Barriers to Entrepreneurship and Sme Growth in Transition: The Case of Kosova

Abstract

This study investigates the barriers to growth of small- and medium-sized enterprises (SMEs) in Kosova. It is based on a SME survey conducted by Riinvest Institute at the end of 2002 which identified critical business environment barriers perceived by entrepreneurs such as legal environment, administrative burden, external financing, tax burden and unfair competition. First, based on this SME survey, the econometric model is constructed in order to test empirically the validity of Gibrat's Law. Then, in order to identify and measure the impact of current reported business environment barriers on SME growth, the Gibrat's Law is augmented with other business environment variables. The econometric results suggest that firms' growth is negatively linked to firms' size and age, suggesting that Gibrat's Law does not hold for growing SMEs in Kosova. Also, the growth of the SMEs is reduced by the presence of the business environmental barriers such as tax burden, unfair competition and inadequate financing. Econometric results raise important issues and policy implications for the development of the SME sector in Kosova.

Explaining individual- and country-level variations in unregistered employment using a multi-level model: evidence from 35 Eurasian countries

“…If correct, then it suggests that reducing the commonality of this practice will require not simply the stronger enforcement of formal rules (e.g., by using effective workplace inspections), but also a new emphasis on the reduction of this institutional asymmetry, which will require changes in both informal and formal institutions. To determine the changes in formal institutions required, three theories are evaluated which have sought to explain the various country-level formal structural imperfections and failings that are argued to result in larger informal economies (Krasniqi, 2007;Krasniqi 2011;Williams 2013;Krasniqi and Mustafa 2016;Lajqi and Krasniqi 2017), namely: economic under-development and the lack of modernisation of government (modernisation thesis); too much state interference in social expenditure and redistribution (state overinterference thesis), or inadequate state intervention and protection of workers (state under-intervention thesis). Here, however, these structural conditions are more seen as ways of reducing institutional asymmetry rather than free-standing explanations.…”

EXPLORING THE PROBLEMS FACED BY PRACTITIONERS OF MICRO, SMALL, AND MEDIUM ENTERPRISES (MSMEs) IN YOGYAKARTA

“…According to Saini and Budhwar (2008), Hessels and Parker (2013), most of the MSMEs does not have training system and lack of formalization of human resources management. Access to finance is an important determinant in all countries, as it affects the creation of new business and the expansion of existing business (Krasiqi, 2007). Commercial banks that are the main source of finance is not willing to give loans to small business because these business units are often not able to provide collateral as a warranty and was considered MSMEs has a high level of uncertainty (Mutalemwa, 2009;Irwin & Scott, 2010;Okpara, 2011;Hyz, 2011).…”

“…The high capital cost is other burden in terms of financing of MSMEs. A research conducted by Krasiqi (2007) provides evidence from Slovenia that financial costs and credit insurance payment are the main obstacles to the development of MSMEs. According to Ajlouni (2006), access to finance is one of the common problems faced by all MSMEs in Jordania.…”

Small and Medium Enterprises Facing Institutional Barriers in Kosovo

“…Most of these evident obstacles are qualified as either formal obstacles, namely high levels of taxation (Hashi, 2001;Bukvić and Bartlet, 2001;Aidis 2005), overall business environment (Estrin et al, 2005;Bartlett and Prasinkar, 1995;Smallbone, 2002;Krasniqi 2007), legal framework (Smallbone and Welter, 2001b), or informal barriers, namely enforcement of property rights (Schaffer and Weder, 2001), and the networks of corruption (Johnson et al 1997). To analyze the impact of both formal institutions (e.g.…”