Barriers to SME Growth in Slovenia

The paper is based on the findings of a research project which aimed to identify the critical barriers to small business growth and development in Slovenia. The key barriers identified in the research included factors linked to the institutional environment including bureaucracy, and to external financial constraints including the high cost of capital. Internal organisation and resource issues, and social support through local development coalitions were found to be less important. The research was based upon a sample survey of small firms in Slovenia, and on an econometric analysis of the sources of firms' growth. This provided evidence that firms' growth was negatively linked to firms' size, and that growth was reduced by the presence of institutional and financial barriers. On the other hand employee benefits such as severance pay were positively linked to growth. The paper provides a possible explanation for this unexpected finding and discusses the policy implications. Address for correspondence: Will Bartlett, SPS 8 Priory Rd, Bristol BS8 2QD Tel: +44-117-9456755 Fax: +44-117-9546756 Email: [email protected]