Academic journal article Asian Social Science

Strategic Development of Small Businesses in Russian Regions

Academic journal article Asian Social Science

Strategic Development of Small Businesses in Russian Regions

Article excerpt

Abstract

This article has been written to emphasize the significant role of small businesses in the development of different countries' economy. It defines the condition and various issues of small businesses' functioning in Russia and demonstrates the consequences of its oversight. The author's evaluation system for small business development is also provided from a regional standpoint. Also presented are the results of cluster analysis, the analysis goes on to discuss the strategic trends of small business in Russia, and it proposes mechanisms and instruments for its implementation depending on a region's attractiveness and competitiveness for small businesses.

Keywords: small business, cluster analysis, small and medium enterprises, strategic planning, regional development.

(ProQuest: ... denotes formulae omitted.)

1. Introduction

The necessity of small business at a contemporary level is characterized by its significant role in the socio-economic and political development of countries. The most significant of which is the social role, which includes not only the possibility to provide occupations to broad layers of populations and the creation of jobs, but also the improvement of life in society, which, incidentally, is reflected on the level of an economy's development. One cannot underestimate the role of small business in establishing an innovative economy as entrepreneurs behave as innovators in the essence of their economic spirit and must constantly improve upon their production in order to develop a business.

Despite the fact that government authorities in Russia emphasize the necessity of the development of this economic sector, it nevertheless does not currently play a significant role in the economy (Table 1).

The comparison of the development of small business in Russia with that of other countries indicates a low level of small business development in Russia. Annually, a multitude of programs and legal acts are developed, infrastructural development objects are created, and support is offered for small business. The programs undertaken by central and local governments are not carried out to completion, which is caused not only by economic and organizational issues. The main reasons include the lack a methodical basis for programs to develop along with the failure to establish an end goal and determine the steps that are to be taken to achieve such goal.

In the long run, despite everything that has been done, the effect of these actions does not correspond to the effort that has been put forth and the requirements for the development of an economy.

The aim of the given article is to determine strategic trends and contemporary conditions, mechanisms, and instruments for the development of small business in various regions of Russia.

2. The Role of Small Business in the Development of an Economy

Small business plays a significant role in the socio-economic, innovative, and political development of countries, which is determined by the fulfillment of significant functions.

Those of social significance include:

* the ability to create new jobs, which leads to the decline of unemployment and social tension in a country, especially during periods of economic downturn in a country;

* the development and integration of technological and technical innovations, which facilitate the development of progress in science and technology. Striving to survive in the battle of competition, small businesses are more frequently prone to take risks and implement new projects. Furthermore, favorable conditions for entrepreneurship and technology integration are created to a large degree for small businesses (Sahut & Peris-Ortiz, 2014);

* the formation of a broad layer of small owners (middle class) who are the guarantors of stability and a mobile force in the economy. Entrepreneurs form their own incomes independently and seek opportunities for improvement. …

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