Small and medium sized enterprises (SMEs) are an important feature of the emerging regional economy in Central and Eastern Europe. In Hungary alone they accounted for around 70 per cent of GDP and for 45 per cent of employment in 2000 (Business Central Europe - an Economist publication). Many SMEs work as suppliers for major multinational manufacturers and retailers in the region, fulfilling an important economic and social role. As the CEE countries prepare to join the European Union, the importance of these roles will become more noticeable.

Increased competition from Western European SMEs has emerged as a major concern from research of Hungarian SMEs for TransCulture's Leonardo project. A more competitive environment will further highlight the need for effective training and development of local SMEs in the CEE region. This is especially true for those firms which have business in other countries. While EU accession will remove present trading restrictions between applicant countries, local firms will have to more frequently deal with national cultural differences in the way they do business.

Our research also points to a lack of coherent and focused training and development programmes, which directly affect the business needs of SMEs. Instead of offering prescribed skill training programmes regardless of company size or structure, we aim to empower SME companies to take responsibility for their own training and learning development. This is done by carefully identifying the business needs of SMEs and fitting programmes to them accordingly. Post-project evaluation emphasises long-term sustainability of learning of all SME employees in relation to business needs.

Through development of the Leonardo project, we aim to apply this new methodology to SMEs in all parts of the European Union. It will be applied in native languages in each country and should prove to be an invaluable tool in a more competitive union of 25 nations.