engleski

SMEs in Croatia in the Light of EU Integration

Moving from applicant to candidate country, and ambitious to become a full member of the European Union, Croatia faces the complex challenge of adjusting its institutions to the standards of the EU. Yet apart from reforming formal institutions as the legal system in accordance with the conditions imposed by the EU prior to accession, there is a sphere of informal institutions that deprives policy makers of direct influence. According to New Institutional Economics whose most prominent exponent is Douglass North, informal institutions are the values and norms that shape a society supplementary to the existing formal institutions. Whereas formal institutions in Croatia are close to matching the EU’ s demands, informal institutions in Croatia often form and impediment to accelerated progress and especially hinder economic modernization and catching up to Western performance. We argue that business making is characterized by a lack of trust in outsiders and networks and relationships that often ex ante exclude third-party from participation or even insight. These patterns are persistent in various kinds of economic relationships, be it in supplier-producer, seller-buyer, of financing relationships. We will identify those areas in which such exclusive business relationships exist, explain their origin, and analyze the economic effects of such. Although informal institutions can hardly be influenced by political measures, we will develop certain basic approaches for policy makers to break of the often cumbering structures.

Croatia; SMEs; entrepreneurship; regional integration; EU.

ISBN 9958-605-89-9 (conference proceedings)