The Perception of Legal Risk and Its Impact on the Business of Smes

Abstract

One of the prerequisites for a favourable business environment is a stable legislative context and law enforcement. In particular, for SMEs, that do not have the financial resources for stable legal assistance, legal risk is becoming one of the most important business risks. The aim of this paper is to enrich the current scientific knowledge with a comparison of the impact of legal risk on SMEs in selected countries. The empirical research was conducted by Tomas Bata University in Zlín during 2019-2020. In total, 1935 SMEs completed the questionnaire and their responses were examined to fulfil the purpose of the paper. The four statistical hypotheses were analysed through statistical methods such as Z-score and Chi-square tests, with IBM SPSS Statistics 23.0 used for data evaluation. Findings highlight that more than 50% of SMEs consider the management of legal risk as appropriate. Only 39% of SMEs consider the business environment as over-regulated. Almost 50% of entrepreneurs agree that their business is affected by frequent legislative changes but with no negative impact. There are statistically significant differences in consideration of legal risk between SMEs from the Czech Republic and the rest of the selected countries (Slovakia, Poland, Hungary and Ukraine).

Barriers of Smes’ Sustainability in Sub-Saharan Africa: A PLS-Sem Approach

“…The immense contributions of Small and Medium Enterprises (SMEs) in the entire world cannot be underestimated (Sanjo & Ibrahim, 2017;Jibril, Kwarteng, & Chovancova, 2019). SMEs are well known for contributing about 40% to Gross Domestic Product (GDP) and 70% creation of employment opportunities (Qalati et al, 2021;Chatterjee & Kumar 2020;Virglerova et al, 2020;Ye & Kulathunga, 2019;Belas et al, 2020;Kiram & Saputra 2021). SMEs, therefore, play a major role in the growth and development of both developed and developing countries (Pandya 2012;Lazányi, & Amoah, 2020).…”

Earnings management: A bibliometric analysis

“…It is also important to understand the link between aspects of the business sector and the business environment (Khan et al, 2019). The market, economic and financial risks are the most important risks (Virglerova et al, 2020), which determine the quality and performance of enterprises (Dvorsky et al, 2019). He et al (2017) examines the linkage of dividend policy and earnings management and the fact if the mutual bonds between countries changes due to divergent institutional strength or transparency.…”

Disparities in the Perception of Business Risks in Connection With the Achieved Education of the Owner/Manager and Doing Business

“…Legal risk is defined as the result of losses suffered to a particular business due to its disregard for business laws (Virglerova, Conte, Amoah, & Massaro, 2020). Even though the legal environment resulted not being a significant factor in predicting business risk (Çera et al, 2019), it is considered an equally positive factor that influences future business perception (Dvorsky et al, 2020).…”

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