SMEs A key factor for economic growth and employment

SMEs - A Key Factor for Economic

Growth and Employment
Prof. Dr. Vasilika Kume
Department of Management,
Faculty of Economy, Tirana University
e-mail: vasilika.kume@unitir.edu.al
Prof. Assoc. Andrea Koxhaj
Department of Management,
Faculty of Economy, Tirana University
e-mail: andri.koxhaj@unitir.edu.al
Anisa Kume
a lecturer at the Faculty of Management,
Military University, Tirana
e-mail: kumeanisa@yahoo.com

SME-t Nj faktor potencial pr

rritjen ekonomike dhe punsimin
Prof. Dr. Vasilika Kume
Departamentit t Manaxhimit,
Fakulteti i Ekonomis, Universiteti i Tirans
e-mail: vasilika.kume@unitir.edu.al
Prof. Assoc. Andrea Koxhaj
Departamentit t Manaxhimit,
Fakulteti i Ekonomis, Universiteti i Tirans
e-mail: andri.koxhaj@unitir.edu.al
Anisa Kume
sht pedagoge pran Fakultetit t Manaxhimit,
t Universitetit Ushtarak, Tiran
e-mail: kumeanisa@yahoo.com

Abstract: The SMEs are key to entrepreneurial spirit and innovation and thus crucial to
ensure competitiveness and local economic development. Especially in transition countries,
SMEs are faced with many obstacles: administrative barriers, limited access to nance,
lack of technologies, skills of entrepreneurship. As they are one of the most important fac-
tors for economic growth and employment, we have considered important to study their
characteristics, constraints and the challenges they face in their operating environment, in
order to minimize constraints and support their development.
Keywords: nancial institutions, small and medium sized enterprises, nancial market,
public policy, GDP.

Abstrakt: SME-t jan nj faktor ky i shpirtit siprmarrs dhe novacioneve dhe pr

kt arsye kan nj rol t rndsishm n konkurrencn dhe zhvillimin ekonomik lokal.
Veanrisht n vendet n tranzicion ato ndeshen m nj numr pengesash: barriera ad-
ministrative, akses i limituar n nanca, mungesa e teknologjive, aftsi siprmarrse.
Duke qen nj nga faktort e rndsishm pr rritjen ekonomike dhe punsimin, ne e
konsiderojm t rndsishme t studiojm karakteristikat e tyre, kuzimet dhe sdat me
t cilat ato ndeshen n mjedisin ku operojn, me qllim q t minimizohen kuzimet dhe
mbshtesim zhvillimin e tyre.
Fjalt kye: institucionet nanciare, ndrmarrjet e vogla dhe t mesme, tregjet nan-
ciare, politikat publike, PBB.

41
Vasilika Kume, Andrea Koxhaj, Anisa Kume
. Introduction
The development of the SME sector is con-
sidered as the most efcient instrument
for the economies in transition, which gen-
erates sustainable economic growth, em-
ployment and poverty alleviation. (METE1,
2008)
The contribution of the SME sector to the
Albanian economic growth is very impor-
tant, because it assures approximately
64% of the GDP and employs 66% of
employees in the private sector. (METE,
2008). As per INSTAT2, 91.6% of enter-
prises employ 1-4 employees.
This research aims to provide an over-
view of the SME sector in Albania, its main
characteristics and contributions to the
economy of the country.
II. Data Gathering Instruments
Primary data were collected by distribut-
ing 700 structured questionnaires to SME
businesses all over the country. The ques-
tionnaires have been answered mainly by
owners of businesses and sometimes by
accountants of businesses. In order to
have representative opinions, businesses
from each category of SMEs from different
sectors were chosen randomly.
SME Characteristics in Albania
The Albanian economy is a structure which
is dominated by micro enterprises. Active
micro enterprises display an intensity of
11 enterprises per 1,000 habitants and
amounted to 80.102 entities during 2007,
which is an average 91.5% of the total
number of active enterprises. The domi-
nance of the micro enterprises has been a
persistent fact during the whole transition
period and has reected the structure of
the Albanian economy which went through
a spin-off of the big state companies,
where the private initiative was the face
of a constraint capital supply and micro/
small businesses spurred due to low initial
costs.
1 3
The Ministry of Economy, Trade and Energitics.
2 4
The Institute of Statistics
42
1. Hyrje
Zhvillimi i sektorit te SME-ve sht
konsideruar si instrumenti m ecent pr
ekonomit n tranzicion, i cili gjeneron
rritje ekonomike t qndrueshme, punsim
dhe reduktim t varfris. (METE3, 2008)
Kontributi i sektorit t SME-ve n rritjen
ekonomike n Shqipri ka qen shum
i rndsishm, pr faktin se ai siguron
afrsisht 64% t GDP-s dhe punson
66% t punonjsve t sektorit privat.
(METE, 2008). Sipas INSTAT4, 91.6% e
ndrmarrjeve punsojn 1-4 punonjs.
N kt artikull jemi prpjekur t ofrojm
nj pamje t prgjithshme t sektorit t
SME-ve n Shqipri, karakteristikat e tij
kryesore dhe kontributin n ekonomin e
vendit.
II. Mbledhja e t dhnave
T dhnat primare jan mbledhur nga
shprndarja e 700 pyetsorve t struk-
turuar n SME-t n t gjith vendin.
Pyetsort jan plotsuara kryesisht nga
pronart dhe n disa raste edhe nga
manaxhert e nancs. Me qllim q t
prtonim opinione prfaqsuese, bizneset
jan zgjedhur n mnyr t rastsishme
pr cdo kategori t SME-ve dhe nga sektor
t ndryshm.
Karakteristikat e SME-ve n Shqipri
Ekonomia shqiptare ka nj struktur t
dominuar nga ndrmarrjet e vogla. Ndr-
marrjet e vogla aktive kan nj intensitete
prej 11 ndrmarrje pr 1,000 banor dhe
kapin shumn 80,102 njsi gate vitit 2007,
duke prbr nj mesatare prej 91,5% t
numrit total t ndrmarrjeve. Dominimi
i ndrmarrjeve-mikro ka qen nj fakt i
pamohueshm gjat gjith periudhs s
tranzicionit dhe ka reektuar strukturn
e ekonomis shqiptare. ato jan prballur
m kompanit shtetrore, duke prtuar
nga kostot e ulta t hyrjes.
Ministria e Ekonomis, Tregtis dhe Energjitiks
Instituti i Statistikave
 SMEs A key factor for economic growth and employment

Micro and Small Medium Ndrmarrjet e vogla Ndrmarrjet e

Enterprises Enterprises dhe mikro mesme
- By number of - By number of - Sipas numrit t - Sipas numrit t pun.
employees employees pun. Ndrmarrjet e mesme:
Micro enterprises: 1-9 Medium enterprises : 50- Ndrmarrje mikro: 50-249 punonjs.
employees. 249 employees; 1-9 punonjs.
Small enterprises: Ndrmarrje t vogla:
10-49 employees. 10-49 punonjs. - Sipas qarkullimit
- By annual - By annual turnover - Sipas qarkullimit vjetor
turnover Annual turnover cant vjetor qarkullimi vjetor nuk
Micro enterprises: exceed the sum 250 Ndrmarrjet mikro: mund t kaloj 250
Annual turnover cant million leke. qarkullimi vjetor nuk million leke.
exceed the sum 10 mund t kaloj 10
mil leks. mln leks.
Small enterprises: Ndrmarrjet e vogla:
Annual turnover cant qarkullimi vjetor nuk
exceed the sum 50 mund t kaloj 50
mil. lek mln leks.
- By form of - By form of ownership - Sipas forms s - Sipas forms s
ownership Less then 25 % of pronsis pronsis
100% of capital capital can be owned by 100% e kapitalit M pak se 25% e kapitalit
must be owned by enterprises which are not duhet t pronsohet mund t pronsohet
individuals classied as SME nga individt. nga ndrmarrjet q nuk
klasikohen si SME.

Figure 1: SMEs Denition in Albania Figure 1: Prkuzimi i SME-ve n Shqipri

During 2008 Albania had an economic
growth by 6% GDP. The private sector con-
tributed by 80% to GDP and approximately
70% to employment. In the private sector,
SMEs give an important contribution by
64% to GDP and by 66% to employment.
Gjat vitit 2008 Shqipria kishte nj rritje
ekonomike prej 6% t GDP. Sektori privat
kontribuoi me 80% t GDP-s dhe afrsisht
me 70% t punsimit. N sektorin privat,
SME-t japin nj kontribut prej 64% t
GDP-s dhe 66% t punsimit.

Figure 2: Number of enterprises by classication5

Figura 2: Number of enterprises by classication6

5 6
Source: INSTAT Source: INSTAT

43
Vasilika Kume, Andrea Koxhaj, Anisa Kume

Figure 3: SME distribution by sector7

Figure 3: SME distribution by sector8

SMEs contribute importantly to the em- SME-t kontribuojn n mnyr t

ployment, presenting 54% of the total em-
ployment.
Regarding geographical distribution, 50%
of the enterprises are concentrated in the
Tirana-Durres area, which employ 57% of
the total number of employees in Albania.
rndsishme n punsim, duke prbr
rreth 54% t totalit t punsimit.
Prsa i prket shprndarjes gjeo-grake,
50% e ndrmarrjeve jan prqendruar n
zonn Tiran-Durrs, dhe punsojn 57%
t numrit total t punonjsve n Shqipri.

Figure 4: Geographical distribution of SMEs9

Figure 4: Shprndarja gjeograke e SME-ve10

III. Findings III. Rezultatet

The aim of the survey was to obtain infor- Qllimi i pyetsorve ishte t siguronim
mation on the perception of the SMEs in Al- informacion prsa i prket zhvillimit t SME-
bania regarding their operating conditions ve n Shqipri, prsa i prket konditave
and regulations that affect their activity. dhe mjedisit n t cilin ato operojn.

7 8
Source: INSTAT Source: INSTAT
9 10
Source: Ministry of Finance Source: Ministry of Finance

44
 SMEs A key factor for economic growth and employment
The rst 6 questions are related to the
characteristics of the businesses chosen.
77% of the persons interviewed are the
business owners, 10% are managers or
executives and 13% nance managers.
39% of the businesses chosen are in the
trade sector or personal services, 27% in
the manufacturing and in the service sec-
tor.
When businesses were asked if it was dif-
cult for them to nd qualied people, 70%
of them answered yes and 30% didnt nd
difculties in nding qualied people.
Figure 5: How difcult is to nd qualied people
Figura 5: Sa e vshtir sht t gjeni njerz t kualikuar
Businesses declare that it is difcult to nd
qualied people especially with technical
skills and marketing skills oriented to the
market and sales.
When businesses were asked about the
local competition, 60% of the interviewed
answered that they are the main competi-
tors and 27% answered that local busi-
nesses were their minor competitors.
About 30% of businesses considered as
important competitors the foreign busi-
nesses and 20% considered national com-
petition.
When businesses were asked if they thought
that business associations could help them
develop their business, 87% of them an-
swered yes and 13% of them thought they
cant help. We should underline that even
though businesses answered that business
association could support their develop-
Gjasht pyetjet e para kan t bjn me
karakteristikat e bizneseve t zgjedhura.
77% t personave t inter-vistuar jan
pronar biznesesh, 10% jan manaxher
apo ekzekutiv dhe 13% jan manaxher
nance.
39% e bizneseve t zgjedhura i prkasin
sektorit t tregtis ose shrbimeve
personale, 27% prodhimit dhe sektorit t
shrbimeve.
Kur bizneset u pyetn nse e kan t
vshtir t gjejn njerz t kualikuar,
70% prej tyre u prgjigjn po dhe 30%
nuk e kishin t vshtir gjetjen e njerzve
t kualikuar.
Bizneset deklarojn se veanrisht e
vshtir sht t gjenden njerz t kuali-
kuar me aftsi teknike dhe t marketingut,
t orientuara nga tregu.
Kur bizneset u pyetn rreth konku-
rrencs lokale, 60% e t intervistuarve i
konsideronin konkurrentt lokale si konku-
rrent kryesor n treg dhe 27% nuk i
konsideronin t rndsishm konkurrentt
lokale. Prkatsisht 30% dhe 20% e
bizneseve konsideronin t rndsishm
konkurrentt e huaj dhe ata kombtar.
Kur bizneset u pyetn nse shoqatat e
biznesit i ndihmonin ata n zhvillimin e
biznesit t tyre, 86% u prgjigjn pozitivisht
dhe 13% negativisht. Duhet nnvizuar
se megjithse bizneset u prgjigjn se
shoqatat e biznesit mund ti mbshtesin
45
Vasilika Kume, Andrea Koxhaj, Anisa Kume

Figure 6: What about local competition?

Figure 6: Si e konsideroni konkurrencn lokale?

Figure 7: Do business associations help?

Figura 7: sa ndihmojn shoqatat e biznesit?

ment, they could hardly mention any busi-
ness associations name.
When the interviewed were asked about
other important factors affecting their
business activity, it seemed that corrup-
tion was a major problem for 80% of the
respondents. They underlined the corrup-
tion in the public administration especially
in local government ofces.
Another problematic issue for businesses
is the access to and the costs of nancing,
related to the poor crediting infrastructure
in the country. It seems that business nd
difculties too in interacting with customs
and trade regulations, 50% of them an-
swered that it was a major constraint.
n zhvillimin e veprimtaris, ata nuk
prmendnin ndonj emr konkret.
Kur t intervistuarit u pyetn rreth
faktorve t rndsishm q ndikojn n
aktivitetin e biznesit, pr 80% t bizneseve,
korrupsioni ishte problemi kryesor. Ata
theksuan veanrisht korrupsionin n
administratn publike, veanrisht n at
lokale.
Nj tjetr problem mjaft i rndsishm
pr bizneset ishte aksesi n nancime,
si rezultat, sipas tyre, i infrastrukturs
s dobt kredituese n vend. Rezulton
gjithashtu se rreth 50% t bizneseve
gjejn vshtirsi n veprimet me doganat
dhe legjislacionin tregtar.

From the survey, the most used way to Nga pyetjet e bra rezulton se mnyra
m e prdorshme nisjen e biznesit sht
start a small business is to establish one,
hapja e nj biznesi t ri. Si mnyra t tjera
and then inherit the family business, fran-
u prmendn franshiza ose blerja.
chise or purchase alternatives.

46
 SMEs A key factor for economic growth and employment

The personal values of the owner: experi- Vlerat personale m t rndsishme t

ence, hard work, working discipline, cus- pronarve q ojn n suksesin e biznesit
tomer relations, communication, etc. are u konsideruan: eksperienca, puna e
stated as reasons for the success of small palodhur, disiplina, relacionet me klientt,
business. komunikimi, etj.

The reasons for failure are nancial, eco-
nomic, inexperience in management, non-
planning, unfair competition, etc.
In this research when the strengths of
small business regarding the compe-
tition have been discussed, the following
factors have been considered: good qual-
ity of the product/service, low prices, good
location, professional/ skilled business
knowledge, quick service, image, etc. The
results are shown in table 7.
Besides the strengths, we can state there
were a lot of weaknesses of small busi-
nesses like: lack of effective management,
lack of working capital, lack of specialisa-
tion, nancing risk, etc.
Arsyet m t rndsishme t dshtimit u
renditn problemet nanciare, ekonomike,
mungesa e eksperiencs, konkurrenca e
pandershme, etj.
N kt studim, kur u diskutua pr fuqit
e bizneseve t vogla prsa i prket
konkurrencs nj vend t rndsishm
zn faktort e mposhtm: cilsia e mir
e produkteve/shrbimeve, mimet e ulta,
vendndodhja e mir, aftsit profesionale,
shrbimi i shpejt, imazhi, etj. Rezultatet
e pyetsorit renditen n tabeln 7.
Pavarsisht nga fuqit, mund t rendisim
edhe disa dobsi t prmendura si t
rndsishme si mungesa e nj manaxhimi
efektiv, mungesa e kapitalit qarkullues, e
specializimit, risku nanciar, etj.

Strengths Percentage
Fuqit Prqindja
Good quality product/service 25,15
Cilsia e mir e produktit/shrbimit 25,15
Low or different prices 11,96
mime t ulta 11,96
Location 8,59
Vendndodhja 8,59
Professional business knowledge 5,52
Njohurit profesionale 5,52
Wide assortment 3,99
Asortimente t shumllojshme 3,99
Quick service 4,99
Shrbim i shpejt 4,99
Selling on credit 4.22
Shitja me kredi 4.22
Kindness to customers 3,07
Mirsjellja me klientt 3,07
Communication skills 3,07
Aftsit e komunikimit 3,07
Experience 3,07
Eksperienca 3,07
Innovation 2,76
Novacionet 2,76
Technical equipment 2,45
teknologjia 2,45
Company image 2,45
Imazhi i kompanis 2,45
Loyalty of buyers 1,84
Besnikria e blersve 1,84
Unique products/services 1,84
Produkte/shrbime unike 1,84
Honesty 1,84
Ndershmria 1,84
Tradition 1,53
Tradita 1,53
Other 11.66
T tjera 11.66
Total 100.00
Totali 100.00
Table 7: The strengths of SME-s
Tabela 7: Fuqit e SME-ve
vis-a-vis competition kundrejt konkurrencs

47
Vasilika Kume, Andrea Koxhaj, Anisa Kume
IV. Conclusions
Micro, small and medium-sized enterpris-
es (SMEs) are the engine of the economy.
They are an essential source of jobs, and a
seed bed for industrial growth, create en-
trepreneurial spirit and innovation and are
thus crucial for fostering competitiveness
and employment. They are key to entre-
preneurial spirit and innovation and thus
crucial to ensure competitiveness and lo-
cal economic development.
Especially in transition countries, they are
faced with many obstacles in their busi-
ness activities: administrative barriers,
limited access to nance, lack of technolo-
gies, skills and entrepreneurship. Further-
more, they may nd it hard to cope with
all the new challenges, technologies and
regulatory requirements facing them.
SMEs are faced with increasing competi-
tive pressure stemming from globalisa-
tion, enlargement and the opening up of
markets spurred by new technologies and
innovation. They will need to nd ways to
tackle these challenges, because the chal-
lenges are likely to persist and to increase
in the future. To survive and win in such a
competitive ght, to grow in such an en-
vironment, they must also develop their
comparative advantages, and this requires
knowledge, nancial resources and eco-
nomic exibility.
Public policy at local level can play a signif-
icant role in enhancing entrepreneurship
performance by tackling the various mar-
ket failures that can occur, for example
in the supply of nance, premises, train-
ing and business advice, and by helping
to overcome learning failures within local
economies by building rm competencies
and networks for knowledge exchange.
This includes intervention to encourage
more entrepreneurial attitudes, support
for training, improving access to nance,
promoting exports and internationaliza-
tion, supporting innovation and develop-
ing business networks and clusters.
Reform measures have largely contributed
to strengthening the private sector devel-
opment and supported the SME develop-
ment. However, the progress is still behind
48
IV. Konkluzione
Ndrmarrjet mikro, t vogla dhe t mesme
(SME-t), jan motori i ekonomis. Ato
jan nj burim i rndsishm i vendeve
t puns dhe nj faktor i rndsishm
pr rritjen industriale. Ato jan faktor
ky i krijimit t shpirtit siprmarrs dhe
novacioneve, duke prbr kshtu nj
element t rndsishm t konkurrencs
dhe t zhvillimit ekonomik lokal.
Veanrisht n vendet n tranzicion, SME-
t ndeshen me vshtirsi n aktivitetet
e tyre: barriera administrative, akses i
kuzuar n burimet nanciare, mungesa e
teknologjive, aftsive t siprmarrjes, etj.
Pr m tepr ato mund ta ken t vshtir
t ndeshen me sdat e reja, teknologjin
dhe rregullat e krkesat ligjore me t cilat
ndeshen.
SME-t ndeshen me presion konkurrues
n rritje si rezultat i globalizmit dhe hapjes
s tregjeve, t stimuluara nga teknologjit
e reja dhe novacionet. Ato duhet t
gjejn mnyra ekase pr tu prballur me
kto sda, sepse kemi t bjm me sda
afatgjat dhe n rritje. Pr t mbijetuar
dhe tuar n nj luft t till konkurruese,
t rritesh n nj mjedis t till, ato duhet
t zhvillojn avantazhe konkurruese. Dhe
kjo krkon, njohuri, burime nanciare dhe
eksibilitet ekonomik.
Politikat publike n nivel lokal luajn nj
rol t rndsishm veanrisht n rritjen
e performancs s siprmarrjes, duke i
paraprir dshtimeve t bizneseve, pr
shembull n ofertn nanciare, krijimin
e kushteve, trajnimin dhe kshillat
profesionale, dhe me ndihmn pr t
kaprcyer vshtirsit duke krijuar
kompetenca dalluese dhe rrjete pr
kmbimin e njohurive. Kjo prfshin
ndrhyrjen pr inkurajimin e sjelljeve
siprmarrse, mbshtetjen e trajnimeve,
prmirsimin e aksesit nanciar, nxitjen
e eksporteve dhe ndrkombtarizimin,
mbshtetjen e novacioneve dhe xhvillimin
e rrjeteve dhe klasterave.
Reformat e ndrmarra kan kontribuar
mjaft ndjeshm n fuqizimin e sektorit
privat dhe mbshtetjen e zhvillimit t
SME-ve. Megjithat, progresi i br sht
realisht i vogl krahasuar ne vende t tjera
t rajonit. Sdat kryesore q shoqrojn
 SMEs A key factor for economic growth and employment

the other competing countries from the
region. The main challenges associated
with the development of the private sector,
in particular SMEs, remain the relatively
poor investment climate and the level of
corruption. Poor law enforcement, lack of
management skills and poor infrastruc-
ture, constitute major impediments to the
SME development.
zhvillimin e sektorit privat, n veanti SME-
t, mbeten klima e dobt e investimeve
dhe niveli relativisht i lart i korrupsionit.
Niveli i dobt i zbatimit t ligjeve, qeverisja
e dobt e kompanive, mungesa e aftsive
mana-xheriale dhe infrastruktura e dobt,
prbjn pengesat kryesore pr zhvillimin
e SME-ve.

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