to 3.1% in 2000 to 2.8% in 2007;  
  - Size or small size industrial firms is superior to other areas and the services sector is by 
far   dominated by micro enterprises, while the size of the small and medium enterprises in 
this   field  are  compatible  (close)  with  those  of  the  same  size  category  that  are  acting  in 
construction   and agriculture;  
  -  Tendencious  during  1999-2007  there  is  evolution  in  the  balanced territorial  profile 
number of   SMEs, without a noticeable sensitivity to reduction of existing gaps;  
  - Statisticians and authorities in the field of SMEs and disclose existing tendencies to 
assert a  specialization in sectors of SMEs from different regions (Bucharest-Ilfov in services and 
  construction, South and South-East - the agriculture, Center, West and North - West - 
  industrial profile, etc.). 
Regarding  the  dynamics  of  SMEs  by  2000,  in  Romania  it  can  be  observed  two  important 
phenomena taking place under the overall state of the economy: a more spectacular dynamic, 
with higher numbers growth trend of the economy, a slower dynamics number in years with the 
difficulties  in the economy. Among the classes of SMEs, the highest availability in this regard in 
other countries have micro-enterprises with zero employees and then those with 0-9 employees. 
In our country the highest availability is of their micro (0-9 employees). Explanations are related 
to the fact that their existence and functioning of capital required is much lower and their owners 309 
 
make special efforts in the form of labor, transport, built spaces, land, etc.., Accepting all that 
because the enterprise is the source of support for their existence. In this small class there the 
largest number of situations in which there is no question of profit (profit residual), but only an 
income to support spending. 
SMEs in Romania, as well as those from other countries, have important contributions in the 
economy and investments that they made, and private investments have the most important role. 
Involving SMEs in the economy induces inevitably participation in the creation of new value, or 
value added, along with depreciation of fixed capital form the gross value added - the source of 
its own finance for any company. The share of direct exports of SMEs in total direct exports 
made to all existing enterprises was 49%, and all size classes and increased contribution to this 
indicator,  but  the  most  spectacular  was    the  evolution  of  class  enterprises  with  100-249 
employees whose exports have increased by 54% so far above the other two size class whose 
exports increased by 38% and 43%. Another criterion on enterprise activity is the gross result of 
the financial year, which places us in terms of the goal of economic profit in a capitalist economy 
in the reception of the profits that can be reached by deduction of units illustrating opposite 
phenomena, being positive shows that it is possible. 
All these issues together with others to which we have referred shows us that the situation of 
SMEs in our country is determined under favorable domestic business environment. This requires 
them directly or indirectly through the way in which the two variables of capital importance 
move: the application of international and local products of competitors from other countries. If 
demand for local products will be down and the competition of foreign origin will increase, 
inevitably difficulties faced by SMEs will increase, and vice versa. The most profitable trend, 
keeping in mind the entry in the EU is tightening of competition from other countries, and facing 
such situations and acting for concomitant expansion in domestic demand for local products, 
SMEs have more opportunities that can be addressed in line: increasing the share of sales to 
existing  customers  and  retention  of  their  orientation  to  new  market  segments,  using  new 
techniques  and  technologies  for  production,  attracting  investment  in  new  fields  of  action, 
increasing receptivity to clients' problems and demands of their quality or punctuality, increasing 
accountability to promote products etc.  
If we talk about the challenges of entering the EU we say that all these problem should be the 
subject of intense concern  and that we open the prospects closest to the potential existing in 
Romania, so we benefit from openings offered by the EU. 
 
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Centre for Economic Studies Series, 2005 
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“Problemes economiques”, nr.2854/2004, Paris 
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Economica, 2007  
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European Institute of Romania, Bucharest, 2003  
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THE ROMANIAN COMPANY IN THE EUROPEAN SYSTEM

http://steconomice.uoradea.ro/anale/volume/2009/v1-international-relations-and-european-integration/48.pdf

THE ROMANIAN COMPANY IN THE EUROPEAN SYSTEM

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