Foundations for the functioning of institutions for support and development of small and medium entrepreneurship

Abstract

The article considers the conceptual foundations of the functioning of institutions for support and promotion of the development of small and medium businesses. The author defines the significance of such institutions, and the value of their product, that is, the services for small and medium entrepreneurship (SME), which allows a better understanding of the main functional and applied role and purpose of these entities. Given the lack of trust from the population of Ukraine for government agencies and organizations, the presence of a number of problems in the SME support system, and especially the inadequate legislative regulation of the status and definition of the functions of the main performers of SME development policy, the article notes that this area needs a qualitative institutional change. The study uses the methods of analysis and synthesis, comparison, generalization, and induction and tests the methodology of Canvas Business Model strategic planning of the activities of SME support entities. Guided by the principle of functionalism, the author conventionally groups the SME support institutions into five main types: business support funds, business centers, business incubators, business innovation centers, and business associations. For each type of SME support institution, the main functional purpose and, accordingly, the main type of operational activity are specified. There are proposals that allow understanding the essence, the functional and applied role and the mission of individual elements of the SME support infrastructure. In practical terms, they can be used in state purpose-oriented programs to promote the development of small and medium businesses in order to qualitatively improve the final product for SME. The author develops a model of the activity for a typical SME support entity, which is applicable, can be adapted to specific conditions and is flexible over time. Strategic planning of the entity’s activities based on the methodology of Canvas Business Model allows defining both the value of the product (services for SME), as well as the general value of the entity’s activities, which is extremely important in the SME support system. It is emphasized that each institution of the SME promotion infrastructure performs an important social function. The key values recommended following for SME support institutions are trust, partnership, and righteousness.