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

Abstract

T he Russian manufacturing sector has an underdeveloped SME sector both in terms of employment and contributions to GDP in comparison with other economies, with evident signs of stagnation over the past few decades. However, little is known about the capacity of SME sector, i.e., the opportunities to grow and thus exploit the benefits reaped from economies of scale. This paper attempts to estimate the impact of internal and external factors on a firm's competitiveness in the context of optimal enterprise size.The main conclusion is that that the satisfaction of Russian SME managers has been increasing due to factors such as the sufficient supply of qualified personnel, modern infrastructure, developed partnerships, the expansion Кeywords: small and medium enterprises; scale of business; determinants of growth; barriers to growth; Russia.of the geographical scope of available markets and favorable institutional conditions for entrepreneurship. In contrast, serious constraints to SME growth in Russia discourage entrepreneurs and lead to poor decisions by managers such as exploiting shadow schemes, leaving the market or growth in the form of nominally independent firms under the informal "umbrella" of one owner. Formidable bureaucratic barriers and significant transactional costs increase the vulnerability of small businesses to administrative pressure. In order to survive and remain on the market, Russian companies have to adapt to the existing institutional environment, and must be larger compared to their counterparts in developed economies.

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“…There are a number of empirical Russian studies of internal and external competitiveness factors. Their authors used various techniques to assess the competitive positions of Russian manufacturing enterprises [Gurkov et al, 2005;HSE, 2008HSE, , 2014Shakina et al, 2017;Alimova, 2017;Golikova, Kuznetsov, 2017]. However, the impact the objective factors affecting SMEs' competitiveness make on SME managers' subjective assessment of the competitive pressure their companies experience remains poorly understood.…”

“…Studies show that manufacturing companies typically are not ready to put their business at risk and apply for bank loans, even if they are experiencing financial constraints. This is due to the high interest rates and the generally insufficiently developed banking services market [Golikova, Kuznetsov, 2017;Alimova, 2017]. Therefore, it can be assumed that companies with access to reliable external funding sources have better development opportunities and experience lower competitive pressure (hypothesis H4).…”

Formation Of Entrepreneurial Climate In Russia For Sustainable Development Of Small Business

“…Analyzing the activity of small business structures, one should take into account regional differences that have a significant impact on the business environment. This explains the fact that even in the neighboring regions, the conditions for business can vary considerably (Golikova & Kuznetsov, 2017).…”

Modeling of the Balanced Strategy of Innovative Development of the Enterprises as Bases of Ensuring Economic Security of Russia

“…"The new effective model of development of economy is the model answering the purpose of social and economic development of the country, providing formation of modern outlook, generation of the research environment, reflecting the effectiveness of real process of reproduction and effectiveness of work of each division realizing efficiency of internal process of production" [4] Problems of formation of strategy of innovative development of the enterprises were an object of research of rather large number of domestic and foreign researchers, for example, [5,6,7,8]. At the same time, it is important to note that for domestic science the "narrow" orientation by consideration of questions of innovative development expressed in concentration only on technological aspect is peculiar what, in particular, the choice of the key strategic parameters in Strategy testifies to.…”