Kosovo Entrepreneurship

Entrepreneurship
and Small Business

Development in Kosovo
RESEARCH REPORT
This research was supported by the Netherlands Ministry of Foreign Affairs through SPARK.
All opinions expressed are those of the authors and have not been endorsed by donor.
Entrepreneurship
and Small Business
Development in Kosovo
(Research report)
Authors
Besnik A. Krasniqi, Project leader
Muhamed Rexhepi
Kastriot Ajeti
Blerta Murturi
Besart Hajrizi
Arlinda Mustafa
Albulena Zeneli
Editor
Blerina Rexha
English Editing
University of Sydney
Cover page & layout
projectGRAPHICS
Entrepreneurship and small businesses are
the backbone of economic development all
over the world. They play an important role
for employment, income and societal changes,
particularly in transition economies. This
research report is concerned with the nature
and the extent to which entrepreneurship and
small business in Kosovo has been developed
so far, and outlines the main current and
future challenges and perspectives for the
development of the small and medium sized
enterprise (SME) sector.
Kosovo, like other countries in the region,
has faced radical changes during its transition
trajectory. Moreover, because of its special
political conditions, the country has been
subjected to extreme business environment
conditions affecting entrepreneurship
development during various stages. As
an Autonomous Province in the former
Yugoslavia, it was subject to national and
labour market discrimination, occupation and
fnally War in 1999, making Kosovo a unique
case of transition in its economic and political
transformation path. The development of
entrepreneurship and small frms are seen as
the main sources of income and job creation
that may help Kosovo in its economic recovery
process. However, achieving the full potential
of entrepreneurship and small business is
linked to the entrepreneurial potential i.e.
entrepreneurs with the ambition and ability
to grow and also upon opportunities or
constraints originated by the institutional
environment settings.
The purpose of this research report is to
share information from this work on the
profle of entrepreneurs and small businesses,
as well as the problems and policy issues in
small business development. The report
shows the short history of entrepreneurship
in Kosovo and the key motivational factors
behind business start-ups, types of businesses,
ownership and management issues, the
performance of frms and their expectations,
fnances, taxes, the internationalization of
SMEs, human resources, innovation and
social capital. The study seeks to provide
insights on the process of entrepreneurship
and SME sector development in Kosovo. For
this purpose a nationally representative SME
survey was conducted by Business Support
Centre Kosovo (BSCK) at the end of 2010.
The decision to conduct this research was
infuenced by a desire to address what BSCK
and its contributors to this study perceived to
be a gap in current academic and policy debates
on SME development in Kosovo. On the one
hand there was a lack of primary source data
that could enable more empirically grounded
analysis and on the other hand, there were some
topics that, although important, have not been
addressed at all, such as innovation activities
and social capital. At the same time there was
a strong commitment by BSCK to implement
its mission in supporting entrepreneurship
development in Kosovo.
It is the result of work undertaken by
BSCK in collaboration with SPARK, a non-
governmental institution, and the fnancial
support of the Dutch Ministry of Foreign
Affairs who wished to support research and
policy debate on SME development in Kosovo.
I hope it will stimulate the development of
effective SME policies and practices in a wide
range of settings.
Dr. Besnik A. Krasniqi
Director, Business Support Centre Kosovo
Foreword
Abbreviations ............................................................................................................................................................ 6
Acknowledgments ................................................................................................................................................... 7
Executive Summary ................................................................................................................................................ 8
Main fndings ........................................................................................................................................................... 8
Introduction ................................................................................................................................................................. 13
Aims of the research .............................................................................................................................................. 13
Methodology ........................................................................................................................................................... 13
Data and Sampling ................................................................................................................................................. 14
Quality control ........................................................................................................................................................ 15
Statistical analysis .................................................................................................................................................... 15
The rest of the report ............................................................................................................................................ 15
2. Entrepreneurship and SME Profle ............................................................................................................... 16
Background of entrepreneurship ......................................................................................................................... 16
Entrepreneurial motives ........................................................................................................................................ 16
The Ownership ....................................................................................................................................................... 18
The Management of SMEs .................................................................................................................................. 19
Location ................................................................................................................................................................... 20
Organizational and legal format ........................................................................................................................... 20
Sector ........................................................................................................................................................................ 20
3. Performance, Assets and Business Activities ............................................................................................... 22
Business performance ............................................................................................................................................ 22
Asset structure ........................................................................................................................................................ 22
Industry/sector performance ............................................................................................................................... 23
Business expectations ............................................................................................................................................. 23
4. Finance .................................................................................................................................................................... 24
Kosovos banking system ...................................................................................................................................... 24
Sources of SME investment ................................................................................................................................. 25
Discouraged borrowers ....................................................................................................................................... 27
5. Taxes ......................................................................................................................................................................... 30
6. Internationalization of SMEs: Exporting and importing ........................................................................ 31
Foreign cooperation ............................................................................................................................................... 32
7. Human Resources ............................................................................................................................................... 34
SME management ................................................................................................................................................... 35
Current and future growth plans .......................................................................................................................... 36
Training and consultancy........................................................................................................................................ 36
8. Innovation and Strategy ...................................................................................................................................... 38
Innovation ................................................................................................................................................................ 38
Business strategy and future plans ....................................................................................................................... 39
9. Information Technology .................................................................................................................................... 40
10. Business Environment ...................................................................................................................................... 41
11. Social capital ........................................................................................................................................................ 43
References .................................................................................................................................................................... 46
Table of Contents
6 Entrepreneurship and Small Business Development in Kosovo
Abbreviations
BSCK Business Support Centre Kosovo
CBAK Central Banking Authority of Kosovo
CBK Central Bank of Kosovo
EU European Union
FDI Foreign Direct Investment
MEF Ministry of Economy and Finance
MoF Ministry of Finance
MTI Ministry of Trade and Industry
OECD Organisation for Economic Cooperation and Development
SME Small and Medium Size Enterprises
SOE Socially-Owned Enterprises
TAK Tax Authority of Kosovo
UNMIK United Nations Mission in Kosovo
7 Research report
Acknowledgments
Business Support Centre Kosovo would like to acknowledge the fnancial support of SPARK
through the Ministry of Foreign Affairs. In addition, the research has benefted from advice
and substantive contributions from Prof Nait Vrenezi (Faculty of Psychology, University of
Prishtina) who delivered training on interviewing skills, and Prof. Aferdita Berisha (Faculty
of Economics, University of Prishtina) for her contribution in data processing. BSCK is also
grateful to students of the Faculty of Economics (University of Prishtina) and College of
International Management GLOBUS for their contribution and efforts in conducting feld
interviews.
The fndings is this research report are endorsed by BSCK and do not refect the views of the
donor. All errors remain ours.
This report presents the fndings from the
survey of 500 SMEs conducted by BSCK in
December 2010. The purpose of this research
was to identify and subsequently address
challenges and problems of SME development
that both the individual (entrepreneur) frm
and business environment level. These three
levels of analysis are important in order to
promote practices and policies for unlocking
entrepreneurial potential of small businesses
in the country. The survey and analysis cover
topics on the profle of entrepreneurship
and SMEs, motivational factors at start-
up stage, ownership and management
issues, performance of SMEs and business
expectations, investment, human resources,
the impact of fscal policy, innovation and
business strategy, implementation, and the use
of information technology. The research is
also planned to be conducted in the coming
years and will serve as a comparison base
for future development trends in this sector.
The following section presents the main
conclusions.
Main fndings
Statistical analysis of the sample and
population has concluded that the
number of active SMEs is much smaller
than offcial statistics provided by the
Ministry of Trade and Industry (Agency
of Business Registration). Based on the
initial random sampling procedure in
SPSS we can conclude that at least 40
percent of companies from our initial
sample do not exist. This high fgure
of inactive SMEs might indicate a high
failure rate, informal sector or even
creation of frms only for one purpose
or project.
For the frst time in Kosovo this research
reports the data on the motivation of
start-ups using a representative sample.
According to the BSCK SME Survey,
29.9 of entrepreneurs declared that
they spotted an opportunity and started
up their businesses while 26.6 percent
of entrepreneurs were not employed
during the time when they established
their businesses. This indicates the
substantially large impact of both push
and pulls factors in the decision of people
to start-up business in Kosovo during
the different stages of transition.
Around 43 percent had extensive
experience and 30 percent had limited
experience and in the same feld of
business prior to the business start-up,
with an average experience of 8 years.
Huge differences between male and
female owned business were found.
Findings show that 94.1 percent of
companies are male owned while only 5.9
are female owned businesses, suggesting
the low level of female entrepreneurial
activity.
In cases where businesses are declared as
partnerships (83.5 per cent) the majority
of them (66 percent) declared that they
have family relationships, 15 percent
professional and 15 percent joint venture/
joint fnancing. Not only is the number
of partnerships small, but moreover, the
Executive Summary
9 Research report
quality of these relationships seems to be
unsatisfactory and is a big concern for the
development of the SME sector.
The majority of SMEs (75.6 percent)
owners are also mangers. These fndings
indicate that SMEs in Kosovo may have
problems of managerial capacities in
solving managerial problems and this
of course may inhibit companies from
achieving their full potential.
Around 85 percent of SMEs are located
in cities, 13.7 in rural areas while only
1.3 percent are located in both rural and
urban areas. SMEs seek more growth
opportunities and also other benefts
of being located in cities, such as better
supply with inputs, low transportation
costs etc. In addition, SMEs also operate
in a single plant in one location in Kosovo
(83.7 percent).
The majority of businesses are organised
as individual businesses (88.3 percent).
Only 8.2 percent of companies in
the sample are organised as business
partnerships and 3.4 as shareholding
companies reconfrming the conclusion
that business partnerships are not
common practice among SMEs in
Kosovo.
Almost 50 percent of companies stated
that company sales have decreased in
2010 compared to 2009. The average
monthly turnover of surveyed enterprises
has increased by 20 percent in 2010
compared to 2009. This means that the
number of loss making companies has
increased while smaller numbers of
growing companies have performed
better.
There in an increase of total assets in 2010
compared to 2009. Business premises
lead the value of fx assets (21.3 percent),
followed by equipment and machines
(17.1 percent). Working capital remains
the main asset, probably refecting the
high number of trade companies that do
not have advanced machinery equipment
and other fxed assets.
The majority of respondents - 55.8
percent - declared that proftability is
not very high while 5 percent think that
proftability is very high in sectors in
which they operate.
Although 46.8 percent evaluated their
business performance in 2010 to be worse
than in 2009, the business expectations
are optimistic as 45.8 percent of SMEs
expect better business performance in
2011 compared to 2010.
The results from the BSCK SME survey
show an increase of investment by 60
percent in 2010 compared to the year
2009, when it was 40 percent. About 72
per cent of investment in the sample
frms was fnanced by internal sources,
suggesting the importance of internal
funds for growth of the SME sector in
Kosovo and a lower role of banks in
supporting the fnancial needs of SMEs.
The major source of fnancing working
capital is retained proft and personal
savings which represent around 73 percent
of working capital. Bank loans represent
around 17 percent while borrowing from
family and friends is more than 7 percent.
Fourty percent of the SMEs in the sample
applied for a loan, whilst the other 60
percent didnt. The reason that frms
didnt apply for a bank loan is that 49
percent were discouraged from applying
and 51 percent didnt need a bank loan.
This may be because 80 percent of the
SMEs answers are small businesses, which
if we compare to medium businesses, are
less supportive by bank loans because of
the asymmetric information, collateral
assessment, transaction costs, bankruptcy
cost.
Comparing the total amount of loans
that frms applied for we can say that
bank required a collateral of double
the value of the loan (236,436 average
value of loan compared to 518,265
average value of collateral requirement
in Euros). According to our interviews
with entrepreneurs they claim that very
often the interest rate (average of 12.3
percent) exceeds the margin of proft
in specifc sectors. In addition to high
requirements for obtaining the bank loan,
another obstacle to SME fnance is the
short average repayment period found
in our survey (33.9 months) which is less
than three years. This has a direct impact
on long term strategic projects that need
a longer repayment period in order to
successfully implement their investment
projects. In no case did we fnd that frms
were given a grace period and no start-up
was fully fnanced by banks at their early
stage (younger than 6 months).
According to the BSCK SME Survey,
around 64 percent of turnover is being
reported by businesses. About 38 percent
of respondents believe that tax rates in
Kosovo are very high, 17 percent think
they are high, 15 percent moderate and
21 percent think that rates are low.
The data in this research shows that only
5.5 percent of enterprises in Kosovo
export their goods and services. However,
a fnding which has seen positive growth
is the average value of exports of these
enterprises, where in 2009 the average
value of exports was around 66,111,
while in 2010 this value increased to
88,850. This represents a growth rate of
25.6 percent in the sample.
The issues mentioned as obstacles to
exporting enterprises are also delays
at the border, inadequate legislation,
lack of infrastructure and political risk.
Importing enterprises face obstacles
during imports too, such as customs and
inadequate legislation, while methods of
and payment are seen as a lower barrier of
these enterprises.
Only 16.9 percent of respondents declared
that they have an international partner.
Despite the low percentage of frms that
are involved in international cooperation,
the fndings suggest that a substantially
higher proportion of surveyed frms
(around 25 percent) declared that they are
looking for an international partner.
According to the BSCK SME survey,
the average size of employment has
increased continuously since startup.
In 2007 the average employment went
up to 13.4 employees while the same
enterprises declared an average of around
15.5 employees in 2010. This indicates
that the number of workers on average
from the start-up phase has increased by
33 percent, while comparing 2007 and
2010 it had increased by 1.5 percent.
The majority of SMEs employees work
on a full time basis (92.2 percent) while
11 Research report
the remaining share belongs to other
part time types of employment such as
permanent part time employees, seasonal
work and other specifc arrangements
with or without contracts. This fnding
indicates that SMEs do not take full
advantage of other fexible forms of
employment.
Around 60 percent of SME employees
are more likely to be qualifed with a high
school diploma and other professional
secondary school education. The share of
employees with university level education
is around 27 percent, unqualifed
employees 8 percent, while the remaining
part is with masters and doctoral degrees.
SME managers with a secondary level
education compose 64.2 percent, whilst
34.7 percent had a university level
education and only 1.1 percent was with
primary level education.
Only 25.4 percent of the surveyed
enterprises employed additional
employees in 2010. From the total
number of new employees, 77 percent of
them completed secondary school, 18.4
percent university studies, 4.4 percent
high school and only 0.3 percent master
and doctoral studies.
Around 24 percent of SME managers
completed some type of training for
management and business practice. In
addition we observed that even a smaller
proportion of them have mangers with
previous managerial experience in other
organizations.
According to the BSCK fndings, only
19.6 percent of SMEs stated that during
the past three years the company has
undertaken R&D activities for the creation
or substantial modifcation of products,
services or new processes. The average
number of new products or services
introduced during the past three years
by companies is 15.9 products/services.
Among the companies which performed
innovation, 36.3 percent declared that
innovations were new to Kosovos market
and the remaining 63.7 percent were new
to the frm.
The most important strategy for business
in Kosovo is to improve the quality of
products and services. The survey data
shows that 37.8 percent of enterprises
claimed that improvement in the quality of
goods and services is their main strategy,
30.8 percent for reduction of costs, 14.2
percent for marketing and promotional
activity, 9.0 percent for the advancement
of technology and equipment, and
8.2 percent for the enhancement of
employees skills for better performance.
According to the BSCK survey 59.42 of
frms declared that they have computer/s.
On average SMEs have around 6.5
computers per enterprise. Only 40 percent
of companies that do not have computers
are planning to buy a computer in the
future.
More than 86 percent of companies do
use the internet. From the companies
that do use the internet, 46.6 percent use
the internet for market research, 15.4
percent for promotion and advertising
activities, 13.9 percent for selling of
goods and services, 18.1 percent for
email communication and the remaining
5.7 percent for other purposes.
The survey results show that entrepreneurs
are more concerned with constraints
related to the external environment
rather than with internal factors such as
managerial or employees skills, which
were ranked at the very bottom of
the list of constraints. Entrepreneurs
perceive the informal economy, strong
competition and corruption as three
top obstacles. Other obstacles that score
above the intensity factor of 50 are taxes,
fscal evasion, supply with electricity,
suffcient and adequate laws, political
instability, administrative burden crime,
robbery and anarchy.
More than 71 percent think that contacts
with family, friends and business
associations are very important for the
development of their business. In a scale
of 1 to 10 entrepreneurs were asked to rank
the level of trust with their collaborators.
Findings suggest that business trust
among entrepreneurs in Kosovo is very
high too. Results show that 48.65 percent
of respondents declared that they have
maximum trust in their partners
13 Research report
Aims of the research
This research report contains fndings from the
survey of 500 small and medium sized enterprises
(SMEs)
1
carried out in December and January
2010. The aim of this research is to analyze the
profle of entrepreneurship and SMEs in Kosovo
and it is planned to be implemented in subsequent
years by making comparative statistical analysis
regarding performance of SMEs and changes in
business and institutional environment. On the
one hand there is a lack of primary source data that
will enable a more empirically grounded analysis
and on the other hand, there were some topics
that although important, have not been addressed
at all, such as innovation activities and social
capital and their role on business performance.
The outcome of this survey is that the research
report addresses several aspects of SME
management and its interaction with policy
environment. As such the SME research
report is aimed to support the needs of both
SME mangers on several aspects infuencing
business performance and policy makers and the
government (both local and central) by providing
inputs for making informed decisions about SME
development policies.
Methodology
This research report is based on statistical analysis
of the data collected as a part of a wide-ranging
Survey conducted by Business Support Centre
Kosovo which included 500 companies in
Kosovo. The processes of designing the survey
questionnaire and the sample selection has been
supported by numerous experts. In addition,
discussions were held with relevant stakeholders
and there was also a piloting of the questionnaire.
The interviews were conducted face-to face with
the key people in each enterprise, mainly owner/
managers or fnancial managers. The questionnaire
contains eight sections covering major aspects
of entrepreneurship and SME development in
Kosovo. The respondents were asked to provide
qualitative (their motives for start-up and growth,
data on enterprise performance, perceptions of the
business environment and future prospects) and a
quantitative answer on internal characteristics of the
respective frm (years in the business, location, size
of the company in terms of employment, value of
assets, sector of activity, etc), fnancial information
performance indicators (proftability and level of
investment, etc) and information on their innovation
activities and information technology.
The data for SMEs was collected by the trained team
of interviewers at Business Support Centre Kosovo
who were students at the Faculty of Economics
of the University of Prishtina and Students of the
College of International Management GLOBUS.
The training for interviewers was organised by
BSCK and delivered by Prof. Besnik Krasniqi
from BSCK, for the part of the questions included
in the research instrument regarding economic
and business aspects. Another consultant from
the Faculty of Psychology of the University of
Prishtina (Prof. Nait Vrenezi) delivered other parts
of training related to the psychological aspects of
the interviewing process and how the interviewer
should approach the respondent. During the training
each interviewer has completed one questionnaire
in order to practice and better understand the topics
and related questions in the questionnaire. Among
other things, the aim of this training session was
to explain to the interviewers the importance of
this research, and the technical issues involved in
implementing the survey.
Introduction
1
The terms Small frm, Small and Medium Enterprise (SME) and Small Business are used interchangeably in this report. The
precise defnition is based on the generally accepted defnition of SMEs: enterprises that employ less than 250 employees are considered
SMEs (OECD and European Commission). Medium enterprises are considered those with 50249 employees; small enterprises with
10-49 employees; and microenterprises up to nine employees.
Table 1.1: Share of enterprises in the population and the sample by size and sector (in %)
Sector Size Micro Small Medium Total
% Share of
sector in
population
% Share of
sector in
the sample
Manufacturing 95.2 2.4 2.4 100.0 10.1 23
Services 97.0 1.7 1.3 100.0 40.0 35
Trade 98.7 0.8 0.6 100.0 50.0 42
% share of company size in
the population
97.7 1.3 1.0 100.0 100.0 100
% share of company size in
the sample
70 25 5 100
Note: total number of enterprises is 100,000
Table 2.1: Total sample by sector and size (number of frms)
Sector Size Micro Small Medium Total
Manufacturing 80 27 6 115
Services 122 45 9 174
Trade 148 53 10 211
Total 350 125 25 500
Source: BSCK SME Survey 2010.
Data and Sampling
The sample is drawn randomly from the business
register kept at the Ministry of Trade and Industry/
Agency for Business Registration. The procedure
for selecting the sample size and companies to be
interviewed was done in Excel and SPSS using
random command. After several testing phases
the team decided to do stratifcations of the
sample by two categories: size of the company and
sectors of business activity. This stratifcation was
important because the random sampling yielded
unsatisfactory results in terms of representation
of medium frms and manufacturing frms.
Both these categories were underrepresented
in the sample and as such would not have been
useful in analyzing these categories. Therefore,
the stratifcations were applied and satisfactory
results in terms of statistical representation of the
both sector and size class was yielded. Table 1.1
presents more accurate information on the share
of enterprises in the population and the sample by
size and sector.
After statistical stratifcation by company size class
and the sector (manufacturing, services and trade)
the fnal sample is presented in the Table 2.1 below
15 Research report
This randomly stratifed sample enables us to
draw generalized conclusions about the whole
population of SMEs in Kosovo. The sample
includes SMEs across all regions of Kosovo and is
stratifed by three main sectors in order to refect
the differences between trade, production and
services. Statistical stratifcation was also done in
terms of size in order to ensure the representation
of medium frms within the SME sector.
During the implementation of the feld survey
we found that around 58 percent of the frms
were not operating or did not exist anymore. This
high fgure of inactive SMEs might indicate high
a failure rate, informal sector or even creation of
frms only for one purpose or project.
Quality control
The frst phase of the quality control was testing
the questionnaire during the training, during which
we received few remarks about the questions
and technical errors. In the second phase the 50
interviews were conducted as part of the piloting
phase. Each interviewer conducted approximately
one interview in the feld. After the piloting phase
each interview provided a feedback to the BSCK
project team and fnal preparations were made to
launch the fnal interviews.
In addition, the BSCK project team supported the
interviewers in conducting at least one interview
in the feld. The BSCK team also phoned 40
percent of all interviewed companies in order to
ensure that interviews were conducted properly
and interviewers behaved satisfactory during the
interviewing process.
Another stage of quality control included the logical
control by the BSCK team at the BSCK offce.
Completed questionnaires were reviewed and cross
checked for specifc questions and consistency of
responses. In each stage, the project team ensured
the removal of some questionnaires (although only
a few cases were found) and replaced them with
other frms and in some cases interviewers were
sent back to the company to collect the required
data. Then, the collected data was processed in MS
Excel and SPSS by the BSCK team.
Statistical analysis
Statistical data analysis was done in Excel and SPSS
statistical software. The BSCK team and external
consultants cleaned the database in order to make
available the database for statistical analysis. The
research analyses in this report are primarily based
on descriptive statistics using cross tabulation
techniques. Occasionally this report makes use
of more advanced techniques such as correlation
techniques. Some short references to entrepreneurs
and their phrases during the interview are recorded
and reported only occasionally here to provide
additional and deeper insides about certain aspects
of business operations.
The rest of the report
The rest of the report contains twelve chapters.
Chapter 1 seeks to profle entrepreneurship and
the SME sector. Chapter 3 analyses business
performance and business activities. Chapter 4
deals with fnance issues of small businesses.
Chapter 5 discusses tax related concerns of small
businesses. Chapter 6 examines the international
cooperation of small frms with particular
focus on exporting and importing. Chapter 7
investigates human management practices utilized
by small frms. Chapter 8 studies innovation and
business strategy. Chapter 9 focuses on the use
of information technology by SMEs. Finally,
Chapter 10 discusses the importance of business
environment/institutions and Chapter 12 on the
role of trust in business development.
Background of entrepreneurship
The roots of entrepreneurship and private
enterprises in Kosovo can be found in ancient
times. Before the Second World War the private
sector in Kosovo consisted of family businesses
concentrated mostly in agriculture, cattle-raising
and handicrafts under poor conditions and using
relatively primitive technology. Producers of basic
consumption goods, traditional artisans and small
manufacturers dominated the production activities,
while the service sector consisted of traditional
services such as carpenters, leather craftsman, and
blacksmiths (Riinvest, 1998).
During the phase of the centralised socialist system
(1945-50), Kosovos private economy was limited
to family farms (in agriculture), greengrocers,
small shops, restaurants, tailors and handicrafts.
In 1950, the Soviet type socialism was abandoned
and the economic system was modifed towards a
more market-oriented system or the so called self-
management socialism (Krasniqi, 2012).
After the fall of the communist system, Kosovo,
like other countries in the region, faced radical
changes during its transition trajectory. Because
of its special political conditions, the country has
been subjected to extreme business environment
conditions affecting entrepreneurship development
during various stages. As an Autonomous Province
in former Yugoslavia it was subject to national
and labour market discrimination, occupation and
fnally War in 1999, making Kosovo a unique case
of transition. It enjoyed some of the benefts of
the acceptance and implementation of Yugoslavias
market-based socialism during the communist era.
The existence of a small private business sector
in former Yugoslavia had a positive impact on
the overall attitude of the population towards
entrepreneurship. During the 1990s, Kosovo faced
an economic downturn caused by the declaration of
emergency measures by the Milosevic government
and the subsequent occupation of the country by
Serbian military and police forces which led to the
dismissal of more than 150,000 Albanian employees
from the social and state sectors. This strengthened
the push factor for the ethnic Albanian citizens to
engage in entrepreneurial activity.
Kosovo is the latest country in the Balkan region
to embark on the process of transition to a
market economy. The privatisation process, as
a fundamental element of this process, began
during the Markovic government in 1988 but its
implementation in Kosovo was interrupted by the
Serbian regime and the Albanian population was
excluded from the process. Violence escalated
during 1998 and culminated in the 1999 war. In the
aftermath of the War, Kosovo faced war damages
and the problems of building an institutional
framework because everything started from scratch.
Entrepreneurial motives
Motives for start-ups have been subject to
research investigations in numerous studies on
entrepreneurship. It is particularly interesting to
investigate the motivation of people in transition
economies at the start-up phase of their business. A
systemic change under which the entrepreneurship
evolved provides an interesting topic for
examining the importance of the environment
for entrepreneurship and other distinguished
characteristics of enterprising people in Kosovo
(Krasniqi, 2009). Accordingly, it is argued that
the entrepreneurship in transition economies was
mainly considered as necessity driven and to the
limited extent opportunity driven.
2

2. Entrepreneurship and SME Profle
2
For example, some of the self-employed would prefer to be employees rather than entrepreneurs because in the transition economies there
is usually high unemployment in the business environment with limited job opportunities, so they were constrained or forced involuntarily to
undertake entrepreneurial activity.
17 Research report
In entrepreneurship literature, it is argued that
the previous business experience of owners
play an important role in the decision to enter
a business career. The fndings reported in
Table 2.2 show that around 43 percent had
extensive experience and 30 percent had limited
experience in the same feld of business prior to
their start-up decision.
Table 2.2: Experience of SME owners in business
prior to start-up
Did you have any experience in the feld
where you started your own company?
%
I had extensive experience 42.8
I had limited experience 30.0
I did not have experience 27.2
Total 100.0
The average length of experience for both groups
is 7.9 years. This average suggests that average
experience of more than 8 years is necessary to
accumulate knowledge and information about
customers, suppliers and markets in order to make
use of knowledge for business purposes. This is
explained by the decreasing rate of return from
learning from experience.
Table 2.3: Business planning practices at the
start-up stage and after
Responses
Did you have a
business plan
before you started
your own company?
Do you
currently have
a business
plan?
Yes 26.0 38.1
No 74.0 61.9
Total 100.0 100.0
For the frst time in Kosovo this research reports
the data on the motivation of start-ups using a
representative sample. According to the BSCK SME
Survey (Table 2.1) 29.9 percent of entrepreneurs
declared that they spotted an opportunity and
started up their businesses while 26.6 percent
of entrepreneurs were not employed during the
time when they established their businesses. This
indicates the substantially large impact of both
push and pulls factors in the decision of people to
start-up business in Kosovo in different stages of
transition.
Table 2.1: Reasons for starting up business
Start-up motivations %
I spotted a business opportunity and I decided to act upon it and establish my own company 29.9
I have been unemployed and had to do something to earn a living 26.6
I always wanted my dream of having my own company to come true 20.7
To work independently from my boss 12.3
Dispute with my previous employer-partner 1.4
I inherited from my family 7.6
Other 1.6
Total 100.0
It is also important to note that the majority of SMEs
have owners with a secondary school education
(61.6 percent). Findings in Table 2.4 also show
some tendency that as we move from the category
of frms with one owner towards frms with more
owners, there is an increase in the percentage
share of owners with a university education at the
one hand and a decrease in the percentage share
of owners with a secondary school education.
This has an important implication for SMEs and
policymakers as education seems to be important
in the promotion of partnerships and team work.
Despite these positive tendencies in partnership
in business the data presented in the Table 2.5
points out that there are only minor differences
in changes of the ownership structure during the
start-up period and 2010 regarding the number of
owners, suggesting that business partnerships are
not common practice in Kosovo.
Table 2.5: The changes in ownership structure:
comparisons between the start-up phase and 2010
No of owners
(in categories)
At the start-up
in (%)
In 2010 (in %)
1 owner 83.3 83.5
2-5 owners 15.7 15.0
More than 6
owners
1.0 1.5
Total 100.0 100.0
In order to thoroughly investigate the group of
frms that operate as partnerships, the BSCK
survey included questions that asked about the
relationships between owners. In cases where
businesses are declared as partnerships, the
The Ownership
The characteristic of the owners of SMEs play a
crucial role in the performance of SMEs and are
therefore an important topic for investigation.
Among the most important characteristics is
whether frms in Kosovo were established through
a joint initiative of people as a teamwork effort
or individual initiatives, and in addition, what is
gender and educational level of the owners.
Table 2.4 presents the ownership structure by
gender and educational level. We observed huge
differences between male and female owned
businesses. The fndings show that 94.1 percent of
companies are male owned while only 5.9 percent
are female owned businesses, suggesting the low
level of female entrepreneurial activity.
Table 2.4: Ownership structure, gender and educational level
Number of
owners
Male Female
Educational level
PhD MSc University
Secondary
School
Primary
School
One owner 93.6 6.4 0.8 2.2 30.1 62.7 4.2
Two owners 97.4 2.6 2.7 2.7 33.8 59.5 1.4
Three owners 93.8 6.3 0.0 3.1 40.6 56.3 0.0
Four or more
owners
93.3 6.7 0.0 0.0 40.0 46.7 13.3
Total 94.1 5.9 1.0 2.3 31.3 61.6 3.9
19 Research report
majority of them (66 percent) declared that they
have family relationships, 15 percent professional
relationships and 15 percent were joint ventures/
joint fnancing. Not only are the number of
partnerships small, moreover the quality of these
relationships seems to be unsatisfactory and a
big concern for the development of the SME
sector. Family relationships which are usually not
established based on economic rations seem to
dominate the business relationships. Professional
relationships and joint ventures which would
probably support the growth of SMEs with capital
and knowledge synergies remain rather limited.
Table 2.6: Type of relationships between owners
Type of relationship %
Family 66.0
Professional 15.0
Joint venture 15.0
Total 100.0
Under the conditions of the Kosovo economy,
such as limited access to fnance and diffcult
terms and conditions for raising capital, one would
expect that partnerships would compensate these
by providing synergy of capital, experience and
knowledge. In particular it is expected that joint
venture partnerships would be more likely to be
established. Accordingly, there is a need for a
more proactive approach of owners and especially
consultants to support these partnerships.
Additionally, the government should give more
efforts in creating better legal infrastructure
(adequate laws and their impartial implementation)
and better functioning of institutions because
they play a big role in promoting partnerships as
contracts that are the backbone for the creation
and functioning of these business partnerships.
The weak institutional environment and
particularly contract enforcement may play a
big role in building partnerships because family
relationships are usually reported to be used in the
context of weak institutional environments, since
internal information about the business partner
(family member) can be used to avoid possible
opportunistic behaviour (this is confrmed in the
last chapter regarding social capital).
The Management of SMEs
The separation of ownership and management
remains one of the biggest challenges of growing
SMEs all over the world. Kosovo, as a post confict
and transitional economy is not an exception
either. One of the key models in literature is the
so called a life cycle model
3
which is used as a
reference point to discuss the needs of SMEs
to increase their managerial capabilities which
ultimately leads to the need for separation of
ownership from management. The growth stage
model posits that organizations evolve through
the life cycle stages as they grow, accompanied
by signifcant changes in managerial capabilities
necessary for frms to respond to a common set
of managerial challenges. Accordingly, a founders
involvement in general management activities may
be of decreasing importance or even detrimental
as the transfer of decision-making power from
owners to managers increases the frms managerial
capabilities. Bringing more professional managers
in the frm can have a positive effect on its growth.
The growth stage model has a crucial role in
explaining small business growth as it provides
the basis for analysing frms from their incumbent
phase. The majority of SMEs in Kosovo do not
have a complete separation of the ownership
from management. According to the BSCK SME
Survey only 9.3 percent of SMEs managers run
3
The life cycle model is not grounded by economic theory (Davidsson et al., 2002) but has received much attention from organizational
theorists treating organizations as evolving through a life cycle or stages of growth, and hence the need for signifcant changes in the frms
managerial capabilities (Van de Ven and Poole, 1995). Greiner (1972) and later Churchill and Lewis (1983) are amongst the frst to propose the
life cycle models pointing out that organizational development proceeds through different phases or stages. According to Greiner (1998, p.
56) the same management practices cannot be maintained throughout the life span of an organization; neither the company problems nor the
solutions are the same as the frm grows. In Greiners view, frms grow in successive stages from birth to maturity and face a series of problems
and crises such as leadership, autonomy, control and coordination as they move on and grow.
businesses alone without direct involvement of
the owners. In 15.1 percent of companies the
owner and manager run the company together
while in 75.6 percent of companies the owners are
also managers. These fndings indicate that SMEs
in Kosovo may have problems of managerial
capacities in solving managerial problems and this
of course may inhibit companies from achieving
their full potential.
Table 2.7: Management and Ownership in SMEs
Management of the company %
Owner (s) 75.6
Manager 9.3
Together (manager and the owner) 15.1
Total 100.0
Location
The majority of SMEs in Kosovo are located in
urban areas. According to the BSCK SME survey
presented in Table 2.8 around 85 percent of them
are located in cities, 13.7 percent in rural areas while
only 1.3 percent is located in both rural and urban
areas. SMEs seek more growth opportunities and
also other benefts of being located in cities such as
better supply with inputs, low transportation costs
etc. In addition, SMEs also operate in a single plant
in one location in Kosovo (83.7 percent). Survey
data shows that 15.5 percent of frms operate in
multiple plants in two different locations while 0.8
percent of frms operate in Kosovo and abroad.
Table 2.8: Operation of Businesses in single and
multiple plants
Operational Location of business %
In one location in Kosovo 83.7
Two or more locations in Kosovo 15.5
In Kosovo and abroad 0.8
Total 100.0
Organizational and legal format
The majority of businesses are organised as
individual businesses (88.3 percent). Only 8.2
percent of companies in the sample are organised
as business partnerships and 3.4 percent as
shareholding companies, reconfrming the earlier
conclusion that business partnerships are not
common although increasing slightly.
Table 2.9: Organizational types
Organizational type MTI data
BSCK SME
Survey %
Individual business 90.0 88.3
Partnership
(general and limited
partnership)
3.3 8.2
Shareholding company 5.7 3.4
Total 100 100.0
In addition to organizational types, the survey
suggests that 74 percent of companies operate
under the unlimited legal liability.
Sector
SMEs in Kosovo mostly operate in trade (47.6
percent) and services (30 percent). This percentage
share of trade and services sectors in the population
is comparatively higher because the BSCK
sample was based on stratifed random sampling
techniques. However, it is important to note some
differences in terms of business activities within the
three main sectors. For example, we observed that
the number of companies in building construction
and material construction (25 percent) remains
the dominant activity within the industry sector.
Wood processing is also a dominant activity of
manufacturing companies. In the trade sector the
majority of frms operate as retail stores (73.7
percent). In the services sector the most dominant
activity is transport, hotels and tourism.
21 Research report
Finally, in all three sectors there was a substantial
share of rims that declared operating in two or
more business activities suggesting that a large
number of SMEs do diversify their portfolios by
penetrating in different sectors.
Table 2.10: SME sector of activity
Sector % share of sector Activity within the sector %
Industry 22.4
Agro processing 7.4
Metal processing and electrical equipment 5.9
Construction material 11.0
Chemical, plastics and rubber 2.9
Textile and leather 2.9
Wood processing 14.7
Graphics and publishing 1.5
Building construction company 14.0
Agriculture and farms 2.2
Two or more of the above 37.5
Total 100.0
Trade 47.6
Retail 73.7
Wholesale 6.9
Retail and Wholesale 19.4
Total 100.0
Services 30.0
Transport 24.7
Finance 1.1
Hotels and tourism 19.8
Consulting and professional training 3.3
Information technology 3.8
Two or more of the above 47.3
Total 100.0
Industry/sector performance
3. Performance, Assets and Business Activities
Table 3.1: SME performance (qualitative measure - sales and proft)
Compared to past 12 months
your sales/proft has:
Sales Proft
% Average % Average
Decreased 49.2 -23.20% 46.0 -22.50%
No change 23.1 0 22.6 0
Increased 27.7 16.01% 31.4 18.80%
Total 100.0 100.0
Table 3.2: Asset structure of SMEs
Type of asset 2010 2009
Working capital (fnished goods, raw material, etc) 50.0 54.9
Buildings and premises 21.3 14.6
Machinery and equipment 17.1 20.1
Transportation vehicle 3.1 3.5
Land 8.5 6.9
Total 100.0 100.0
Average value of assets (in Euros) 544,634 368,664
Business performance
The number of businesses that declared that their
sales and proft have decreased is much higher
than the number of businesses that declared the
opposite. Almost 50 percent of companies stated
that company sales decreased in 2010 compared
to 2009. Although the percentage of frms that
declared a decrease in sales and proft is higher
than those which declared that sales and proft
increased, this does not necessarily mean that the
overall SME sector is decreasing. This is confrmed
by the data on sales confrming that the average
growth of sales in the sample has increased
(Table 3.1).
The average monthly turnover of the surveyed
enterprises has increased by 20 percent in 2010
compared to 2009. This means that the number
of loss making companies has increased while
a smaller number of growing companies have
performed better and increased their sales
substantially more than the decrease of sales by
loss making companies.
Asset structure
The data presented in Table 3.2 shows that there
in an increase of total assets in 2010 compared
to 2009. Business premises lead the value of fx
assets (21.3 percent), followed by equipment and
machines (17.1 percent). The table below shows
the percentage share of each type of asset of the
total value of all assets. Working capital remains
the main asset, probably refecting the high number
of trade companies that do not have advanced
machinery equipment and other fxed assets.
23 Research report
Industry performance is a signifcant factor
infuencing the growth of companies. 37.9 percent
of businesses think there is an increase of the
sector they operate in, 33.5 percent see no changes
in their sector and 28.5 percent think that there is
a decrease in the sector they operate in. In asking
the question about the proftability of frms in
the sector in which they operate, the majority
of respondents, 55.8 percent, declared that
proftability is not very high while 5 percent think
that proftability is very high. These results may
partially explain the large number of loss making
companies that were found in our analysis earlier.
Table 3.3: Proftability of frms in industry/sector
What do you think is proftability of frms
operating in your industry or sector?
%
Very high proftability 5.0
Not very high proftability 55.8
Not very low proftability 21.2
Very low proftability 17.9
Total 100.0
Business expectations
It is interesting to note that beside the fact that
there is a high number of loss making enterprises,
the BSCK survey data presented in Table 3.4
signifes that optimism has increased in 2011.
Although 46.8 percent evaluated their business
performance in 2010 a worse than in 2009, the
business expectations are optimistic as 45.8 percent
of SMEs expect better business performance in
2011 compared to 2010.

Table 3.4: Current evaluation and future
expectation of business performance
2010 2011
How do you
evaluate your
business
performance
%
What business
performance
do you expect
in 2011
%
Better than 2009 29.1
Better than
2010
45.8
No changes 24.1 No changes 25.2
Worse than 2009 46.8
Worse than
2010
29.0
4. Finance
Access to fnance is one of the most important
factors of SME investment and growth in
transition economies. This section explains SMEs
fnancing in Kosovo and the characteristics of the
banking system. The BSCK SME survey revealed
that 80 percent of them are small businesses which
have implications on how SMEs are fnanced.
The majority of the SMEs are fnanced by the
companys own resources as a primary source of
fnance, with bank loans and other external factors
as the second most important sources.
External fnance can be supplied either by the
owners own resources, loans from banks, issuing
new equity, or a grant from the public sector.
However, as confrmed by the BSCK SME survey
results, the most commonly used source of
external fnance for small frms is a bank loan. The
resources of small frm owners are usually limited,
especially for younger and smaller businesses.
Thus, the growth-oriented small frms wishing
to expand will need external sources of fnance
supplied by banks
The result shows that there is a decrease of
investment in 2010 if we compare to the results
of 2009.Most of the enterprises tended to use
internal funds and only then did they ask for bank
support, knowing the high interest rate of 12
percent compared to the 7.5 percent rate of the
regional countries, as well as collateral assessment,
transaction costs, bankruptcy cost.
Kosovos banking system
In the aftermath of the 1999 War, Kosovos
banking system started from scratch. Old banks
were no longer functional and there was a gap until
the frst bank started to operate. Currently there
are seven commercial banks which continue to
spread their branches and sub-branches around all
regions of Kosovo (Table 4.1). This improvement
can be observed also in terms of the increase of
the loan to deposit ratio (in the beginning this
ratio was too low as main banks i.e. foreign-owned
banks invested some of their assets in foreign
capital markets, especially in EU countries). In the
frst quarter of 2005 the deposit to loan ratio was
54.1 percent while in the same quarter of 2010 it
was 73.4 percent (CBK, 2010)
Table 4.1: Selected indicators of the banking sector in Kosovo (2005-2010)
Indicators 2007 2008 2009 2010
Total assets (in mil Euros) 1435 1808 2204 2219
Commercial banks 7 8 8 8
No of branches and sub-branches of commercial banks 227 279 289 296
Interest rates for business loans 14.6 14.8 14.4 14.6
Insurance companies 10 12 11 11
Pension funds 2 2 2 2
Financial auxiliaries (Exchange Bureaus, money transfers etc. 30 29 28 29
Micro fnancing institutions 16 16 19 17
Source: Central Bank of Kosovo, 2010.
25 Research report
The banking sector in Kosovo is privatized and
most of the capital is owned by foreign entities.
The banking sector in Kosovo consists of 8
commercial banks where 6 of them are owned by
foreign entities and 2 of them are capital owned.
According to the Central Bank of Kosovo, we
observed that assets of the banking sector have
increased continually since 2006 (CBK, 2010).
However, besides some improvements in certain
areas as mentioned above, commercial banks in
recovery after the global fnancial crisis banking
sector had slowed down their lending activities
(CBK, 2010). This is most likely because of
the banks perception and doubts about the
performance of companies during the crisis and
their ability to repay loans. This conservatism
of commercial banks has been refected in a
commercial banks lending decision.
Credit tightening by the banking sector mostly
affected loans to enterprises, which increased at
a very low rate compared to previous periods.
According to the CBK (2010) in the frst half of
2010, loans issued to enterprises recorded an annual
growth rate of only 2.3 percent, compared to the
growth rates of 13.9 percent and 38.5 percent in
2009 and 2008, respectively. On the other hand, the
growth rate of loans issued to households seems
to have not been affected, meaning that under the
recent crisis the most affected are businesses as
opposed to the households (CBK, 2010).
Sources of SME investment
Financing constrains after the global fnancial crises
have been a major obstacle especially in transition
economies. SMEs are facing different business
environmental impediments in their day to day
operations. In Kosovo too, small businesses are
pressured by fnancial constrains, facing different
fnancial obstacles in their business environment
and the imperfect market. The Central Bank of
Kosovo has implemented a survey with the four
biggest banks in the country showing that law
enforcement is the most problematic area of the
banking sector affecting the implementation of
contracts. The BSCK SME survey also shows
that the uncompetitive environment hinders SME
development which is in line with the CBK fndings.
These institutional and other business environment
obstacles including access and conditions to
external fnance have a major implication for the
investment and growth of SMEs.
The results from the BSCK SME survey show
an increase of investment by 60 percent in 2010
compared to the 2009 which was 40 percent.
The survey also contains information on the
sources of fnance for investment. The fndings
reported in Table 4.2 show that about 72 percent
of investments in the sample frms were fnanced
by internal sources, suggesting the importance of
internal funds for the growth of the SME sector
in Kosovo. Small businesses rely more on internal
funds and less on bank loans, partially because
of diffculties to access a bank loan due to the
high interest rates, high collateral requirements
and partially because there is a large group of a
so called discouraged borrowers group
4
which
needs more research.
Table 4.2: Sources of funding for SMEs (in %)
Sources of fnance % Share
Own resources 71.4
Loan from domestic banks 22.8
Loan from foreign bank 0.3
Grants from donors and NGOs 0.6
Borrowings from family or friends 4.7
Informal market 0.0
FDI 0.2
Total 100.0
4
Kon and Storey (2003) suggest that it is important to investigate the discouraged borrowers, something that has been ignored in the Stiglitz-
Weiss model. They argue that application costs incurred mean that a proportion of good borrowers may not apply for a loan to a bank at all,
because they feel they will be rejected.
It is important to note that SMEs do not beneft
much from foreign direct investments refecting at
the same time the low foreign direct investment
in Kosovo. In addition, we have no frm declaring
that they make use of informal markets. This is
explained by the fact that this question is sensitive
and this category has probably provided responses
under the category of Borrowing from family or
friends.
Regarding investment allocation by sector, the
BSCK SME survey shows that the major share of
SME investment was in services (42.2 percent) and
then in trade (34.8 percent) and manufacturing (23
percent).
Table 4.3: Allocation of investment by sector
Sectors %
Manufacturing 23.0
Trade 34.8
Services 42.2
Total 100.0
Although the BSCK SME survey has noted
some positive trends concerning the increase of
the investment activity of frms, the quality and
volume of this investment is not satisfactory.
Turning to the allocation of investment within the
company presented in Table 4.4, we can observe
that major investments were made in premises and
facilities while a substantially smaller proportion is
invested in machinery and equipment. Low levels
of investment in machinery and equipment refects
the low level of the manufacturing activities of
SMEs in Kosovo and the subsequent investment
in machinery and equipment which is likely to
have an impact on manufacturing and growth of
SMEs. Working capital (which is not considered as
an investment) represents a higher proportion of
funds used to fnance day to day activities.
Table 4.4: Allocation of investment/fnancing sources
Type of investment/fnance 2009 2010
Working capital 22.2 30.3
Premises and facilities 62.2 55.7
Machinery and equipment 8.8 10.4
Transportation means 0.9 2.2
Land 5.6 0.9
Other 0.3 0.4
Total 100.0 100.0
From the chart below we can see that compared
to 2009, investment on average in the SME sector
in 2010 has increased the funds going to working
capital by 8 percent. This might refect that SMEs
are kept more stocks in 2010 compared o 2009. In
this vein it is important to investigate the sources
of funding for fnancing working capital. The
BSCK survey included specifc questions regarding
sources of funding for working capital.
The results are presented in Table 4.5. The
major sources of fnancing working capital
are retained proft and personal savings which
represent around 73 percent of working capital.
A bank loan represents around 17 percent while
borrowing from family and friends is more than
7 percent. Borrowing from family and friends is
obviously a more important source for working
capital than for investment. This is partially
explained from the fact that investments usually
need larger capital requirements as compared to
working capital requirements. In addition, because
of the inadequate business planning practices,
SMEs in Kosovo face liquidity problems and
cash fow constraints. Under these circumstances
the entrepreneurs rely on their informal network
such as family members and friends to solve and
borrow money quickly to avoid bank procedures.
27 Research report
More than 20 companies declared that they delay
their payments to their domestic suppliers as a
means of fnancing working capital, and exactly
the same number of companies use the delays to
pay the tax authorities and pension contributions
to cover the cash fow problems in fnancing
working capital.
Discouraged borrowers
As mentioned earlier the number of frms that
asked for a loan increased in 2010 compared to
the previous year. The 40 percent of the SMEs in
the sample applied for a loan, whilst 60 percent of
them didnt. The reason that frms didnt apply for
a bank loan is that 49 percent were discouraged
to apply for a bank loan and 51 percent didnt
need a loan. This may come because 80 percent
of the SMEs who answered are small businesses,
which if we compare to medium businesses,
are supported less by bank loans because of
asymmetric information, collateral assessment,
transaction costs, bankruptcy costs.
Table 4.5: Sources of fnance for working capital
Source of fnance % share
Personal savings 32.8
Retained proft 40.0
Borrowings from family and friends 7.1
Bank loan 16.8
Special programs for SME support 0.1
Loans from informal market 0.0
Loans from domestic supplier 0.1
Loans from international supplier 0.0
Delay of taxes and other social contributions 0.1
Others 3.0
Total 100.0
Another obstacle to access a bank loan is collateral
that small businesses need to have. If we compare
the total amount of loans applied for we can say
that banks require twice the amount of the loan
as collateral (236,436 average value of the loan
compared to 518,265 average value of collateral
requirement in Euros). The fndings suggest that
4.6 percent of the discouraged borrowers group
declared that they did not apply for a loan because
collateral requirements were too high.
The interest rate is another obstacle that small
businesses are faced with regarding the raising
of external fnance. More than 23 percent of the
discouraged borrowers group declared that they
did not apply for a loan because they considered
that the interest rate was too high (see Table 4.6).
According to our interviews with entrepreneurs,
they claim that very often the interest rate (average
of 12.3 percent) exceeds the proft margin in
specifc sectors.
Table 4.6: Reasons for not applying for a loan
Reasons for not applying %
I did not need a loan company had
sufcient capital
64.6
Application procedure was very complex 4.6
Interest rate was to high 23.2
Collateral requirements were too high 4.6
Repayment period was not sufcient (short) 1.7
I did not know how to apply 0.0
I was not confdent that my application for
the loan would be approved
1.3
Total 100.0
Total population
(500 SMEs)
Applied for loan
(202)
Rejected
(7)
Successful applicants
(195)
Did not apply
(298)
Did not have
need loan
(153)
Discouraged borrower
(145)
Did not want a loan
Not confdent about
success of application
Not able to fulfl bank
requirements
Loan
application
Figure. 4.1. Access to bank loan.
29 Research report
In addition to the high requirements for obtaining
the bank loan, another obstacle to SME fnance is
the short average repayment period found in our
survey (33.9 months) which is less than three years.
This has a direct impact on long term strategic
projects that need a longer repayment period in
order to successfully implement their investment
projects. We did not fnd in any case that frms
were given a grace period and no start-up was fully
fnanced by banks at their early stage (younger than
6 months).
In general, entrepreneurs evaluated the bank loans
as a very unfavourable (around 60 percent of the
respondents) pointing out that the problem of
frms is not only to access the fnance but even
those who were successful in obtaining bank loans,
the terms and conditions for loans posed another
diffculty (Table 4.7).
Table 4.7: Terms and conditions for loans
Ranking %
Very favourable 15.6
Favourable 1.8
Neutral 16.8
Unfavourable 6.6
Very unfavourable 59.3
Total 100.0
According to the BSCK SME Survey around
64 percent of turnover has been reported by
businesses. About 38 percent of respondents
believe that tax rates in Kosovo are very high, 17
percent think they are high, 15 percent moderate
and 21 percent think that rates are low.
About 39.5 percent of businesses are not informed
about the use of taxes collected from the tax
administration and customs, while 29.8 percent
have partial information and 24.7 percent are not
at all informed. This indicates that the Ministry of
Finance and the Government of Kosovo should
be more transparent about spending and the use
of resources through information campaigns.
This would probability increase the willingness of
taxpayers to be more aware of the importance of
paying taxes.
Even today developing economies are facing
problems of high informality and tax evasions.
Kosovo is not an exception either, where it is
estimated that about 50 percent of turnover is
not declared from businesses to authorities (TAK,
2010). In 2011, tax collection improved due to
more strict control from Tax Administration
offcials. The reports of the frst and second
quarters for this year published from TAK show
an increase in tax collection compared to the same
period of 2010.
Comparing the frst quarter of 2011 with the
same quarter of 2010, we notice an increase by 22
percent in total budget revenues, where revenues
from customs have increased by 23 percent and
revenues from domestic taxes where higher by 46
percent. (MoF, 2011)
5. Taxes
1,600
1,400
1,200
1,000
800
600
400
200
0
2010
m
i
l
i
o
n

e
u
r
o
2011 2012 2013 2014
Total Renevues Tax Renevues Non-Tax Renevues
Figure 5.1: Tax and Non-Tax Revenues in Kosovo Budget
Source: Ministry of Finance, 2010
31 Research report
The data in this research shows that only 5.5
percent of enterprises in Kosovo export their
goods and services (Table 6.1). However, a fnding
has seen positive growth is the average value of
the exports of these enterprises, where in 2009 the
average value of exports was 66,111.11, while
in 2010 this value increased to 88,850.00. This
represents a growth rate of 25.6 percent.
Other data obtained from this research includes the
year when exporting enterprises started to export,
noting that 2009 was the year with the largest
number of new exporting enterprises representing
20.7 percent. The total value of exports in relation
to total sales for 2010 is 28 percent, suggesting that
exports are an important source of growth for the
SME sector in Kosovo.
The issues mentioned as obstacles to exporting
enterprises also include delays at the border,
inadequate legislation, lack of infrastructure and
political risk. But on the other hand ineffcient
breakdown of banks and certifcates of quality are
not seen as important obstacles in exporting goods
and services.
The data provided by the Central Bank of
Kosovo (CBK) shows that Kosovo has a negative
trade balance. From this data we can see that in
recent past years imports have increased further,
worsening the trade balance. The data below
shows imports and exports in recent years and
their movements in the trend.
6. Internationalization of SMEs:
Exporting and importing
Imports Exports Trade Balance
2500
2000
1500
1000
500
-500
-1000
-1500
-2000
-2500
T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2
2006 2007 2008 2009 2010 2011
Figure 6.2: Trade Balance of Kosovo (in million Euros)
While there was an increase in the average value
of exports in 2010 compared to 2009, there was
a decline in imports by 46.7 percent. The average
value of imports in 2009 was 4,966,435.7, while
in 2010 this amount dropped to 3,385,414.2. The
total value of imports in relation to total sales for
2010 is 58.6 percent. Enterprises face obstacles
during imports too, such as customs and inadequate
legislation, while methods of and payment are seen
as a lower barrier of these enterprises.
Foreign cooperation
The international cooperation of SMEs is
important and of course not limited to the
exporting and importing activities. In questioning
whether a company has an international partner,
only 16.9 percent of the respondents declared
that they have such a partner (Table 6.2). Despite
the low percentage of frms that are involved in
international cooperation, the fndings suggest
that a substantially higher proportion of surveyed
frms (around 25 percent) declared that they are
looking for an international partner.
Table 6.2: International cooperation of SMEs
Do you have an
international
partner?(%)
Are you looking
for an international
partner? (%)
Yes 16.9 24.3
No 83.1 75.7
Total 100.0 100.0
Moreover, the type of partnership with the foreign
partner is an important factor that indicates
the level of the internationalization of SMEs
(Table 6.3). The majority of surveyed frms that
have an international partner declared that their
Export Barriers
Barrier
Intensity
factor
Delays at the border 52.27
Inadequate legislation 49.00
Poor Infrastructure 48.91
Political Risk 46.74
Personal documentation (ex. Visa) 38.04
Contract enforcement 38.04
Lack of information on market 26.04
Certifcate of product origin 26.00
Banking sector 6.25
Quality certifcates 3.13
Import Barriers
Barrier
Intensity
factor
Customs 40.2
Inadequate legislation 39.0
Transportation 35.3
Poor Infrastructure 28.5
Methods of payment 19.6
Total ???
Table 6.1: Import and Export Barriers Faced by SMEs
Note: Individual values were multiplied by the number of respondents and divided by the possible maximum
value of the indicator. This yielded a percentage value of maximum 100 (all respondents attributing maximum
importance to the factor) and minimum 0 (all respondents attributing minimum importance to the factor).
33 Research report
cooperation largely has to do with imports (52.3)
and exports (11.9 percent). Other forms of
cooperation include joint ventures (10 percent),
branch partners (9.2 and technical assistance (7.3).
Table 6.3: Types of cooperation with
international partners
Type of cooperation %
Import 52.3
Export 11.9
Joint venture 10.1
Technical assistance 7.3
Branch of foreign company in Kosovo 9.2
Penetration in foreign markets 5.5
Franchise 1.8
Other 1.8
The fndings indicated that employees are more
likely to be qualifed from gymnasium and other
professional secondary school education; around
60 percent (Table 7.2). The share of employees
with university level education is around 27
percent, unqualifed employees 8 percent, while
the remaining part are with masters and doctoral
degrees. Going down from the highest educational
level to the lowest, the survey fndings show
that females are less educated that males in each
employment category.
7. Human Resources
SME research indicates that enterprises started
their businesses with a small number of employees.
The average number of employees at the time of
start-up were 4.4 employees, suggesting a relatively
small size when frms enter the market. According
to the BSCK SME survey the average size of
employment has increased continuously since
startup. In 2007 the average employment went
up to 13.4 employees while the same enterprises
declared an average of around 15.5 employees in
2010. This indicates that the number of workers
on average from the start-up phase has increased
by 33 percent, whilst comparing 2007with 2010; it
has increased by 1.5 percent.
Table 7.1 presents the employment status of SMEs.
The majority of SMEs employees work on a full
time basis (92.2 percent) while the remaining share
belongs to other part time types of employment,
such as permanent part time employees, seasonal
workers and other specifc arrangements with
or without contracts. This fnding indicates that
SMEs do not take full advantage of other fexible
forms of employment.
Table 7.1: SME employment status by percentage
Description % share of number of employees
Full time employees 92.2
Permanent part time employees 1.1
Seasonal employees with contract 5.1
Seasonal employees without contract 1.7
Total 100.0
Source: BSCK SME Survey, 2010.
35 Research report
SME management
The SME literature pointed out the importance
of human capital for entrepreneurial success.
5

The BSCK questionnaire contained questions
regarding the managerial structure and their
educational level. The survey fndings presented in
Table 7.3 demonstrate that 64.2 percent of SME
managers have a secondary level education, 34.7
percent have a university level education and only
1.1 percent has a primary education.
Table 7.2: Education of employees by gender and average salary
Educational Level
Number of employees (in %)
Average monthly
salary (in )
Total Male Female
Doctor of Science 0.1 0.1 0.1 626
Masters degree 1.9 1.4 3.7 608
University degree 26.8 22.7 40.5 392
High school 3.9 4.7 1.3 289
Gymnasium/Professional secondary school education 59.2 62.2 49.4 229
Unqualifed (primary school
not completed)
8.0 8.9 4.9 220
Total/Average 100.0 100.0 100.0 282
Table 7.3: Education of SME Management by gender
Gender
Average
age
Educational level
Managerial position Male Female University
Secondary
school
Primary
School
General manager 81.6 18.4 41.5 34.7 64.2 1.1
Financial manager 92.9 7.1 41.4 64.9 33.8 1.3
Operations/Technical
Manager
91.7 8.3 44.0 81.6 18.4 0
Marketing manager 72.2 27.8 34.0 92.3 7.7 0
Total 81.6 18.4 40.2 34.7 64.2 1.1
5
For more details see Krasniqi, B. (2012).
Comparing the different managerial positions
and their educational level, several differences
are observed. As the majority of owners of small
businesses are usually general managers, they have
a major share of managerial positions without a
university degree. In other areas of management
practice where certain types of specialized
management tasks are required to be performed,
such as operations, fnance and marketing
(that usually go beyond the owners managerial
capabilities) more people with a university level
education are employed in the business. Going
back to the earlier section in the report in which
we discussed about ownership, this fnding
again reconfrms the conservatism approach in
delegating tasks and suggesting the reluctance
of the SME owners to divorce ownership and
management which is supposed to increase the
managerial capabilities of frms and hence support
SME growth.
Current and future growth plans
Only 25.4 percent of surveyed enterprises
employed additional employees in 2010. From
the total number of newly employed people
77 percent of them had completed secondary
school, 18.4 percent university studies, 4.4 percent
high school and only 0.3 percent master and
doctoral studies (Table 7.4). This fnding prevails
that the most common employee in SMEs in
Kosovo has secondary school and university level
education, refecting the current labour market
trends. Quite different results are found from
the enterprise responses for their future plans of
new employment and their educational structure.
During 2011, SMEs plan to hire more employees
with a low level education and also increase the
number of employees with MA and PhD level
education.
Table 7.4: Educational level of employees
Educational level
% share of
newly hired
employees in
2010
% share of
employees
planned to be
hired in 2011
Doctor of Science 0.1 4.4
Master degree 0.2 8.2
University degree 18.4 4.9
High school 4.4 0.0
Gymnasium/
Professional
secondary school
education
77.0 17.0
Primary education
completed
0.0 34.6
Unqualifed 0.0 30.8
Total 100.0 100
Training and consultancy
Training of employees is an integral part of human
capital development at both the managerial and
non-managerial level. From the survey fndings we
observed that only 24 percent of SME managers
have completed some type of training for
management and business practice (Table 7.5). In
addition we observed an even smaller proportion
of them that have managers with previous
managerial experience in other organizations.

37 Research report
Regarding the consultancy services that SMEs in
Kosovo make use of, we observed unsatisfactory
results as only 13.6 percent of enterprises declared
that they receive some type of consultancy
services from other organizations. SMEs seem to
enjoy only limited benefts from consultancy. If we
compare the small percentage of frms that have
experienced managers and also the small portion
of them that have received management training,
it becomes more obvious that SMEs should make
more efforts to contract complementary skills
form external consultants in order to increase
managerial capabilities. However, from companies
that received consultancy, only 46 percent were
satisfed with the quality of consultancy services,
raising questions about the quality of consulting
frms in Kosovo.
Table 7.5: Training, experience and consultancy services
Responses
Have you or your mangers
attended any training in
the area of management
and business?
(%)
Have you or your
mangers ever worked in
a managerial position
before joining this
company?
(%)
Have you used any type
of consultancy from other
institutions/organizations?
(%)
Yes 24.3 22.8 13.6
No 75.7 77.2 86.4
Total 100.0 100.0 100.0
Innovation
Innovation plays an important positive impact on
the performance of companies. This BSCK report
is amongst the frst attempts to provide data on
the level of innovation activities of SMEs. Several
questions included in the questionnaire measure the
level of activity and types of innovation activities.
According to the BSCK fndings only 19.6 percent
of SMEs stated that during the past three years the
company has undertaken R&D activities for the
creation or substantial modifcation of products,
services or new processes. The average number of
new products or services introduced during the
past three years by companies is 15.9 products/
services.
Besides the small number of innovations conducted
by SMEs, the quality of these innovations is not
satisfactory either. Among the companies which
performed innovation, 36.3 percent declared
that innovations were new to Kosovos market
and the remaining 63.7 percent were new to the
frm. The low level of cooperation amongst
frms is observed in terms of frm-frm and frm-
institutions partnerships. Data provided in Table
8.1 indicates that 60 percent of frms mainly
conduct innovation in house without cooperating
with other organizations. Only 27.1 of surveyed
companies do cooperation with other companies
in producing innovation and at the same time,
12.8 percent of them with other organizations.
It is important to note that none of the frms
that performed some innovation activities has
cooperated with academic institutions.

Table 8.1: Sources of innovation and
cooperation of frms
Sources of innovation %
Mainly from company 60.2
Company in cooperation with other
companies
27.1
Company in cooperation with other
academic and research institutions
0.0
Mainly from company and institutions
outside company
12.8
Total 100.0

These fndings suggest that the quality of
educational and research institutions is very
low and not supportive to the needs of private
companies. This fnding urges the need for more
proactive government policies to support the
academic institutions in order to increase the
quality of their services for meeting the needs of
the private sector.
Regarding other types of innovation, we observed
that only 17.1 percent of companies performed
some organizational innovation. Slightly more
companies (19.7 percent) have introduced a
marketing method which was new to the market
(Table 8.2).

8. Innovation and Strategy
39 Research report
Table 8.2: Types of innovation (organizational
and marketing innovation)
Type of innovation
Percentage of
Yes responses
Over the past three years has your
company substantially modifed
or fully changed its organisational
structure?
17.1
Over the past three years has
your company introduced any
new method of marketing for its
products that was not used by
other companies in the market
19.7
Business strategy and future plans
The most important strategy for business in
Kosovo is to improve the quality of products and
services. The survey data shows that 37.8 percent
of enterprises claimed that improvement in the
quality of goods and services is the main strategy,
30.8 percent reduction of costs, 14.2 percent
marketing and promotional activity, 9.0 percent the
advancement of technology and equipment, and
8.2 percent enhancement of employees skills for
better performance (Table 8.3). The technological
advancement does not seem to be an important
strategy of frms, which reconfrms the results on
low SME investment in machinery and equipment
as compared to other categories discussed earlier.
Table 8.3: SME business strategy
Most important business strategy %
Quality improvement of goods
and services
37.8
Marketing and promotional activities 14.2
Technological advancement (machinery,
equipment etc)
9.0
Enhancement of employees skills
for better performance
8.2
Cost reduction 30.8
Total 100.0
In terms of future strategic planning and
investment we observed that SMEs are not
innovative in fnding new markets and business
opportunities. More than 80 percent of frms are
planning to continue to operate in the same areas
as their current business (Table 8.4). Only 3.5
percent plan to invest in new areas of business.
Table 8.4: Future strategic directions of SMEs
Future developments %
Continue to operate in
the same business
80.9
Invest in the new area/market 3.5
Both of the above (Continue to operate
in the same business and Invest
in the new area/market)
9.8
Have not decided 5.9
Total 100.0
In todays knowledge based economy the use of
information technology by frms adds to their
competitive advantage. Moreover, not only is the
intensity of the use of IT, but also the quality
of the use of IT is an important factor for SME
development. According to the BSCK survey
59.42 of frms declared that they have computer/s.
On average SMEs have around 6.5 computers per
enterprise. Only 40 percent of companies that do
not have computers are planning to buy a computer
in the future.
In addition to the low intensity of the use of
computers by SMES, we also observed that the
quality of use is not good either (Table 9.1).
The majority of companies use computers
for purposes of fnancial record keeping (37.7
percent). Around 16.7 percent of companies
us companies use computer for planning, 15.3
percent for market research and 11.7 percent for
word processing, suggesting that the quality of the
use of computers is unsatisfactory compared to
the use of computers for production management
(8.0) and quality control (6.8).
Table 9.1: Purposes of computer usage
Computer usage %
Financial record keeping 37.7
Planning 16.7
Word processing 11.7
Market research 15.3
Production/operations management 8.0
Quality control 6.8
Other 3.8
More than 86 percent of companies use the
internet. Table 9.2 shows that of the companies
that do use the internet, 46.6 percent use the
internet for market research, 15.4 percent for
promotion and advertising activities, 13.9 percent
for the selling of goods and services, 18.1 percent
for email communication and the remaining 5.7
percent for other purposes.
Table 9.2: Internet usage
Internet usage %
Market research 46.8
Promotion and advertising 15.4
Selling products 13.9
E-mail communication 18.1
Other specifc business purposes 5.7
Total 100.0
9. Information Technology
41 Research report
10. Business Environment
The dynamic growth of the new private sector
has been one of the key driving forces behind
the economic recovery in all former communist
countries. Kosovo is not an exception. Despite
its importance, the business environment has
not been very conducive for SMEs. In particular,
institutions and their quality are key determinants
of private sector development.
However, unlike other TEs, Kosovo faced specifc
challenges in building market economy institutions.
Because of the War, the transformation process
and privatisation was delayed while new institutions
were built from scratch. One of the main
challenges in this transition path was the creation
of new institutions and a favourable business
environment for entrepreneurship (Krasniqi,
2012). Based on the experiences of other TEs, the
promotion of entrepreneurship and small frms
remains the single solution to promote economic
development.
Despite their importance, SMEs in Kosovo still
face an unfriendly business environment. Table
10.1 summarises the key fndings of the BSCK
SME surveys conducted in 2010 concerning
the obstacles to the development of SMEs as
perceived by entrepreneurs.
Table 10.1: Obstacles to business
Obstacle Intensity factor
Informal economy/black economy 72.9
Strong competition 71.1
Corruption 69.8
Taxes too high 66.1
Fiscal evasion 60.2
Supply with electricity 58.3
Law enforcement 57.4
Sufcient and adequate Laws 53.7
Political instability 53.2
Administrative burden 51.7
Crime, robbery and anarchy 51.3
Lack of market demand 48.5
Delayed collection of debts 44.8
Access to fnance 41.1
Insufcient capacities 29.2
Supply of materials, machinery and equipment 24.6
Lack of information concerning business 21.2
Transport 20.0
Business Licensing 16.2
Employee skills 13.2
Managerial skills 8.7
The survey results show that entrepreneurs are
more concerned with constraints related to the
external environment rather than with internal
factors such as managerial or employees skills,
which were ranked at the very bottom of the list of
constraints. Entrepreneurs perceive the informal
economy, strong competition and corruption as
three top obstacles. Other obstacles that score
above the intensity factor of 50 are taxes, fscal
evasion, supply with electricity, suffcient and
adequate laws, political instability, administrative
burden, crime, robbery and anarchy. As can be
noted all obstacles with an intensity factor of
more than 50 are related to the external and largely
institutional environment suggesting the poor
institutional environment for doing business in
Kosovo.
Concerns of entrepreneurs about the business
environment originate mainly from the high
informal sector and corruption. Conducting
business under the conditions of unfair competition
distorts frms incentives because under these
circumstances the performance of the frm in
the market does not refect the real performance
achieved through building competitive advantage
based on resources and/or effcient use of these
resources, but may indicate the ability of frms to
engage in the informal economy, tax avoidance
and corruption. The presence of an informal
economy and corruption, which in turn is affected
by an inadequate legal framework, creates an
uncompetitive business environment, leading to
the increased cost of doing business for frms that
operate offcially compared to their counterparts
that operate informally or partially informally.
The fndings have some major conclusions. The
frst one is related to the quality of institutions
which remains the main challenge for building a
competitive business environment. As suggested
by the literature of new institutional theory, both
formal and informal institutions appear to be
important obstacles and related to each other in
shaping the rules of the game. However, according
to entrepreneurs perceptions of obstacles in
Kosovo, institutional variables scored highest in
the list of obstacles in operating their business.
Unfair competition stemmed from weakly installed
legal framework (as a formal barrier) or its weak
and biased enforcement together with corruption
or other informal means (informal barrier). In
the business environment alike, frms that use
informal means such as corruption for example,
create incentives for other frms to go informal,
stimulating unproductive entrepreneurship as
suggested by Baumol (1990).
43 Research report
Social capital that takes the form of norms, trust,
and networks is one of the main factors that affect
SME development and competitiveness enabling
individuals and organizations to bond together and
bridge gaps. In particular some researchers such as
Aidis et al. (2008) argue that in an environment of
weak formal institutional, enforcement and high
corruption, business interactions based on trust
are especially important. This is because the frms
need to develop informal institutions in order to
compensate for the lack and/or inadequacy of
formal institutions.
Entrepreneurs ranked very high the importance
of social capital for the development of their
business (Table 11.1). More than 71 percent
think that contacts with family, friends and
business associations are very important for the
development of their business.
Table 11.1: Importance of social capital
(How important are contacts with friends, family
and business associations)
Importance %
1 (not important) 1.4
2 0.2
3 0.2
4 0.8
5 (neutral) 3.6
6 2.8
7 2.6
8 6.8
9 10.1
10 (very important) 71.4
Total 100.0
In addition, the BSCK SME survey included
other questions regarding trust in business and its
importance for businesses. On a scale of 1 to 10,
entrepreneurs were asked to rank the level of trust
with their collaborators. The fndings suggest that
business trust among entrepreneurs in Kosovo is
very high too. Results reported in Table 11.2 show
that 48.65 percent of respondents declared that
they have maximum trust in their partners. Linking
to the other studies of transition economies
mentioned above, this might suggest that because
of the poor institutional environment, businesses
in Kosovo use business trust in trying to mitigate
the negative effect of weak institutions.
Table 11.2: Level of trust in business collaboration
Level of trust in partners % share
1 (does not trust at all) 5.2
2 1.4
3 2.2
4 2.6
5 (neutral trust) 9.2
6 7.8
7 6.8
8 14.5
9 8.6
10 (maximum trust) 41.6
Total 100.0
In order to further investigate the role of business
trust we included the question is a high level of
trust with other companies an important factor for
compensating the lack of assets in your company.
Again, more than 41 percent declared that this is

11. Social capital
very important; suggesting that trust in cooperation
with other businesses may act as a complementary
resource (Table 11.3).
In relation to this it is important to cite the
response of one entrepreneur who said My main
business partner - supplier has helped me to get out of
fnancial diffculties because I had a problem with cash and
the bank did not gave me a loan he (the business partner)
supplied me with inputs for my company and I did not have
to pay him immediately, so I could pay the money back
after I sold my goods. In this particular case, as noted
from this entrepreneur, the trust enabled him to
compensate for trade credit or a loan for fnancing
working capital. Under these circumstances, the
bank was probably not able to loan this company,
but somebody from his network that had insider
information about the quality of the person
and possibly the companys future performance
facilitated this supplier who used this information
and trust to supply him.
Table 11.3: Importance of high trust for the
compensation of lack of assets by other companies
Importance %
1 (not important) 5.2
2 1.4
3 2.2
4 2.6
5 (neutral) 9.2
6 7.8
7 6.8
8 14.5
9 8.6
10 (very important) 41.6
Aidis, R., Estrin, S. And Mickiewicz, T. (2008). Institutions and entrepreneurship development in
Russia: A comparative perspective, Journal of Business Venturing, Vol. 23, No 6, pp. 656-672.
Central Bank of Republic of Kosovo (2011). Monthly Statistics Bulletin (no.118), Prishtin, Republic
of Kosovo: Central Bank of Kosovo.
Davidsson, P., Kirchhoff, B, HatemiJ, A. and Gustavsson, H. (2002) Empirical analysis of
business growth factors using Swedish data, Journal of Small Business Management, Vol. 40, No. 4,
pp. 332349.
Greiner, L. (1972) Evolution and revolution as organizations grow, Harvard Business Review,
Vol. 50, No. 4, pp. 3746.
Greiner, L. (1998) Evolution and revolution as organizations grow, Harvard Business Review,
MayJune, 5566.
Kon, Y. and Storey, D. (2003). A theory of discouraged borrowers. Small Business Economics,
Vol. 21, pp. 3749.
Krasniqi, A, Besnik (2009), Personal, Household and Business Environmental Determinants of
Entrepreneurship, Journal of Small Business and Enterprise Development, Vol. 16, No 1, pp. 146 166.
Krasniqi, B. (2012), Entrepreneurship and small business development in Kosovo, New York, US: Nova
Science Publisher (forthcoming).
Ministry of Finance (2011). Mid-Term Expenditure Framework 2012-2014, Prishtin, Republic of
Kosovo: Ministry of Finance of Kosovo.
van de Ven, A. H. and Poole, S. M. (1995) Explaining development and change in organizations,
Academy of Management Review, Vol. 20, No. 3, pp. 510 540.
Riinvest (1998). Economic activities and democratic development of Kosovo, Prishtin: Riinvest Institute for
Development Research.
References
Katalogimi n botim (CIP)
Biblioteka Kombtare dhe Universitare e Kosovs
65(047)
Entrepreneurship and Small Business Development in Kosovo
: (Research report) / Besnik A. Krasniqi... [et al.]. Prishtin :
Business Support Centre Kosovo, 2012. 49 f.: ilustr.; 28 cm.
Foreword : f. 3. - References : f. 49
1. Krasniqi, Besnik A.
ISBN 978-9951-19-017-6

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