Institutional perspectives on entrepreneurial behavior in challenging environments

Suboptimal Size: Factors Preventing the Growth of Russian Small and Medium-Sized Enterprises

“…2 This situation is confirmed by the conclusions of a mounting body of research on entrepreneurship in emerging economies [Manev, Manolova, 2010;Ojala, Isomaki, 2011]. However, in contrast to SMEs in developed economies, which face challenges mainly in achieving high rates of growth [Lee, 2014;Mason, Brown, 2013], the SMEs in transitioning economies, especially in Russia, struggle to grow at all [OECD, 2015;Welter, Smallbone, 2011;Smallbone et al, 2014]. Moreover, keeping in mind that this sector, especially as far as manufacturing is concerned, is heterogeneous and consists of quite a diverse population of firms -new entrepreneurial firms vs. former Soviet enterprises [Chepurenko, 2015] -we Golikova V.,Kuznetsov B., might expect quite different patterns in their development as regards growth, downsizing or stagnation.…”

“…The aforementioned determinants, both demand and supply side, are relevant for all countries, however, in transitioning economies, their impact on growth and sometimes the vector of a business's development is determined by the features of the institutional environment. The body of empirical research on SME performance in developing economies found a robust relationship between firm performance and the quality of institutions [Aidis et al, 2008;Molz et al, 2009;Blagojevic, Damijan, 2013;Sharafutdinova, Kisunko, 2014;Yukhanaev et al, 2015;Volchek et al, 2013a,b;Wang, You, 2012;Krasniki, Desai, 2016;Welter, Smallbone, 2011]. However, the mechanism behind their interactions remains poorly studied.…”

“…The determinants of firm growth described above, such as supply-and demand-side factors, are still valid for firms operating within emerging economies. However, their effectiveness and the direction of their effect is often determined by the idiosyncrasies of the institutional environment [Marcelin, Mathur, 2015;Cuaresma et al, 2013;Volchek et al, 2013a,b;Molz et al, 2009;Dallago, 2000;Blagojevic, Damijan, 2013;Welter, Smallbone, 2011;Yukhanaev et al, 2015].…”

“…Economies that did not manage to develop according to the Western model must operate under an alternative informal institutional network [Smallbone, Welter, 2010], which is prone to rent-seeking, shadow schemes and similarly, tends to incentivize sub-optimal behavior among firms [Golikova, Ermilova, 2006;Sharafutdinova, Kisunko, 2014]. As a result, a discussion of a firm's aspirations for growth, scale of production and performance in transitioning economies without recourse to a study of institutional issues is liable to be incomplete [Aidis et al, 2008;Aidis, 2015;Welter, Smallbone, 2011;Smallbone et al, 2014;Krasniki, Desai, 2016;Wang, You, 2012]. Moreover, an institution-based study has become the main theoretical framework for business research on emerging economies and researchers tend to explore the interplay of formal and informal institutions at multiple levels of analysis [Thorsten et al, 2005;Meyer, Peng, 2005Estrin et al, 2013].…”

The Choice of Funding Sources for Start-Ups in a Transitional Economy: The Ability to Predict in a National Context

“…The probability of early-stage entrepreneurs' attracting external investments increases if their business idea is innovative and involves the production of goods or services new to the market. This factor appears to outweigh the fears of failure [Yang, 2012;Welter, Smallbone, 2011;Robb, Robinson, 2010]. Certain "rules of the game" for the entrepreneurial sector have by now been developed in countries with transitional economies.…”