Entrepreneurial Potential Of Russian Society

Abstract

The development of small entrepreneurship is a crucial index of the degree of success of market reforms, of the level of efficiency of competitive economy. However, in Russia, above all, by virtue of unproductive, sometimes erroneous, state policy toward the small business sector, the latter has actually been in a state of stagnation. From the year 2000 to date, the number of small enterprises has been steadily decreasing. A certain increase in the number of SE agents occurs thanks to the growing number of private entrepreneurs, their rate of growth being estimated at 7% ( Russian Review of Small and Medium Enterprises 2001. Moscow: TASIS, Resource Center of Small Entrepreneurship, 2002, p.39.). Employment in the SE sector is also on the downgrade: in 1999-2001, it fell from 18 608,2 mln people to 16 963,4 mln (informal employment included) (Op. cit.). In the meantime, it is our firm conviction based on the results of several research projects undertaken by the RIISNP since 1992 that there exists a fairly solid “proto-entrepreneurial substructure”. True, the size of this substructure fluctuates considerably under the influence of numerous factors and conditions, and varies much region-wise. It is quite obvious that considering the size of Russia’s population, its educational level and other factors, the activation of protoentrepreneurial strata of the population could lead to irreversible consequences indeed, as far as creation of a steadily growing competitive economy and social state is concerned. Without claiming to encompass, within the framework of a relatively short-term project, the entire set of the aforesaid matters (especially, those relating to macroeconomic components of the entrepreneurial environment), the project team undertook, in March of 2002, a pilot survey of the entrepreneurial potential in several regions of Russia. Initially, we defined the entrepreneurial potential as a sum total of all natural persons willing to engage in entrepreneurial activity . In analyzing the entrepreneurial potential, a standardized (questionnaire-based) opinion poll of adult able-bodied population as the main tool for primary data collection. During the survey, formalized interviews were organized based on the all-Russia sample (1756 respondents in 19 constituents of the Russian Federation representing 12 economic-and-geographic regions of Russia). The survey conducted on the basis of a sample, representative from the standpoint of sociodemographic grouping of Russia’s population, enables one to draw the following conclusions: 1. Population treats small entrepreneurship with great sympathy. In large measure, the attitude to small entrepreneurship is shaped up under the influence of entrepreneurs in the milieu of most respondents. 2. The entrepreneurial potential of adult active population is rather high: 13.5 % of the respondents admit, one way or the other, they are capable of an entrepreneurial start-up (potential entrepreneurs); around 6 % have, over the past year, made specific steps towards launching an undertaking of their own (proto- and latent entrepreneurs). 3. If we compare these data with a statistics-based assessment of activity of the population in setting up sole-proprietor enterprises and SEs, we should admit that only every eighth latent entrepreneur goes as far as launching his own undertaking in one of these forms. The rest give up all attempts to set up a firm of their own, at least, within the framework of legal economy. 4. Of all the potential entrepreneurs, roughly 40% go by quite matter-of-fact considerations, around 1/5 are “necessity-based entrepreneurs” (forced to seek solution to their material problems through entrepreneurship, but having no particular bent for entrepreneurship), the rest may be described as “romanticists”. 5. A fair proportion (nearly one third) of the potential entrepreneurial strata are people with an entrepreneurial experience in the past, who are still convinced that entrepreneurship is “their business”, that they can and are able to engage in this activity, but quit further attempts to start an undertaking of their own due to lack of required resources. They have learned from past experience that successful “launching” of their own undertaking requires much more resources than are available to them at present, above all, financial and social resources. Thus, the necessary assistance in offering financial resources and professional advice, on the one hand, and reducing the pressure of “state racket”, on the other hand, might expand considerably the social basis of entrepreneurship in Russia. 6. At present, social networks perform the role of major organizations intended to support the development of small entrepreneurship, first of all. It is from his milieu that a novice entrepreneur receives the appropriate impetus to engage in an entrepreneurial activity, the necessary resources and knowledge and connections he is so much in need of. Therefore, one of the crucial components of the social resource made available to a novice entrepreneur are other entrepreneurs among his next of kin and friends. In this context, the circumstance playing the key role here is the fact that protoentrepreneurs and representatives of small entrepreneurship in Russia today are people of the same or adjoining social strata. As for the actual differences between them they largely boil down to the size of available resources, which determines both practical readiness for engaging in entrepreneurship and its success at start-up. 7. The characteristic features of value orientations among potential entrepreneurs are nonconformity and orientation to an innovational type of behavior as well as importance of freedom understood as personal independence. 8. In setting up new enterprises, the main difficulty lies in solution of the problem of finance. The primary sources of finance here are, as a matter of tradition, personal and family savings (‚love capital’): the poll indicates that a large proportion of entrepreneurs borrows and lends money, the friendly channels of finance obviously permit doing this on an interest-free basis. 9. The high level of the demand among start-up SEs for a broad range of business facilities demonstrates a deep and organic contradiction with their low financial solvency. As a consequence, service organizations as participants of the Russian infrastructure in support of small entrepreneurship, while structuring the package of facilities are only in small measure oriented towards this segment of the market. Under the conditions of self-accounting, SOs are far less motivated to deal with novice entrepreneurs than with more mature, large entrepreneurship. 10. The most common form of shadow entrepreneurship is “casual entrepreneurship”: haphazard brokerage deals rather than the activity of small firms, operating “in shadow”.