Entrepreneurship and small business development in Kosova : an overview -- Theory of entrepreneurship and the transition context -- Determinants of entrepreneurial activity : empirical evidence from Kosova -- Small firm growth -- Determinants of small firm growth : empirical evidence from Kosova -- Investment and finance in small firms : empirical evidence from Kosova -- Conclusions and policy implications
This study investigates the barriers to growth of small- and medium-sized enterprises (SMEs) in Kosova. It is based on a SME survey conducted by Riinvest Institute at the end of 2002 which identified critical business environment barriers perceived by entrepreneurs such as legal environment, administrative burden, external financing, tax burden and unfair competition. First, based on this SME survey, the econometric model is constructed in order to test empirically the validity of Gibrat's Law. Then, in order to identify and measure the impact of current reported business environment barriers on SME growth, the Gibrat's Law is augmented with other business environment variables. The econometric results suggest that firms' growth is negatively linked to firms' size and age, suggesting that Gibrat's Law does not hold for growing SMEs in Kosova. Also, the growth of the SMEs is reduced by the presence of the business environmental barriers such as tax burden, unfair competition and inadequate financing. Econometric results raise important issues and policy implications for the development of the SME sector in Kosova.
Purpose The purpose of this paper is to fill the gap in the research literature on how sport can be used more productively as a peacebuilding device in post-conflict countries.
Design/methodology/approach This paper uses interviewing method that includes both semi-structured and unstructured interviews with trainers, instructors and children involved in implementing Open Fun Football Schools (OFFSs) in Kosovo.
Findings Findings show that OFFSs have played a vital role in peacebuilding in Kosovo by bringing together people from different ethnic backgrounds in Kosovo, which contributed to social inclusion of Albanians and Serbs, and other communities by changing their initial attitudes toward one another.
Research limitations/implications The main research limitation is the usage of semi-structured and unstructured questionnaires instead of structured questionnaires, which would provide more generalized conclusions about the OFFSs. More research is needed on this topic to investigate the effect of similar programs in other country contexts.
Practical implications The most important practical implication of the research is that conflict mitigation through football sports programs and activities can be used in other similar contexts by donors and the international community. OFFSs offer a hope for peacebuilding, and if adequately implemented can contribute to peacebuilding in post-conflict societies similar to Kosovo's context. The positive attitude changes as a result of participation in the OFFS programs shows that these joint programs can promote better ethnic relations. There is a need for the expansion of such programs to reach more people.
Originality/value The study provides an original contribution as there has been almost no prior research which actually measured the effects of OFFSs on change of youth attitudes through the integrated sport programs with different ethnicity in Kosovo.
This article tests the validity of Gibrat's Law and Jovanovic's learning theory for growing small and medium-sized firms (SMEs) in post-conflict economy of Kosovo. Despite evolving body of evidence suggesting that Gibrat's Law does not hold, there is a lack of empirical evidence from transitional and post-conflict economies. This study provides econometric analysis of the relationship of age, size and growth of SMEs. The article is based on pooled SME surveys conducted by Riinvest Institute (2004- 2006). Econometric findings show that Gibrat's Law does not hold in all model specifications while support the conventional Jovanovic's learning theory based on growth-size age model suggesting important policy implications for promotion of small firms in Kosovo.
AbstractThe role of formal and informal institutions is crucial in forming growth aspirations. Firms use their resources and personal network, trusting to overcome or compensate for inadequate informal institutions. Transition countries can unlock their growth potential by targeting entrepreneurs with high growth aspiration through policy measures (increasing their level of human capital through a higher quality of educational system, aligning formal and informal institutions, promoting well‐functioning and impartial courts). Entrepreneurs use the informal institutions to complement deficient or inadequate formal institutions. Firm size as an indicator of better access to resources moderates positively the effects of informal institution barriers by having a positive influence on growth aspiration. Training, networking, and trust have a positive effect on growth aspiration and entrepreneurs use these practices in response to institutional deficiencies (inadequate educational systems, inefficient courts and other formal institutions). Policy initiatives should consider small firms as being affected by formal institutions.
Abstract This article investigates how regional supply chains support the Western Balkans' economic growth. It first identifies the role of the cefta free trade agreement in expanding the size of the local market and opening up regional trading opportunities. It recounts how the larger market and specific industrial policies have attracted foreign direct investment (fdi) to the region in recent years. It analyses how these two factors have combined to generate export-led growth in the region and have brought about substantial structural changes within these economies. The article argues that to take continued advantage of the success in trade liberalisation and fdi attraction, policymakers should pay special attention to promoting backward spillovers by promoting linkages between local small and middle sized enterprise (sme) supplier firms and the newly arrived multi national corporations embedded into global value chains. Policies should be adopted which build the capacity of local sme suppliers within regional supply chains, both in terms of labour force skills and technological upgrades. The EU's recently launched Economic and Investment Plan for the Western Balkans and the activities of the Western Balkan Six Chamber Investment Forum may support such policies.
This paper investigates the role of Special Economic Zones (SEZs) in the Western Balkans in supporting industrial policy for economic development. It shows that Serbia and North Macedonia have both implemented policies to establish networks of SEZs that have attracted a relatively large amount of new foreign direct investment, mainly into the motorcar and components industries. Although many jobs have been created and some improvements in export competitiveness have occurred, there is no evidence of improvements in labour productivity or widespread technology spill-over to local economies. The import intensity of production is extremely high, implying little linkage to local economies. The qualitative interviews further reveal limited linkages between SEZ-based companies and local businesses, limited technology transfer, and a lack of appropriate skills among the workforce. In particular, there is insufficient capacity in the motorcar components supply chain. The paper concludes that governments have used SEZ policies as an alternative to regional and local development policies based on smart specialisation. In order to take advantage of the opportunity offered by SEZs, governments in the region should put more effort into developing local supply chains, aligning their policies towards SEZs and smart specialisation in order to leverage the advantages of an increased inflow of direct foreign investment for sustainable economic development in the future.
Institutional theory has been widely used to explain entrepreneurship in the informal economy. A first wave of institutionalist theory argued that informal entrepreneurship resulted from formal institutional failures and a second wave that such entrepreneurship results from an asymmetry between the laws and regulations of formal institutions and the unwritten socially shared rules of informal institutions. This paper evaluates the validity of these two waves of institutionalist explanation and a new third wave of institutional theory explaining informal entrepreneurship in terms of a lack of both vertical and horizontal trust. Reporting data from a 2013 survey in Kosovo involving 500 face-to-face interviews with owners of small and medium-sized enterprises, 35.7 percent of sales are estimated to be unreported and a regression analyses reveals this is significantly higher among smaller and older firms, and firms owned by men. No significant association is found between formal institutional failings and the under-reporting of sales, but there is a statistically significant correlation between sales under-reporting and the level of vertical and horizontal trust. Taking account of the limitations of this single country study, the implications for theory and policy are then discussed.
PurposeRecently, a small but burgeoning literature has argued that tax non-compliance cannot be fully explained using the conventional rational economic actor approach which views non-compliance as occurring when the pay-off is greater than the expected cost of being caught and punished. Instead, a social actor approach has emerged which views tax non-compliance as higher when "tax morale", defined as the intrinsic motivation to pay taxes, is low. To advance this social actor model, the purpose of this paper is to evaluate the individual and national heterogeneity in tax morale, which is crucial if tax compliance is to be improved.Design/methodology/approachTo do this, the authors report data from the 2010 Life in Transition Survey on tax morale in 35 Eurasian countries.FindingsLogit econometric analysis reveals, on the one hand, that there is higher tax morale among middle-aged, married, homeowners with children, with a university degree and employed, and on the other hand, that there is higher tax morale in more developed countries with stronger legal systems and less corruption, and higher levels of state intervention in the form of both taxation and expenditure.Research limitations/implicationsRather than continue with the rational actor approach, this paper reveals that how an emergent social actor approach can help to more fully explain tax non-compliance and results in a different policy approach focused upon changing country-level economic and social conditions associated with low tax morale and thus non-compliance.Practical implicationsThese results display the specific populations with low tax morale which need targeting when seeking to tackle tax non-compliance.Originality/valueThis paper provides a new way of explaining and tackling tax non-compliance in Eurasian countries.
The aim of this study is to critically review the existing initiatives of start-up support services for entrepreneurship growth in Kosovo. In the light of an increasing government and donor activities to support start-ups in Kosovo, there is a need for evaluation of these policy interventions to guide future entrepreneurship policy. Building on the political economy of small firm intervention literature and using mapping method the study identifies and critically evaluates the technical, financial and other support services to start-ups. The study uses secondary resources to explore the initiatives and understand the entrepreneurship growth ecosystem. The findings suggest that although there is an increased trend of business support services the entrepreneurship ecosystem has not gone beyond the traditional policy measures and in many areas remains in its infancy phase of development. Challenges remain in the area of provision of alternative forms of financing, incubation space and services and moreover, in the area of support for growth-oriented startups. The study concludes by providing alternative and additional policy intervention tools.
Business tax evasion is an important issue for governments. Yet, the factors that determine business tax evasion have not been sufficiently examined in the literature in general, and in transition contexts in particular. To address this gap, this study uses the WB/EBRD Business Environment and Enterprise Performance Survey (BEEPS) database with a sample of over 12,692 firms from 26 transition economies. Applying various modelling strategies, we argue that tax evasion is a function of firm level and institutional level variables. We contribute to the literature by providing robust evidence showing that the perceived tax burden has a positive impact on tax evasion. We also find that the tax evasive behaviour of firms is positively influenced by low trust in government and in the judicial system as well as by higher perceptions of corruption and by higher compliance costs. We find that smaller firms, individual businesses and firms in sectors that are less visible to the tax administration are more likely to get involved in evasive behaviour. Overall, institutional factors play an important role in determining firms' tax evasion behaviour in transition economies. This finding has important policy implications.
The paper aims to analyse the feasibility of the vegetable crop production in Kosovo by developing a model used to measure the impact of agricultural intervention programs. For this purpose, we have used combination of direct costing (DC) and activity based costing (ABC) to assess the production costs schemes comparing the two crop modalities extended in the two different regions using different cultivars and different production technologies. This study uses a DC and ABC approach in calculating costs in the pepper and tomatoes' production sectors and in the related agro-processing industries based on five case studies. The results derived from the adopted DC and ABC model in the vegetable sector provide more details and precise cost information that assist various managerial decisions, but are primarily used here to evaluate the impact of agricultural programmes on employment and income generation. It helps government and donors to decide between types of funding intervention programs and to see their impact on agricultural development and employment. Results, which referred to one-hectare area, showed both a higher economic and financial sustainability of good agricultural practice with respect to conventional farming, while the opposite was true in terms of employment effects of intervention programs. The study provides policy implications for both, policy makers and donors when estimating impact of interventions on employment and income levels.
The enforced lockdown and closure of businesses in response to the Covid-19 pandemic has resulted in economic crises across the globe, bringing the attention to entrepreneurship and its importance to economic recovery. The aim of this study is to evaluate the effects of the coronavirus pandemic on SME's and the entrepreneurs' policy preferences based on firm size and industry type. To achieve this, evidence from a Business Support Centre Kosovo's (BSCK) survey involving 236 SME owners interviewed online is reported. Findings from SME survey suggest the problems with cash flow and reduction of customer demand, among others, are major problems faced by SME's across all firm size groups and industry types. Findings from factor analysis clustered SME policy preferences into three groups: policy preferences related to financing and liquidity constraints, market related and tax preferences. This study discusses some policy and managerial implications urging the need for more nuanced and variegated understanding of the effect of coronavirus pandemic on SMEs.
