A/HRC/35/32 in less developed countries,38 the increased risk associated with their operation also means that very few micro-enterprises ever grow beyond 10 or more employees.39 One argument for this is attributed to the owners unwillingness to pursue the expansion of their microenterprise. 26. Consequently, any guidance on business and human rights targeted at small and medium-sized enterprises must take into account the increased risks of them failing in terms of the content of the guidance and the directions it gives, and must also be aware that the target audience of the guidance will be in constant flux and that owner-managers who understand the importance of business and human rights often will be replaced by new entrepreneurs with new businesses. This means that collective tools and solutions may be most beneficial, so that these enterprises and entrepreneurs have access to shared knowledge and tools that can be deployed readily by new market entrants. 27. Small and medium-sized enterprises are generally perceived as being at the bottom of the supply and value chain. The reality is, however, more nuanced. For example, a significant proportion of them engage in exporting and importing, particularly in more developed countries, with a minority engaging in foreign direct investment. 40 They have links at the top, middle and bottom of the supply and value chain. They are, in effect, the nerves that bind the business fabric together. Tailored guidance should also reflect this reality and bear in mind the roles of other actors and stakeholders in this system. 3. Business case for respecting human rights 28. Alongside the moral and legal case for businesses to respect human rights, there is also an economic one. When businesses analyse their potential markets, they inevitably do so in terms of the risks and opportunities, which, in the case of human rights, can be both. The concept and process of due diligence, including environmental and social impact assessments are ways of determining which decisions to make and why. If a company establishes human rights and sustainability as a baseline for its investments, then it is far less likely to be open to the risk of bad publicity and to investors reacting negatively to their products and services. Therefore, it is vital that time and resources be allocated to the argument for business and human rights and that training, particularly for senior managers, be dedicated to the businesses operating in their host countries and to operating oversees. 29. The rise of the Internet has accelerated the need for more small and medium-sized enterprises to look inward and to assess their own cases for developing human rights frameworks. Customers can exert massive pressure on a company to change the way it does business. Targeted human rights-centred campaigns can have both negative and positive impacts on the goods and services of small and medium-sized enterprises and greatly increase or reduce their market share. 30. The Federation of Small Businesses has suggested that concerns about additional bureaucracy can be countered by highlighting the “business case” for improving human rights as an effective way of encouraging small and medium-sized enterprises to act responsibly and fulfil their responsibility to respect human rights. 41 The European Commission concurs with that approach: in its guidance to such enterprises on implementing the Guiding Principles, it explains how effective implementation of the 38 39 40 41 See C.M. Rogerson, “Growing the SMME Manufacturing Economy of South Africa: Evidence from Gauteng Province”, Journal of Contemporary African Studies, Vol. 19, Iss. 2 (2001), pp. 267-291. Available from www.tandfonline.com/doi/abs/10.1080/02589000120066498. See D.C. Mead and C. Liedholm, “The dynamics of micro and small enterprises in developing countries”, World Development, Vol. 26, Iss. 1 (1998), pp. 61-74. Available from http://www.sciencedirect.com/science/article/pii/S0305750X97100109. See Edinburgh Group, “Growing the global economy through SMEs” (2013), p. 13. Available from www.conta-conta.ro/miscellaneous/863_miscellaneous_contabilitate_files%20863_.pdf. See Federation of Small Businesses, Social and Environmental Responsibility and the Small Business Owner (London, 2008). Available from www.fsb.org.uk/LegacySitePath/policy/assets/CSR%20Dec%202008.pdf. 9