Increasing small- and medium-enterprise contribution to local and regional economic growth by assessing the institutional environment

Abstract

PurposeA neo-institutional methodology defines the entrepreneurial environment for SMEs as a multidimensional set of interacting formal/informal institutions influencing regional economic growth. Acknowledging the multidimensional nature of SME growth, this study tests an approach to measure SME institutional environment quality through the identification of regional-level determinants.Design/methodology/approachThe method used in this paper is based on Bruns et al.’s (2017) model and is tested on 81 Russian Federation regions. The approach seeks to determine variation in entrepreneurial ecosystems based on quality and estimated marginal effects of difference across geographical regions.FindingsThe most severe obstacle to SME development in Russia is its shadow economy and corruption. Access to finance, high transportation fees, and instability in the political and economic field ranks second and third, respectively. Results suggest governments should eliminate main obstacles at country-level, which hampers the SME sector's development. While this is noted for this case looking at Russia, this is a common argument found in SME research.Practical implicationsFindings from this study are useful in managerial practice, aimed at increasing innovative development and increasing the competitiveness of Russian SMEs. A neo-institutional approach is one of the theoretical strands with the emphasis on enhanced understanding of organizational behavior and social capital, including cultural norms and beliefs.Originality/valueUtilizing an extended empirical approach to assess the institutional environment for SMEs addresses a research gap – offering novel insight on SME growth useful for policy makers. The results can inform managerial practices to increase SME contribution to economic growth.

An Assessment of Regional Sustainability via the Maturity Level of Entrepreneurial Ecosystems

“…For instance, these are specialized institutions that focus on the protection of intellectual property. Accordingly, informal institutions historically established are rooted in the minds and behavior of people through various ideas, norms, values, beliefs, patterns, or rules that are not formally fixed, but indirectly determine the nature and methods of relationships in the innovation system [55]. These institutions, for instance, showcase entrepreneurial culture, trust, and social capital, and are very important in making decisions.…”

“…These institutions, for instance, showcase entrepreneurial culture, trust, and social capital, and are very important in making decisions. The improvement in the institutional environment and the increased certainty about the future have an impact on entrepreneurial behavior [55]. Formal and informal institutions constitute the "rules of the game" in a community and have an impact on the creation and the development of new ventures; this institutional framework influences the decision to become an entrepreneur and related entrepreneurial activities [56].…”

Universities as Knowledge Integrators and Cross-Industry Ecosystems: Self-Organizational Perspective

“…We note also that the term "ecosystem" is quite complex and has been used in a different sense. It is often used as a metaphor for a network and network external factors, for a particular market or market niche, to reflect the complementarity of physical, human, and intellectual assets, or even spillover effects arising from joint activities (Gamidullaeva et al, 2020). The fundamental idea of this concept is that, in an unstable and turbulent environment, economic agents are building their strategies and creating competitive advantages based on resource sharing, network externalities (external effects), and knowledge "flows" (spillover effects).…”

Toward Dynamic-Based Classification of SMEs

“…The sector of Small and Medium-size Enterprises (SMEs) is a significant contributor to economies worldwide in terms of share, stability and growth, innovation, new job generation, and social cohesion (Ayyagari et al, 2007;Fadahunsi, 2012;Gamidullaeva et al, 2020;Holmes & Gibson, 2001;Morrison et al, 2003;Nooteboom, 1988). For example, in the U.S.A., small businesses make up 99.8 % of U.S. employer firms, 47.1% of private-sector employment, 64% of net new private-sector jobs, and 33% of exporting value (Small Business Administration, 2020).…”