INSTITUTIONAL FACTOR IN THE SYSTEM OF RUSSIAN SMALL BUSINESS DEVELOPMENT

Abstract

The research results on Russian small business development in terms of “Institutions – Resources” are
presented in the article. The study object is small business in Russia and small business in the industry. The
extensive growth of small business is measured by a number of small enterprises in Russia, a number of
small enterprises in the industry, a density of small enterprises in Russia, a density of small industrial enterprises.
The quality of institutional changes is assessed by international ratings for: doing business, economic
freedom, global competitiveness, corruption perceptions, government effectiveness, regulatory quality. The
resource factor of the small business development is evaluated using macroeconomic indicators, indices of
economic sentiment and confidence in the industry. The research period includes the pre-crisis (2003-2007)
and post-crisis (2008-2014). It is shown that the low quality of the institutional environment in the pre-crisis
period is leveled by the growth of the economy. In the post-crisis period institutional factors have become
the support for an increase of small firms against the background of the economic growth slowdown: a significant
reduction in transaction costs of opening a new business, changes in the criteria for rating as small
business entities. The author concludes that the positive institutional changes can also provoke the quasigrowth
of small companies, as well as negative ones. The quasi-growth is conditioned by the increase of not
real market participants, but new “pseudo” small enterprises. This fact is explained by the desire of large
companies to reduce their transaction costs of obedience to the law through the formal division of its business
into several small firms. The determined effect of institutional changes on the small business development
should be considered when designing the legal innovations in this sector.