Barriers to the development of SMEs in the Slovak Republic

Abstract

Research background: SMEs make up an important segment of the economic system, not only in the national economy, but also throughout the EU, and their importance continues to grow. SMEs in Slovakia, according to the latest data of the European Commission, represent 99.9 per cent of all enterprises, constitute 70.7 per cent of jobs, and 61.2 per cent of value added in the economy. However, they are often confronted with market imperfections. SMEs frequently have difficulties in obtaining capital or credit, particularly in the early start-up phase. Their restricted resources may also reduce access to new technologies or innovation. Authors often deal with the impact of SME financing on their development. Madrid-Guijarro et al. (2016), Lee et al. (2015) claim that SMEs have difficulty in funding innovation and the worsening in general credit conditions has been more pronounced for non-innovative firms.Purpose of the article: The main objective of the conducted research was to analyze the conditions for the development of small and medium enterprises (the SMEs sector) in Slovak Republic, whereas the specific objectives were: (1) to determine the terms for gaining external sources of financing for the development of SMEs, (2) to examine the resources for innovation development in the SMEs sector, (3) to find out if SMEs are considered to be a competitive advantage.Methods: The research was conducted in the Slovak Republic in 2016. Participants were 193 Slovak companies that were classified as SMEs by the size class of employment. The research tool used for the study was the own questionnaire consisting of 38 questions and the demographics. The structure of the questionnaire allowed the authors to identify the group of questions concerning the most important conditions for the development of the examined sector referring to the business environment. The results were processed by chi-square method.Findings & Value added: On the basis of the conducted research of the sector of SMEs , it can be concluded that a large group of companies have difficult access to external sources of financing and this refers both to the access to the European Union funds, grants, bank loans and other instruments of the financial market. However, it occurs that: (1) in Slovakia, the smaller the enterprise, i.e. the fewer employees it hires, the easier the access to external sources of financing, (1) innovative projects are realized from company profits or a loan, (1) problems in Slovakia in accessing external funds due to the complexity of the process of approval of applications and documents and strict criteria for the assessment of financial capacity.

Important factors of financial risk in the SME segment

“…Business activities are significantly determined by the environment of the company, which forces it to use a particular method of behaviour and to choose particular business goals and ways of achieving them (Belás et al, 2015;Adamowicz & Machla, 2016;Ivanová, 2017).…”

The Dependence of Perceived Business Risks on the Size of SMEs

“…In Slovakia as in developed countries in general, small and medium-sized enterprises represent an important part of their respective economies (Vojtovič, 2016;Ślusarczyk, 2017;Ivanová, 2017;Zygmunt, 2018). Good conditions prevail for small and medium-sized entrepreneurs in terms of risk management, as they are in close proximity to all aspects of individual operations, and they are in a position to recognize many strengths and vulnerabilities in their business.…”

Family business and business dynasties: A case study of Russia

“…Source: Global Entrepreneurship Monitor (2017) At the same time, many European scientists provide a clear structure for the representation of SMEs in European economy (Simionescu et al, 2017). The model is characterized by the absolute dominance of family enterprises in the microbusiness sector (up to 10 people), providing employment for population, social stability and preserving the traditions (Ivanová, 2017). In explaining the absence of such work in our country, some objective and subjective reasons can be called.…”