Description
Under the current conditions entrepreneurship and entrepreneurs are the main driving force of the market economy in Bulgaria.
Entrepreneurial environment and entrepreneurial activities of small and medium business in Bulgaria
57
Entrepreneurial Environment and
Entrepreneurial Activities of the Small
and Medium Businesses in Bulgaria
Assoc. Prof. Maria Andreeva, PhD
Faculty of Management and Marketing,
?D.A.Tsenov? Academy of Economics - Svishtov, Bulgaria,
e-mail: [email protected]
. -
? ?,
? . . ? -
e-mail: [email protected]
Abstract: Under the current conditions entrepreneurship and entrepreneurs are the main
driving force of the market economy in Bulgaria. However, the competitive entrepreneurial
environment is a key factor for the development of entrepreneurship and the stimulating
of the entrepreneurial activities of the modern Bulgarian entrepreneurs from small and
medium businesses. The paper reviews the characteristics of the entrepreneurial environ-
ment in Bulgaria and its in?uence on the entrepreneurial activities of the small and medium
businesses.
Keywords: business, entrepreneurs, business environment
:
. -
,
.
-
.
: : , ,
. Introduction
In recent years the role of the small and
medium-sized enterprises (SMEs) in the
economy of Bulgaria has been on the in-
crease. These enterprises account for
99,7% of all active companies and provide
employment for more than half of the ac-
tive population in the country. [2; 13]
The importance of the small and medium-
sized enterprises for the modern Bulgarian
economy stems from the following activi-
ties:
1. They create jobs ? a prerequisite for
solving the unemployment problem.
2. They are sources of income and create
the so-called ?middle class? in society.
3. They introduce modern and progressive
production technologies ? support the
development of innovative, ?exible,
adaptive, high-tech, and environment-
friendly economic sectors and
.
-
( )
. 99,7%
-
[2;13]
- :
1. ?
-
.
2.
. . ? ? .
3.
? -
-
, , , -
Maria Andreeva
58
production processes.
4. They support the regional development
and the development of the economy
as a whole.
5. They increase the market compe-
tition.
6. They complement the large busines-
ses.
7. They contribute to the achievement of
an intensive and sustainable economic
growth, etc.
II. Evaluation of entrepreneurial ac-
tivity
Regardless of the crucial importance of
the small and medium-sized enterprises
for the development of the economy in
Bulgaria, their large number (over 250
thousand) and the steady growth of that
number over the last 4 years (of about 2%
annually) we cannot claim that the entre-
preneurial environment in Bulgaria is fa-
vorable, nor that the growing number and
relative share of the small and medium-
sized enterprises is due to optimization of
that entrepreneurial environment.
Likewise, we cannot claim that the entre-
preneurial activities of the small and me-
dium-sized enterprises in Bulgaria are in-
tensifying. A circumstantial proof for that
is the ?twisted? market orientation of the
small and medium-sized enterprises dur-
ing the last 10 or 15 years - most of the
SMEs in Bulgaria are active in the sectors
of trade (about 25%), services (about
18%), transportation (about 14%), while
the share of the companies involved in
real production is quite modest ? 6 to 8%
(with only 5 to 6% of them being high-
tech companies).
As we know, one of the main indices for
entrepreneurial activity is the attitude of
the businesses towards:
/ innovations;
b/ risk, and
c/ initiative.
The SMEs in Bulgaria are insuf?ciently in-
volved in the innovative process - the
innovation activity and innovation partner-
ship indices of the Bulgarian manufactur-
ing companies are well below the average
European levels. While 42% of the com-
panies in the EU implement innovative
technologies for the development of their
.
4. -
.
5. -
.
6. .
7.
.,
.
I.
,
( 250 ),
4 ( 2% ),
,
,
-
.
, -
, -
. -
? ?
10-15 - -
e -
-
( 25%),
( 18%), ( 14%),
-
? 6-
8% (
5-6%).
, -
:
/ ;
/
/ .
, -
. -
42%
,
16%,
(18%),
Entrepreneurial environment and entrepreneurial activities of small and medium business in Bulgaria
59
business, the percentage of such compa-
nies in Bulgaria does not exceed 16% -
a fact that ranks our country last, behind
Latvia (18%), Romania (20%), Hungary
and Malta (21%), and well behind the
leaders Germany (65%), Austria (53%),
Denmark, Luxemburg and Ireland (52%).
Moreover, under the conditions of the eco-
nomic crisis, during the last 2 years this
discrepancy grew even larger [3;27]
The attitude of the SMEs in Bulgaria to-
wards risk and initiative follows the
same trend. According to the entrepre-
neurs themselves, the reasons why they
are reluctant to take risk and are thus un-
able to develop their initiative, are related
mostly to the shortage of available capi-
tals (due to the traditional cautiousness
of commercial banks to extend credits to
SMEs because of their high credit risk, the
reduction of credit exposition of banks to
the real sector, the unacceptable credit
terms and the overly strict requirements
of the banks - collaterals, terms, high
credit prices in terms of interests, etc.),
the lack of suf?cient knowledge and expe-
rience, the feeling of greater risk and inse-
curity, stronger competition, the hope for
shorter periods of return of investments,
the greater pro?t margins in the services
sectors, etc.
Various studies on the competition in Bul-
garia have shown that the most serious
problems hindering the entrepreneurial
activities related to establishment and
development of SMEs during the last
decade are related to: / corporate regis-
tration; b/ renting or purchasing of premis-
es; c/ lack of start-up capitals; d/ choice
of activity ?eld; e/ high taxes; f/ unstable
and unreliable regulatory framework for
the development of SMEs as well as lack
of stable and con?dent entrepreneurial at-
titude towards business, including ethics
and social responsibility; g/ enormous bu-
reaucracy; h/ interventions from the local
governments; i/ lack of complete, timely,
and reliable business information; j/ lack
or unavailability of quali?ed staff; k/ strong
competition; l/ lack of consultancy serv-
ices; m/ lack of systems for control and
budgeting of SMEs; n/ unloyal competition
and racket, etc. [1;337]
(20 %), (21%)
(65%),
(53%), ,
(52%). ,
2 -
[3;27].
, -
. -
, ,
-
, -
(
-
,
, -
, -
-
-
? , ,
,
, .),
, -
- ,
- ,
-
- -
, .
, - -
,
-
-
:
/ ; /
; / -
; /
; / ; / -
, -
, -
,
-
; / ; /
; / -
, ,
; / -
-
; / ; /
; /
-
; / -
. [1;337]
Maria Andreeva
60
III. In?uence of the entrepreneurial
environment
The positive and negative factors of the
entrepreneurial environment, which in?u-
ence the entrepreneurial activities of the
SMEs in Bulgaria, may be summarized as
follows: (Table 1)
Table 1. Factors of the contemporary
entrepreneurial environment in Bulgaria
I. Positive factors of the
entrepreneurial environment
1. Relatively highly quali?ed and the cheapest la-
bor in the EU.
2. Access to the structural funds of the EU and
possibilities for receiving grants from some of its
programmes.
3. Efforts exerted by the government to improve
the business climate.
4. A relatively well-developed technical infrastruc-
ture.
5. A relatively well-developed and accessible edu-
cational system.
6. Good possibilities for internationalization of the
business within the EU.
7. Relatively good possibilities for attracting for-
eign investments.
8. Relative macroeconomic stability during the last
years.
9. Certain traditions in the ?eld of entrepreneur-
ship established during the previous stages of de-
velopment of our economy.
10. Geographical location and climatic conditions
in the country allowing for development of a di-
versi?ed economic structure, which is integrated
in the European economic structures, including the
implementation of strategic projects, etc.
II. Negative factors of the
entrepreneurial environment
. Existing, ?traditional?:
1. complex regulatory and administrative environ-
ment.
2. dif?cult access to ?nancing, especially during
the initial stage, which limits the scope of activi-
ties, technologies used and possibilities for growth
of the SMEs.
3. lack of a system of guarantee funds and risk
?nancing schemes.
4. lack of ?nancial resources for research and de-
velopment and innovations.
5. lack of mechanisms for differentiated support of
SMEs that implement innovations.
6. insuf?cient quality of the information and con-
sultancy services provided by the institutions sup-
porting the SMEs.
7. dif?cult access to information about markets
and business partners, and especially about for-
eign partners.
8. Lack of a real entrepreneurial culture built on
values such as trust in one?s own abilities, risk-tak-
ing skills and responsibility.
9. inef?cient and short-sighted state policy for the
development of the SMEs and entrepreneurship.
10. lack of coherent national policy in the ?eld of
science and innovations, as well as a clear pro-
gramme for its implementation, etc.
III.
-
,
,
: ( . 1)
.1.
I.
1. - -
.
2. -
.
3.
.
4. -
.
5. -
.
6.
.
7. -
.
8. -
.
9.
.
10.
, -
-
, -
, . .
.
II.
. , ? ?:
1. .
2.
,
, -
.
3.
.
4. - -
.
5. -
,
.
6. -
- ,
.
7. -
- , ?
.
8. ,
,
,
.
9. -
.
10.
-
, .
Entrepreneurial environment and entrepreneurial activities of small and medium business in Bulgaria
61
. , -
:
1.
, .
, -
.
2. -
.
3. .
4. - -
-
, .
-
-
. -
, -
-
.
IV. :
1. - -
,
?
,
-
, -
-
.
2. ? -
? -
? -
? ,
.
3.
-
.
:
/ ,
-
, :
-
;
;
, .;
/ , -
? -
B. Additional risks related to the economic
crisis:
1. decrease of the volume of credits extended by
banks, leasing companies and other ?nancial in-
stitutions, which slows down the implementation
of innovations and restricts the initiatives of the
businesses.
2. decreased demand on both the domestic and
the European markets.
3. decrease in the prices of certain goods and serv-
ices.
4. a higher risk pro?le of the Bulgarian economy
and reduced volumes of investments, external ?-
nancing, etc.
The in?uence of the negative factors
shown in the table above is especially
strong under the conditions of the global
economic crisis. Practice has shown that
the SMEs are the most vulnerable busi-
ness entities.
IV. Conclusions and recommenda-
tions:
1. The greater dif?culties related to the
business activities of SMEs (compared to
their counterparts from the other member
states of the EU) at this stage may have
a negative effect on their survival and
growth potential, their competitiveness,
and the development of their innovative
potential.
2. The in?uence of the ?traditionally un-
favorable? factors of the entrepreneurial
environment in Bulgaria is ?multiplied? in
times of economic crisis, has a very strong
negative impact on the SMEs and will de?-
nitely slow down considerably the time for
the recovery of their positions in the econ-
omy of Bulgaria.
3. The government should approve a set
of urgent measures for improvement of
the entrepreneurial environment and sup-
port of the SMEs, including the following
two groups of measures:
/ standard measures, which are imple-
mented by the other member states of the
EU during crises, e.g.: allocation of state
budget resources to those sectors of the
economy which are affected most; facili-
tating the access of SMEs to state tenders;
?nancial concessions for the SMEs, etc.;
b/ speci?c measures, related to the more
unfavorable entrepreneurial environment
in Bulgaria ? development of a new na-
tional strategy for the small and medium-
Maria Andreeva
62
sized business providing equal conditions
for its survival and development. Such
a protectionist strategy should include
changes of regulations and administrative
procedures, provision of more opportuni-
ties for participation in European projects
and programmes, encouragement of the
entrepreneurial activities through logistic
and information support, etc.
,
.
,
,
- -
, .
Reference/
[1] , ., , , . , 2003.
[2] 2007, .,
, 2008.
[3]
2007, ., , 2008.
doc_323117623.pdf
Under the current conditions entrepreneurship and entrepreneurs are the main driving force of the market economy in Bulgaria.
Entrepreneurial environment and entrepreneurial activities of small and medium business in Bulgaria
57
Entrepreneurial Environment and
Entrepreneurial Activities of the Small
and Medium Businesses in Bulgaria
Assoc. Prof. Maria Andreeva, PhD
Faculty of Management and Marketing,
?D.A.Tsenov? Academy of Economics - Svishtov, Bulgaria,
e-mail: [email protected]
. -
? ?,
? . . ? -
e-mail: [email protected]
Abstract: Under the current conditions entrepreneurship and entrepreneurs are the main
driving force of the market economy in Bulgaria. However, the competitive entrepreneurial
environment is a key factor for the development of entrepreneurship and the stimulating
of the entrepreneurial activities of the modern Bulgarian entrepreneurs from small and
medium businesses. The paper reviews the characteristics of the entrepreneurial environ-
ment in Bulgaria and its in?uence on the entrepreneurial activities of the small and medium
businesses.
Keywords: business, entrepreneurs, business environment
:
. -
,
.
-
.
: : , ,
. Introduction
In recent years the role of the small and
medium-sized enterprises (SMEs) in the
economy of Bulgaria has been on the in-
crease. These enterprises account for
99,7% of all active companies and provide
employment for more than half of the ac-
tive population in the country. [2; 13]
The importance of the small and medium-
sized enterprises for the modern Bulgarian
economy stems from the following activi-
ties:
1. They create jobs ? a prerequisite for
solving the unemployment problem.
2. They are sources of income and create
the so-called ?middle class? in society.
3. They introduce modern and progressive
production technologies ? support the
development of innovative, ?exible,
adaptive, high-tech, and environment-
friendly economic sectors and
.
-
( )
. 99,7%
-
[2;13]
- :
1. ?
-
.
2.
. . ? ? .
3.
? -
-
, , , -
Maria Andreeva
58
production processes.
4. They support the regional development
and the development of the economy
as a whole.
5. They increase the market compe-
tition.
6. They complement the large busines-
ses.
7. They contribute to the achievement of
an intensive and sustainable economic
growth, etc.
II. Evaluation of entrepreneurial ac-
tivity
Regardless of the crucial importance of
the small and medium-sized enterprises
for the development of the economy in
Bulgaria, their large number (over 250
thousand) and the steady growth of that
number over the last 4 years (of about 2%
annually) we cannot claim that the entre-
preneurial environment in Bulgaria is fa-
vorable, nor that the growing number and
relative share of the small and medium-
sized enterprises is due to optimization of
that entrepreneurial environment.
Likewise, we cannot claim that the entre-
preneurial activities of the small and me-
dium-sized enterprises in Bulgaria are in-
tensifying. A circumstantial proof for that
is the ?twisted? market orientation of the
small and medium-sized enterprises dur-
ing the last 10 or 15 years - most of the
SMEs in Bulgaria are active in the sectors
of trade (about 25%), services (about
18%), transportation (about 14%), while
the share of the companies involved in
real production is quite modest ? 6 to 8%
(with only 5 to 6% of them being high-
tech companies).
As we know, one of the main indices for
entrepreneurial activity is the attitude of
the businesses towards:
/ innovations;
b/ risk, and
c/ initiative.
The SMEs in Bulgaria are insuf?ciently in-
volved in the innovative process - the
innovation activity and innovation partner-
ship indices of the Bulgarian manufactur-
ing companies are well below the average
European levels. While 42% of the com-
panies in the EU implement innovative
technologies for the development of their
.
4. -
.
5. -
.
6. .
7.
.,
.
I.
,
( 250 ),
4 ( 2% ),
,
,
-
.
, -
, -
. -
? ?
10-15 - -
e -
-
( 25%),
( 18%), ( 14%),
-
? 6-
8% (
5-6%).
, -
:
/ ;
/
/ .
, -
. -
42%
,
16%,
(18%),
Entrepreneurial environment and entrepreneurial activities of small and medium business in Bulgaria
59
business, the percentage of such compa-
nies in Bulgaria does not exceed 16% -
a fact that ranks our country last, behind
Latvia (18%), Romania (20%), Hungary
and Malta (21%), and well behind the
leaders Germany (65%), Austria (53%),
Denmark, Luxemburg and Ireland (52%).
Moreover, under the conditions of the eco-
nomic crisis, during the last 2 years this
discrepancy grew even larger [3;27]
The attitude of the SMEs in Bulgaria to-
wards risk and initiative follows the
same trend. According to the entrepre-
neurs themselves, the reasons why they
are reluctant to take risk and are thus un-
able to develop their initiative, are related
mostly to the shortage of available capi-
tals (due to the traditional cautiousness
of commercial banks to extend credits to
SMEs because of their high credit risk, the
reduction of credit exposition of banks to
the real sector, the unacceptable credit
terms and the overly strict requirements
of the banks - collaterals, terms, high
credit prices in terms of interests, etc.),
the lack of suf?cient knowledge and expe-
rience, the feeling of greater risk and inse-
curity, stronger competition, the hope for
shorter periods of return of investments,
the greater pro?t margins in the services
sectors, etc.
Various studies on the competition in Bul-
garia have shown that the most serious
problems hindering the entrepreneurial
activities related to establishment and
development of SMEs during the last
decade are related to: / corporate regis-
tration; b/ renting or purchasing of premis-
es; c/ lack of start-up capitals; d/ choice
of activity ?eld; e/ high taxes; f/ unstable
and unreliable regulatory framework for
the development of SMEs as well as lack
of stable and con?dent entrepreneurial at-
titude towards business, including ethics
and social responsibility; g/ enormous bu-
reaucracy; h/ interventions from the local
governments; i/ lack of complete, timely,
and reliable business information; j/ lack
or unavailability of quali?ed staff; k/ strong
competition; l/ lack of consultancy serv-
ices; m/ lack of systems for control and
budgeting of SMEs; n/ unloyal competition
and racket, etc. [1;337]
(20 %), (21%)
(65%),
(53%), ,
(52%). ,
2 -
[3;27].
, -
. -
, ,
-
, -
(
-
,
, -
, -
-
-
? , ,
,
, .),
, -
- ,
- ,
-
- -
, .
, - -
,
-
-
:
/ ; /
; / -
; /
; / ; / -
, -
, -
,
-
; / ; /
; / -
, ,
; / -
-
; / ; /
; /
-
; / -
. [1;337]
Maria Andreeva
60
III. In?uence of the entrepreneurial
environment
The positive and negative factors of the
entrepreneurial environment, which in?u-
ence the entrepreneurial activities of the
SMEs in Bulgaria, may be summarized as
follows: (Table 1)
Table 1. Factors of the contemporary
entrepreneurial environment in Bulgaria
I. Positive factors of the
entrepreneurial environment
1. Relatively highly quali?ed and the cheapest la-
bor in the EU.
2. Access to the structural funds of the EU and
possibilities for receiving grants from some of its
programmes.
3. Efforts exerted by the government to improve
the business climate.
4. A relatively well-developed technical infrastruc-
ture.
5. A relatively well-developed and accessible edu-
cational system.
6. Good possibilities for internationalization of the
business within the EU.
7. Relatively good possibilities for attracting for-
eign investments.
8. Relative macroeconomic stability during the last
years.
9. Certain traditions in the ?eld of entrepreneur-
ship established during the previous stages of de-
velopment of our economy.
10. Geographical location and climatic conditions
in the country allowing for development of a di-
versi?ed economic structure, which is integrated
in the European economic structures, including the
implementation of strategic projects, etc.
II. Negative factors of the
entrepreneurial environment
. Existing, ?traditional?:
1. complex regulatory and administrative environ-
ment.
2. dif?cult access to ?nancing, especially during
the initial stage, which limits the scope of activi-
ties, technologies used and possibilities for growth
of the SMEs.
3. lack of a system of guarantee funds and risk
?nancing schemes.
4. lack of ?nancial resources for research and de-
velopment and innovations.
5. lack of mechanisms for differentiated support of
SMEs that implement innovations.
6. insuf?cient quality of the information and con-
sultancy services provided by the institutions sup-
porting the SMEs.
7. dif?cult access to information about markets
and business partners, and especially about for-
eign partners.
8. Lack of a real entrepreneurial culture built on
values such as trust in one?s own abilities, risk-tak-
ing skills and responsibility.
9. inef?cient and short-sighted state policy for the
development of the SMEs and entrepreneurship.
10. lack of coherent national policy in the ?eld of
science and innovations, as well as a clear pro-
gramme for its implementation, etc.
III.
-
,
,
: ( . 1)
.1.
I.
1. - -
.
2. -
.
3.
.
4. -
.
5. -
.
6.
.
7. -
.
8. -
.
9.
.
10.
, -
-
, -
, . .
.
II.
. , ? ?:
1. .
2.
,
, -
.
3.
.
4. - -
.
5. -
,
.
6. -
- ,
.
7. -
- , ?
.
8. ,
,
,
.
9. -
.
10.
-
, .
Entrepreneurial environment and entrepreneurial activities of small and medium business in Bulgaria
61
. , -
:
1.
, .
, -
.
2. -
.
3. .
4. - -
-
, .
-
-
. -
, -
-
.
IV. :
1. - -
,
?
,
-
, -
-
.
2. ? -
? -
? -
? ,
.
3.
-
.
:
/ ,
-
, :
-
;
;
, .;
/ , -
? -
B. Additional risks related to the economic
crisis:
1. decrease of the volume of credits extended by
banks, leasing companies and other ?nancial in-
stitutions, which slows down the implementation
of innovations and restricts the initiatives of the
businesses.
2. decreased demand on both the domestic and
the European markets.
3. decrease in the prices of certain goods and serv-
ices.
4. a higher risk pro?le of the Bulgarian economy
and reduced volumes of investments, external ?-
nancing, etc.
The in?uence of the negative factors
shown in the table above is especially
strong under the conditions of the global
economic crisis. Practice has shown that
the SMEs are the most vulnerable busi-
ness entities.
IV. Conclusions and recommenda-
tions:
1. The greater dif?culties related to the
business activities of SMEs (compared to
their counterparts from the other member
states of the EU) at this stage may have
a negative effect on their survival and
growth potential, their competitiveness,
and the development of their innovative
potential.
2. The in?uence of the ?traditionally un-
favorable? factors of the entrepreneurial
environment in Bulgaria is ?multiplied? in
times of economic crisis, has a very strong
negative impact on the SMEs and will de?-
nitely slow down considerably the time for
the recovery of their positions in the econ-
omy of Bulgaria.
3. The government should approve a set
of urgent measures for improvement of
the entrepreneurial environment and sup-
port of the SMEs, including the following
two groups of measures:
/ standard measures, which are imple-
mented by the other member states of the
EU during crises, e.g.: allocation of state
budget resources to those sectors of the
economy which are affected most; facili-
tating the access of SMEs to state tenders;
?nancial concessions for the SMEs, etc.;
b/ speci?c measures, related to the more
unfavorable entrepreneurial environment
in Bulgaria ? development of a new na-
tional strategy for the small and medium-
Maria Andreeva
62
sized business providing equal conditions
for its survival and development. Such
a protectionist strategy should include
changes of regulations and administrative
procedures, provision of more opportuni-
ties for participation in European projects
and programmes, encouragement of the
entrepreneurial activities through logistic
and information support, etc.
,
.
,
,
- -
, .
Reference/
[1] , ., , , . , 2003.
[2] 2007, .,
, 2008.
[3]
2007, ., , 2008.
doc_323117623.pdf