This paper describes the results of the ongoing project ‘Competence development in SMEs through self-evaluation in Central Finland’. The importance of improving the competences is widely accepted as a key tool for fostering the competiveness of SMEs in particular (Competence Development in SMEs, 2003). More than 99 % of all European businesses are SMEs (European Commission, 2009). The Finnish situation resembles the European situation. In Finland, 99 % of enterprises are small-sized enterprises (less than 50 enterprises) and 0,8 % medium-sized enterprises (less than 250 employees).

 The debate on competence development especially in the SMEs is quite young, although the issue of competence development in general has received a great deal of attention (Katwalo, 2006: Mulder, 2001). Competence development has been linked to organisational learning that is understood as a dynamic process taking place over time and across levels (individual, group and organizational) (Bird, 1995; Crossan et. at., 1999). Most definitions of competence represent the synthesis of knowledge, capabilities, skills and attitudes (e.g. Argyris, 1993).

 In this study a self-evaluation has been chosen as a tool to improve competences in SMEs, because it allows the organization to discern its strengths and areas in which improvements can be made (e.g. Nikkanen 2001). Developed self-evaluation is a reflective action research process, which targets to improve the collective knowledge in the work community.

 The aim of this project is to develop together with the regional organisations (stakeholders) and enterprises a self-evaluation tool through which the enterprises can evaluate their competences and the needs and effectiveness of their developments.

First the study will construct a tool for self-evaluation for the enterprises’ needs and second to test it in the SMEs. The self-evaluation here can be consisted of two main parts: competence development and an enterprise as a learning organization.

 Research questions are the following:                

What kind of competence development is needed in SMEs?

What kind of self-evaluation tool is suited for competence development in SMEs?

How does self-evaluation support enterprises’ learning?

Argyris, C. (1993). Knowledge for action. A guide to overcoming barriers to organisational change. San Fransisco: Jossey Bass Publishers. Bird. B. (1995). Toward a theory of entrepreneurial competency. Advances in Entrepreneurship, firm, Emergence, and Growth 2, 51-72. Competence Development in SMEs. (2003). Observatory of European SMEs No. 1. Luxembourg: Office for Official Publications of the European Communities. Crossan, M.M., Lane, H.W., & White, R.E. (1999). An organizational learning framework: from intuition to institution. Academic of Management Review 24(3), 522-537. European Commission (2009). Enterprise and industry policies. Small and medium-sized enterprises (SMEs). Facts and figures. Retrieved 10 January 2010 from http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/index_en.htm Katwalo, A.M. (2006). An overview of competence development in SMEs. International Journal of Strategic Change Management 1(1/2), 89-95. Mulder, M. (2001). Competence development: some background thoughts. The Journal of Agricultural Education and Extension 7(4), 147-158. Nikkanen, P. (2001). Effectiveness and improvement in a learning organization. In E. Kimonen (Ed.), Curriculum approaches (pp. 55-76). (Jyväskylä, University of Jyväskylä, Department of Education and Institute for Educational Research).