The Impact of the Legal System for Registration and Operation of Companies on the Development of Entrepreneurship in Bosnia and Herzegovina

Abstract

The legal system in Bosnia and Herzegovina is very complex, and as such has a negative impact on the development of entrepreneurship..Registration of companies in developed countries takes one day, in Bosnia and Herzegovina it takes up to a month. This is not the only problem, various paraphysical levies make business more difficult, the high rate of contribution to salaries are the reasons why we have a slow process of development of companies. This process is directly related to direct foreign investments, which in comparison to Bosnia and Herzegovina, e.g. with Serbia it is up to ten times less. This work will be based on the research of the theoretical part, which is the procedure for registering the company in question, both for domestic and foreign citizens, as well as the required time period for registration. Also, in addition to the theoretical part, the paper will also have a research part, based on the available data, and what are the parameters that influence the development of entrepreneurship in Bosnia and Herzegovina. The development of entrepreneurship is largely influenced by domestic and foreign investors, as well as the created climate and work environment. These are the variables that will be taken into account when analyzing the impact of certain parameters on the development of entrepreneurship. An unavoidable variable in the analysis is the legal procedure for registering and operating companies. This segment is unavoidable and plays a big role for both domestic and foreign investors. The analysis will show to what extent they influence the development of entrepreneurship. As recommendations from this work, clear guidelines for improving the development of entrepreneurship in Bosnia and Herzegovina will emerge, through clearly set priorities. Regression analysis offered different coefficients of influence of certain variables, which ultimately sets priorities in the realization of certain business barriers. Therefore, the dependent variable is the development of business companies in BiH (RPD), while the independent variables are the complex administration system (SSA), high paraphysical levies (VPN), low level of state investment in entrepreneurship (NSU) and insufficient level of foreign investment (NSI). The aim of this paper is to investigate and determine in a scientifically based way how complex legislation has an impact on the development of entrepreneurship in Bosnia and Herzegovina, taking into account other business barriers, depending on the available secondary data. Therefore, the hypothesis put forward in this paper is that the complex system of registration of companies has a negative impact on the development of entrepreneurship in Bosnia and Herzegovina. The analysis was done using a multiple regression model, the system of complex administration was not the only factor, there were three more, namely a high level of paraphysical levies, state investment in the development of entrepreneurship and a low level of foreign investment. According to the results of the analysis, two variables showed an extremely high degree of influence on the development of business companies in BiH, namely a complex system of administration and a high degree of paraphysical levies. These two variables showed an extremely high degree of influence on the development of entrepreneurship, which means that their improvement in the form of simplification of the administration system and reduction of paraphysical levies greatly influence the improvement of the development of entrepreneurship.