Academic journal article Review of European Studies

Improvement in the Efficiency of Investment Activity Management of Small Businesses in the Russian Federation

Academic journal article Review of European Studies

Improvement in the Efficiency of Investment Activity Management of Small Businesses in the Russian Federation

Article excerpt

Abstract

Based on a comparative analysis of the Russian small business operating in the Russian Federation and economically developed countries, the present article reveals an insufficient level of small business development while it is highly important for the Russian economy's efficiency. This article justifies the value of investment activities for the operation of small businesses in the Russian Federation. It determines the tendencies of growth among unprofitable small businesses for the period between 2010 and 2013. Based on the analysis and consolidation of financial performance indicators of small businesses in the Russian Federation, we identified the main factors during the analyzed period, which constrained the investment activity of these entities in the current circumstances of the Russian economy development. The factors revealed include the following tendencies: lack of equity capital, low rate of return on the capital invested, and high value of debt capital. The article determines the main directions of investment activities within small businesses, which are characterized by the poor differentiation and subordinated nature of the economic and industrial activity of commercial entities. Taking into account the argumentation of inefficiency in the investment activity development of small businesses in Russia, the feasibility of using the J. Franshon and I. Romane's matrix of financial strategies is reasoned in order to form an optimal investment strategy on the example of the Vector-Plast company. The system of conceptual recommendations on improving the efficiency of the company's investment activity is suggested.

Keywords: investment activities of a small business, investments, management of investment activity, investment strategy, financial strategy, the matrix of financial strategies, investment in fixed capital, financial resources, investment potential of small businesses, equity and debt capital of small entrepreneurship

1. Introduction

1.1 Introduce of the Problem

Small businesses form the economy basis in the Russian Federation (RF) being a state with a market economy, as they represent the most dynamic and widespread form of business activity of the society. The development of the small entrepreneurship sector largely determines the pace of economic growth, as well as the structure and quality of the gross national product (GNP). All-increasing importance of small businesses in the development of economic and business ties in Russia is one of the most important contemporary tendencies because small business takes on significant socio-economic functions providing conditions for the reproduction of market relations with regard to the balance of interests between supply and demand. Currently, the sector of small businesses in Russia is one of the most vulnerable structures in the domestic economy, which is associated with the investment activity subtleness of the given business entities.

1.2 Importance of the Problem

Effectiveness of the investment activity of small businesses is largely predetermined by management decisions. Timeliness and quality of such decisions enhance the company's competitiveness in the market and contribute to its financial development. Economic independence of small businesses within the severe competitive environment is enabled by the properly organized investment policy and monitoring of its implementation. Under these conditions, the problem of increasing the investment management efficiency of small businesses in the Russian Federation becomes a first priority scientific and practical task and determines the relevance of the research topic, purpose, and design.

1.3 Relevant Scholarship

An analysis of the results obtained while researching the leading scientists' developments, as well as the dedicated literature suggests a high level of theoretical elaboration of the subject matter concerning the investment activity management within small businesses. …

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