Why Don't We See More Small- and Medium-Sized Enterprises (Smes) in Lithuania? : Institutional Impediments to SME Development

This paper identifies the specific external barriers to SME development in Lithuania. An analysis of 332 SME owners indicates that formal barriers (taxes, frequent changes to and ambiguity of tax policies) and environmental barriers (low purchasing power, lack of funds for business investment) form the most significant barriers for SME businesses. Informal barriers (late payment to clients, corruption, government interference) were secondary in significance. By grouping together variables according to barrier types, and using regression analysis, the inter-linkages between barrier types becomes evident. Our results suggest that the effect of business barriers is intensified by corruption, lack of information and inadequate business skills