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Small business infrastructure development. Problems and ways to improve

Author(s): Mikhaylo Pyvovarov

Journal: Socìalʹno-ekonomìčnì Problemì ì Deržava
ISSN 2223-3822

Volume: 8;
Issue: 1;
Start page: 6;
Date: 2013;
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Keywords: small business infrastructure | state and development | government support | analysis and ways to improve

The study reviews foreign and Ukrainian theory and practice in terms of business infrastructure. The infrastructure is one of the key factors to success of small and medium-sized enterprises which ensures their efficient operation. This paper defines small business infrastructure as a set of state and public institutions (organizations, entities) which provide support services to enterprises, facilitate their economic activity and enhance its efficiency.The article concludes that organizational and informational infrastructure of small business support should be identified as an array of business support services (informational, consulting and legal) offered by authorized institutions to facilitate small businesses. This study takes a look at the system of small business infrastructure in the country, its state, development and government support. Currently business incubators in the form of technology parks are the type of business assistance programs which prevail in regions and help startup and early-stage companies with technical advice during their first, the most difficult, year in the marketplace. Business incubators are nonprofit organizations financed by communities or sponsors. They can only recover 10 – 60 % of their cost. That is why the government, that declares state support to small business, should share the cost of business incubator programs and encourage sponsors and venture capitalists to give financial support. The dissertation studies the mechanisms of business incubator operation and the stages of its development. It analyzes the development of small business infrastructure elements in Ukrainian over the past 10 years. The analysis of regional business support programs implementation shows that no more than 5.2% of local budgets are allocated to develop the infrastructure. As a result, the majority of regions do not have an established network of financial credit or advisory infrastructure of business assistance, or it develops spontaneously, uncoordinated by local authorities which reduces the efficiency of infrastructure as a driving force of local small business development. The research uncovers the problems and offers ways to improve the infrastructure development

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