This diploma thesis provides an overview of the contemporary debate about the importance of small and medium-sized enterprises (SMEs) in the BRIC countries with a special focus on Russia. Conclusions are based on historical perspectives showing that there are huge country-specific divergences and concepts of supporting SMEs. In contrast to multi-national corporations (MNCs), which are not uncommonly supported by the government of the fast-developing country they stem from respectively they are entering and can continue their triumph easily, SMEs often face tremendous difficulties to establish themselves. While the engine of the economy of industrialized countries are SMEs, it seems as if BRICs, especially Russia, struggle to provide appropriate incentives for the foundation of domestic SMEs in order to boost the economic driving force which interviews.
Table of Content
Introduction
Literature Review
1. BRIC Countries
1.1 Definition BRIC
1.2 Emerging Markets
1.3 Method of Selecting BRIC Countries
1.4 BRICs or BRICS?
1.5 Macroeconomic Environment
2. Small- and Medium-sized Enterprises (SMEs)
2.1 Definition and Classification of SMEs
2.2 Importance of SMEs
2.2.1 Technology Changer
2.2.2 Economy Stimulator
2.2.3 Niche Marketer
2.2.4 Job Generator
2.3 Entrepreneurial Motivations
2.4 Barriers in SME Development
2.5 SMEs in Brazil, India and China compared to SMEs in Russia
2.5.1 History of Russia’s SME Tradition
2.5.2 Critical Issues hampering Russia’s SME Growth Potential
2.5.3 Business Reforms in Russia
3. Research Question
Empirical Study
4. Contingency Theory
4.1 Definition and Classification
4.2 Various Approaches
5. PESTEL Analysis
6. Research Methodology
6.1 Data Collection and Sample Selection
7. Findings
7.1 Pre-foundation Period
7.1.1 Motivators
7.1.2 Opportunities
7.1.3 Threats
7.1.4 General Attitude of Russians towards Self-employment
7.1.5 Summary
7.2 Foundation
7.2.1 Location decision
7.2.2 Problems faced by the Founders during the Foundation
7.2.3 Time, Money, and Efforts required for the Foundation of the Company
7.2.4 Assistance by Government or other Institutions
7.2.5 Summary
7.3 Barriers to a Sustainable SME Sector Growth
7.3.1 Perceived Factors hindering SME Growth in Russia
7.3.2 Current problems faced by the participants’ companies
7.3.3 Simplification measures set by the government over the years
7.3.4 Summary
7.4 Future Outlook
7.4.1 Expected simplification measures
7.4.2 Growth plans
7.4.3 Summary
7.5 Results from the PESTEL Analysis
8. Conclusions and Further Research
8.1 Conclusion
8.2 Limitations
8.3 Further Research
Research Objectives & Topics
This thesis examines the importance of Small and Medium-sized Enterprises (SMEs) within the BRIC nations, with a specific focus on the obstacles and opportunities for domestic entrepreneurs in Russia. It aims to identify the challenges hindering the Russian SME sector and explore why Russia lags behind its fellow BRIC countries in creating a supportive environment for small business growth.
- Comparative analysis of SME significance across BRIC nations.
- Identification of institutional and cultural barriers for Russian SMEs.
- Application of Contingency Theory and PESTEL analysis to the Russian business environment.
- Evaluation of government support mechanisms and business reforms.
- Insights into entrepreneurial motivations and challenges through qualitative interviews.
Excerpt from the Book
2.2.1 Technology Changer
Although SMEs account for a small fractional part of total business R&D in the OECD, the contribution of SMEs to the innovation system is immense. SMEs introduce new products and adapt existing products to the needs of customers. For reasons of low R&D expenditures, SMEs have a competitive advantage (Acs & Audretsch, 1990).
Schumpeter (1934) argued that innovations give companies temporary monopolies. These monopolies last as long as competitors do not copy or improve their innovations. Schumpeter (1942) assumed that large-scale enterprises are more successful innovators than their smaller counterparts. However, he further pointed out that the higher the degree of bureaucracy within a company is, the less innovative ideas will emerge. He started from the assumption that the larger a company is, the more likely it is to increase bureaucracy and as a result, it may lose its innovative strength. Thus, leading to macroeconomic stagnation.
As a matter of fact, nowadays, smaller firms are the driver for innovation. Although large firms tend to be ahead of SMEs when it comes to design-driven innovation, e.g. in factory automation, small firms often have the upper hand concerning discovery-driven, or in other words experimental innovation (Carlsson, 1999). Acs and Audretsch (1988) found the correlation between patents and the rate of product innovation and production innovation to be rather low among larger companies and, on the other side to be much higher among smaller firms.
Summary of Chapters
1. BRIC Countries: Provides a definition and macroeconomic overview of Brazil, Russia, India, and China, situating them within the global emerging markets landscape.
2. Small- and Medium-sized Enterprises (SMEs): Explores the definition, importance, and specific roles of SMEs as technology changers, economy stimulators, niche marketers, and job generators.
3. Research Question: Outlines the primary investigation regarding the challenges and chances for Russian SMEs and the reasons for the sector's underdevelopment.
4. Contingency Theory: Introduces contingency frameworks to understand how organizational structures must align with environmental factors to achieve effectiveness.
5. PESTEL Analysis: Applies the PESTEL model to evaluate the political, economic, social, technological, environmental, and legal factors influencing the business environment.
6. Research Methodology: Details the qualitative approach, including the rationale for semi-structured interviews conducted with nine founders in Russia.
7. Findings: Presents empirical data gathered from interviews, focusing on pre-foundation motivators, foundation challenges, and barriers to sustainable growth.
8. Conclusions and Further Research: Summarizes the key findings, identifies research limitations, and suggests directions for future studies.
Keywords
SME, Russia, BRIC, Entrepreneurship, Economic Growth, PESTEL Analysis, Contingency Theory, Business Environment, Innovation, Startup, Market Barriers, Corruption, Bureaucracy, SME Policy, Qualitative Research
Frequently Asked Questions
What is the core focus of this thesis?
The research focuses on the development of the SME sector in Russia, analyzing the obstacles and opportunities for domestic entrepreneurs in comparison to other BRIC nations.
What are the central thematic fields covered?
The work covers SME definitions and economic importance, the role of contingency and PESTEL frameworks, and the specific regulatory and social hurdles faced by businesses in the Russian Federation.
What is the primary research question?
The thesis explores the challenges and opportunities for SMEs in Russia, specifically addressing the sub-question of why Russia lags behind its peers in supporting domestic small businesses.
Which scientific methodology is employed?
The author uses a qualitative research methodology, conducting nine in-depth semi-structured interviews with entrepreneurs to gain insights into their personal experiences in the Russian market.
What is discussed in the main part of the thesis?
The main part analyzes the literature on SMEs and BRICs, establishes a theoretical framework using Contingency and PESTEL models, and presents empirical findings from interviews organized by the stages of company foundation and growth.
Which keywords best characterize this work?
Key terms include Russian entrepreneurship, SME development, BRIC economies, institutional barriers, and qualitative business research.
How does the business environment in Russia affect SME foundation?
The thesis finds that excessive bureaucracy, high costs of real estate, limited access to affordable credit, and outdated legal frameworks are major impediments during the foundation process.
What role does corruption play in the growth of Russian SMEs?
Corruption and bribery are identified as systemic issues that significantly burden SMEs, particularly when dealing with government contracts or large, state-aligned enterprises.
What impact does the "green trend" have on Russian SMEs?
The study highlights a growing "green trend," particularly among younger consumers, which provides new market opportunities for SMEs that prioritize product quality and environmental friendliness.
- Quote paper
- Mario Schuler (Author), 2014, The Importance of Small- and Medium-sized Enterprises in Russia in relation to the other BRIC countries, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/273892
