Infrastructure Support for the Development of Small Businesses

Abstract

For the purpose of sustainable development of small businesses, it is necessary to pay special attention to the formation of infrastructure for small businesses. This study uses an institutional approach which involves assessing the impact of formal and informal institutions on the development of small businesses. The author introduces the concept of the “frontier” institution as an institution, the operation of which is governed by the prescriptions of laws and established regulations, but the performance of certain functions is based on informal rules. This allows such an institution to more effectively perform the functions of a formal institution and makes it more capable and competitive in the market in a specific period of time. Furthermore, the study identifies the concepts of the institutional environment and institutional infrastructure. The author defines the institutional environment as a set of rules of conduct and institutional infrastructure as a set of institutions that form the rules of conduct and have an impact on small businesses. The impact is understood as the formation by institutional actors of rules of conduct that have incentive and disincentive effects on small businesses. This makes it possible to identify the causes of positive or negative deviations in the development of small businesses and to develop solutions aimed at solving the problems encountered. The article studies the organizational and economic mechanism that reflects the functioning of formal and informal institutions through which institutional infrastructure influences small businesses in order to achieve their goals.