Ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development
The article examines the essence and main characteristics of Ukrainian medium-sized business. The authors analyses the role SMEs sector, especially the middle sector in the economic development. The article also estimates the condition of medium business, main tendencies of development and perspecti...
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irk-123456789-240232022-09-29T21:49:38Z Ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development Tulku, Y.I. Kapturenko, N.G. International and Regional Economics The article examines the essence and main characteristics of Ukrainian medium-sized business. The authors analyses the role SMEs sector, especially the middle sector in the economic development. The article also estimates the condition of medium business, main tendencies of development and perspectives. The author summarizes essential factors that influence on mediumsized business development. Key words: medium-sized business, economic development, business classification, productivity. У статті досліджено сутність та основні особливості українського середнього бізнесу. Проаналізовано роль сектору МСБ, особливо середніх підприємств, в економічному розвитку країни. Також в статті запропонована оцінка стану розвитку середнього підприємництва, досліджено основні тенденції та перспективи розвитку, визначені фактори, які впливають на розвиток цього сектору у вітчизняній економіці. Ключові слова: середній бізнес, економічний розвиток, класифікація бізнесу, продуктивність. В статье исследованы сущность и основные особенности украинского среднего бизнеса. Проанализирована роль сектора МСБ, выделяя при этом средний бизнес, в экономическом развитии страны. Также в статье дана оценка состояния, основных тенденций и перспектив развития среднего бизнеса; определены факторы, влияющие на его развитие в отечественной экономике. Ключевые слова: средний бизнес, экономическое развитие, классификация бизнеса, продуктивность. 2010 Article Ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development / Y.I. Tulku, N.G. Kapturenko // Економічний вісник Донбасу. — 2010. — № 4(22). — С. 78-82. — Бібліогр.: 8 назв. — англ. 1817-3772 http://dspace.nbuv.gov.ua/handle/123456789/24023 330.33(477) en Економічний вісник Донбасу Інститут економіки промисловості НАН України |
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International and Regional Economics International and Regional Economics Tulku, Y.I. Kapturenko, N.G. Ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development Економічний вісник Донбасу |
| description |
The article examines the essence and main characteristics of Ukrainian medium-sized business. The authors analyses the role SMEs sector, especially the middle sector in the economic development. The article also estimates the condition of medium business, main tendencies of development and perspectives. The author summarizes essential factors that influence on mediumsized business development. Key words: medium-sized business, economic development, business classification, productivity. |
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Article |
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Tulku, Y.I. Kapturenko, N.G. |
| author_facet |
Tulku, Y.I. Kapturenko, N.G. |
| author_sort |
Tulku, Y.I. |
| title |
Ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development |
| title_short |
Ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development |
| title_full |
Ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development |
| title_fullStr |
Ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development |
| title_full_unstemmed |
Ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development |
| title_sort |
ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development |
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Інститут економіки промисловості НАН України |
| publishDate |
2010 |
| topic_facet |
International and Regional Economics |
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http://dspace.nbuv.gov.ua/handle/123456789/24023 |
| citation_txt |
Ukrainian medium sized business in terms of global competitive environment: national specifics, tendencies and main problems of development / Y.I. Tulku, N.G. Kapturenko // Економічний вісник Донбасу. — 2010. — № 4(22). — С. 78-82. — Бібліогр.: 8 назв. — англ. |
| series |
Економічний вісник Донбасу |
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AT tulkuyi ukrainianmediumsizedbusinessintermsofglobalcompetitiveenvironmentnationalspecificstendenciesandmainproblemsofdevelopment AT kapturenkong ukrainianmediumsizedbusinessintermsofglobalcompetitiveenvironmentnationalspecificstendenciesandmainproblemsofdevelopment |
| first_indexed |
2025-07-03T03:29:28Z |
| last_indexed |
2025-07-03T03:29:28Z |
| _version_ |
1836594882431418368 |
| fulltext |
78
Економічний вісник Донбасу № 4 (22), 2010
Y. I. Tulku, N. G. Kapturenko
Problem definition. Medium-sized business (MB)
is a basis of social being in world developed economy. It
takes intermediate position between large corporate
business, which is controlled by the state because of its
strategic influence, and small business, which usually
has service function. Generally the substantial part of
labor pool works in a medium business and as a
consequence they define social prosperity of society.
For example in Europe, the share of medium-sized
enterprises is about 1,1 % (number of employees — 51-250
persons). 17% of labor force total is engaged in this sector,
and 17,8% of value added is made here. At that, private
enterprises of medium size play key role in secondary industry.
As for Ukraine, the role of SMEs is defined
ambiguously. There are different points of view on this
issue; sometimes these views are even polar.
Generally, before 1980 in national science there were
only few studies on medium business, as well as business
in general. The first reason for that is ideological aspects:
entrepreneurship as well as capitalist society was
considered as a historically fated.
Deep changes in the ideology that were observed in
the early 1990 (more properly the denial of any ideology
at all) have cardinally changed the question of necessity
of business scientific research as a whole and medium-
sized business in particular.
The objective of the article is to learn specifics
of national medium-sized business, to find out main
tendencies of development and problems that prevent the
development.
The analysis of the latest scientific research
publications.
The problems of small and medium-sized business
has been studied by national researchers — Amosha A.,
Adamov B., Liashenko V., Golovacha E., Akimova I.,
Zaitsev Y., Macogon Y., Savchuk V., and also foreign
researchers — Avramova O., Ovcharova L., Cvetova I.,
Hisrich D. R., Gavin B., Sutton K. and others.
Medium-sized business often falls out of context. In
other words, even when the object of research is small and
medium-sized business, more attention is paid to the
problems of a small one. But private medium business creates
so called “backbone” of the developed economies. It has
some advantages compared with small or large business.
In comparison with small business, medium-sized
business has the advantages as follows: market fluctuation
tolerance, potentially more effective because it can use scale
effect economies, has better access to external financing,
and has more possibilities for scientific and technological
innovations. In comparison with large business, medium
business is: more flexible to market fluctuations, and more
oriented to satisfying individual needs of buyers. Also
medium-sized business has great significance on the
employment market. Medium-sized enterprises play key
stabilizing role, because during the growth period they do
not have tendencies to hyperemployment, but in the recession
period they are quite reserved in reducing staff.
In this connection the necessity of deeper research
of medium-sized enterprises arises, because of their ability
to become the basic element in forming complete middle
class. Also they are able to provide innovatively-investment
development of Ukrainian economy in the terms of global
competition.
Conceptual issues of research
The Ukrainian scientists and politicians (as well as
representatives of other countries) have three main
characteristics of their approach to SMEs problems.
First of all, marginal estimates of SMEs role in the
economy (either SME sector is considered as the main driver
of economic growth and instrument of solving social
problems or the accent is made only on large industrial giants).
Secondly, there is neglect of medium-sized
УДК 330.33(477)
Y. I. Tulku,
assistant,
N. G. Kapturenko,
Ph.D. (Economics),
State University of informatics and artificial intelligence, Donetsk
UKRAINIAN MEDIUM SIZED BUSINESS IN TERMS OF GLOBAL COMPETITIVE
ENVIRONMENT: NATIONAL SPECIFICS, TENDENCIES AND MAIN PROBLEMS
OF DEVELOPMENT
Table 1
Statistics of EU enterprises by size (% share of total), 2005 [8, p. 47]
Business category Number of enterprises Value added Number of persons employed
SMEs 99,8 57,7 67,4
Micro 91,8 21,0 29,7
Small 6,9 18,9 20,7
Medium 1,1 17,8 17,0
Large 0,2 42,3 32,6
79
Економічний вісник Донбасу № 4 (22), 2010
Y. I. Tulku, N. G. Kapturenko
enterprises, while their role in development of entrepreneur
initiative and solving of urgent economic problems is not
less than the role of small and microenterprises.
Thirdly, as a consequence, state policy concerning
SME is oriented on decreasing barriers for market entry
(and also creation of privileged conditions for small
enterprises) and pays no attention to growth barriers.
As a first step, we should define the criteria of
business classifications to highlight the medium sector
and estimate its value in the economy of Ukraine. Usually,
researchers use such figures as number of employees
and annual turnover of the enterprise. Also we should
mention that there are no unique international criteria or
standards of business classification, although some
efforts are making to work out these criteria.
Thus, in 2003 the European Commission has
decided to work out recommendations for standardization
of approaches to defining and classifying business.
Recommendations represent an official normative
document, and its action extends to all of EU members.
So, EU can be an example of standardization and make it
easier for enterprises to carry on business, as it also
facilitates conducting research in this sphere.
Contrastive analysis of business classification in
European Union is given in table 2.
As we can see from the table 2, in EU firms where
number of employees is 50 persons are identified as the
category of small business, and medium business with
the staff of 250 persons.
In the USA, to enterprises of small business attribute
firms with the staff of 100 employees, to medium business
— with 500 persons.
Parameters of business classification in Turkish
economy are similar to European. Criteria of turnover
and number of employees are practically identical.
According to the law of the Russian Federation
“About development of small and medium
entrepreneurship in Russian Federation” average number
of employees should not be more than:
— 101 to 250 persons for medium-sized enterprises;
— 100 persons for small firms;
— micro business — 15 persons.
Annual turnover or balance sheet assets should not
surpass:
— micro firms — €1,4 million;
— small firms — €9,2 million;
— medium-sized enterprises — €23,2 million [1].
Concerning Ukraine, we can say that only in 2008
after changes have been made in Commercial Procedure
Code of Ukraine and in the law of Ukraine “About state
support of small entrepreneurship” we’ve got more or
less well-defined classification of business. The
definitions are given bellow.
“Enterprises can be classified as small, medium or
large firms depending on the number of employees and
annual turnover.
Small enterprises (irrespective of the form of
ownership) are those with the number of employees
during the business period being less than 50 persons,
and the value of total income during this period being
less than 70 million UAH (about € 6,4 million).”
To large enterprises attribute firms if the number of
employees is more or equal to 250 persons, and annual
turnover is more than 100 million UAH (about € 91,2 million).
All others are medium-sized firms” [2].
As we see, even in the Commercial Procedure Code
the medium business got such a vague definition as “all
other firms”.
Quantitative and qualitative parameters of
development of enterprises of this sector were evolved
after legislative changes that had been mentioned above
(table 3, figure 1, 2, table 4, 5, 6).
So, the share of medium-sized enterprises decreased,
and in 2008 it was to 6,8% from total number of firms
(figure 2). Actually to the medium business are attributed
firms with annual turnover from 70 to 100 million UAH.
The reduction of diapason explains decreasing of this
parameter and in the context of analysis of medium business
development it shows the negative tendencies. But in point
of fact these are only changes in the methodology, and
there is no ground for negative forecast.
The criteria of the number of employees remained
stayed the same. In 2008 there were 35,3% of total
number of employed worked in the enterprises of
medium-sized business (table 4).
In total in the medium-sized enterprises there worked
35% of the number of employees in 2008 (table 5). The
majority of employed work in agriculture is 70,1%,
industry is 30,4%, construction is 41,6%.
The productivity of SMEs is lower than on large
firms and equal to 60% of the level of the latter ones.
Also within the SMEs sector the least productive are
medium-sized firms: the productivity here is equal to 89%
from the same parameter of small firms and 76% ? in the
micro enterprises. This fact deserves special attention
because it contradicts to theoretical expectations.
Table 2
Comparison of definitions of SMEs (EU) [3, p.35]
80
Економічний вісник Донбасу № 4 (22), 2010
Y. I. Tulku, N. G. Kapturenko
One of the potential reasons for this is specific
process of formation of modern Ukrainian medium-sized
business, and as a consequence its specifics from the point
of view of ownership. As distinct from Western countries,
where medium business has grown from successful small
private companies, in Ukraine the medium business sector
was formed on the basis of privatization process of middle
and large sized state enterprises. Modern medium
enterprises were created from privatized large companies
that during the process of restructuring made an important
staff reduction and have passed to the category of middle
business, or from the subdivisions of large vertically-
integrated companies, which diminished before or in the
process of privatization. This means that Ukrainian
enterprises instead of being a successful example of
increasing entrepreneurial effort imitatively represent sector,
which have inherited the problems of old large state
companies and need essential restructuring [4].
Specific process of Ukrainian middle sector formation
also determined particular qualities of ownership structure.
In Western European countries medium firms that have
grown up from small companies usually belong to small group
of owners (often members of one or two families), that take
active part in management. This minimizes the risks of
corporative management conflicts. In Ukraine middle sector
is represented by joint-stock companies (namely open) with
vague structure of ownership, this causes problems of
corporative management and reflects operation effectiveness.
Considering the importance of creating effective
high-productive medium-sized business sector for the
Ukrainian economy development we should identify the
main factors that influence this process.
The main source of development of effective and
viable medium business is a small private business that
moves to another size category. Thus, all the factors that
influence the on creation of new enterprises, the survival
capacity in the market and growth, also play key role in
the forming of medium-sized business.
Such factors are generally institutional,
administrative-regulatory, financial, segment and regional
and individual ones [4].
Generally-institutional factors. In a general sense they
characterize the development level of market institutions
that is necessary for functioning of economic entities
(including small firms). In a narrow sense, these factors
are — the systems of protection of private ownership rights
and commercial contracts, providing fair competition.
Administrative-regulatory factors. By implication
they belong to the institutional ones but are always
considered separately and represent interrelationship
between private business state machine in the sphere of
registration, licensing and other “permissive” procedures
and also tax system.
Financial factors characterize specifics of internal
and external sources of financing for business
development.
Segment and regional factors reflect specifics of
region or district, in which the firms work, from the
point of view of technical, natural and other (non-
institutional) aspects.
Individual factors characterize personal specifics
of the entrepreneur.
Conclusions and perspectives for the future
research in this area.
As result of research of specific development of
Ukrainian SMEs we can name some particular qualities
of such enterprises:
Table 3
Number of enterprises per 10 thousand of population, units [7, p. 244]
Years Medium enterprises Small enterprises
2006 5 72
2007 5 76
2008 5 72
Fig. 2. Share of large, medium and small enterprises
after legislative changes in 2008
(% from total number of firms) [7, p. 241]
Fig. 1. Share of large, medium and small enterprises
before legislative changes in 2008
(% from total number of firms)
81
Економічний вісник Донбасу № 4 (22), 2010
Y. I. Tulku, N. G. Kapturenko
Table 4
Number of hired workers in the enterprises [7, p. 252]
Large enterprises Medium-sized enterprises Small enterprises
thousands of
persons
in % to total
number of
employees
thousands of
persons
in % to total
number of
employees
thousands of
persons
in % to total
number of
employees
2006 3189,9 34,7 3848,7 41,8 2158,5 23,5
2007 3440,1 37,9 3480,8 38,4 2154,3 23,7
2008 3594,2 40,4 3136,5 35,3 2156,8 24,3
Table 5
Number of employees in the enterprises [7, p. 247]
Table 6
Number of employees on the sizes of enterprises and on type of economic activity, 2008 [7, p. 239-241]
Large enterprises Medium-sized enterprises Small enterprises
thousands of
persons
in % to total
number of
employees
thousands of
persons
in % to total
number of
employees
thousands of
persons
in % to total
number of
employees
2006 3189,9 34,4 3850,3 41,5 2232,3 24,1
2007 3440,1 37,6 3482,7 38,0 2231,5 24,4
2008 3594,3 40,1 3137,7 35,0 2237,4 24,9
Large enterprises Medium-sized enterprises Small enterprises
thousands
of persons
in % to total
number of
employees
thousands
of persons
in % to total
number of
employees
thousands
of
persons
in % to total
number of
employees
Agriculture , hunting, forestry 88,3 88,3 558,0 70,1 149,4 18,8
Industry 2070,8 58,6 1075,2 30,4 389,9 11,0
Construction 110,8 16,7 275,4 41,6 276,4 41,7
Trade; auto service, repair of
household goods and personal
demand items
413,3
30,2 377,2 27,5 580,0 42,3
Trade in cars and motorcycles,
overhaul and repair
48,6 32,0 48,3 31,7 55,2 36,3
Wholesale and intermediation in
wholesale
155,7
20,9 212,3 28,5 376,9 50,6
Retail; repair of household goods
and personal demand items
209,0 44,1 116,6 24,7 147,9 31,2
The hotels and restaurants
activity
13,7 9,5 55,9 39,0 74,0 51,5
The activity of transport and
communications
787,2 69,2 220,1 19,3 130,7 11,5
Financial activity 40,1 43,8 25,7 28,2 25,6 28,0
Real estate operations; lease;
engineering and services for
entrepreneurs
43,7 4,9 373,4 41,6 479,4 53,5
Education 2,8 7,6 18,3 49,5 15,8 42,9
Healthcare and providing of
social help
4,8 5,3 52,8 57,7 33,9 37,0
Providing municipal and
individual services, activity in
the sphere of culture and sport.
18,8 9,6 98,2 50,5 77,6 39,9
— The main part of SMEs is working in agriculture,
construction, healthcare and social services, municipal
and individual services, in the sphere of culture and sport.
— The majority of medium industrial enterprises
have arisen after privatization and staff reduction in the
large state enterprises.
— As distinct from Western companies, Ukrainian
medium-sized business is represented by open joint-stock
82
Економічний вісник Донбасу № 4 (22), 2010
Y. I. Tulku, N. G. Kapturenko
companies, so the risks of corporative management
conflicts increase.
— Small firms are not an essential source of
development of middle sector, because of motivation
problems and limited possibilities of growth.
— Investment activity of medium-sized enterprises
is rather low, more often insufficient volume of profit is
considered to be as an obstacle for investment.
— Thus an important role of SMEs in economic
development calls for the necessity of attention of scientists,
experts and what is more important government to this
sector. Especially it concerns transformation countries,
where small and medium-sized business was formed in
the process of mass privatization and market mechanism
that determines an economic structure which only starts
functioning. Despite fact that small business has a great
value for development of entrepreneur initiative and
competition, its role should not be exaggerated, as well as
it is not necessary to forget about the importance of
medium business for normal development of economy and
middle class formation. On the level of government policy
it means that policy for entrepreneurship development
should be also focused on tasks for creating conditions
for effective development of medium-sized business.
— More intensive study of medium business is
caused by its advantages in comparison with small and
large enterprises (see above) that under conditions of the
global competitive environment factors make it most
adaptive to them. Under transformation processes which
are occurring in national economy, it is possible allow to
understand more deeply the nature, direction and factors
of changes which occur, and to determine (if need be)
measures of state and internal policy of the enterprises
for more successful adaptation to conditions of the global
competition dominating in modern economic relations.
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Tulku Y. I., Kapturenko N. G. Ukrainian
medium sized business in terms of global competitive
environment: national specifics, tendencies and
main problems of development
The article examines the essence and main
characteristics of Ukrainian medium-sized business. The
authors analyses the role SMEs sector, especially the
middle sector in the economic development. The article
also estimates the condition of medium business, main
tendencies of development and perspectives. The author
summarizes essential factors that influence on medium-
sized business development.
Key words: medium-sized business, economic
development, business classification, productivity.
Тульку Я. І., Каптуренко М. Г. Український
середній бізнес в умовах глобального конкурент-
ного оточення: національні специфічні особли-
вості, тенденції і головні проблеми розвитку
У статті досліджено сутність та основні особли-
вості українського середнього бізнесу. Проаналізова-
но роль сектору МСБ, особливо середніх підприємств,
в економічному розвитку країни. Також в статті за-
пропонована оцінка стану розвитку середнього
підприємництва, досліджено основні тенденції та пер-
спективи розвитку, визначені фактори, які впливають
на розвиток цього сектору у вітчизняній економіці.
Ключові слова: середній бізнес, економічний роз-
виток, класифікація бізнесу, продуктивність.
Тульку Я. И., Каптуренко Н. Г. Украинский сред-
ний бизнес в условиях глобального конкурентного
окружения: национальные специфические особен-
ности, тенденции и главные проблемы развития
В статье исследованы сущность и основные осо-
бенности украинского среднего бизнеса. Проанализиро-
вана роль сектора МСБ, выделяя при этом средний биз-
нес, в экономическом развитии страны. Также в статье
дана оценка состояния, основных тенденций и перспек-
тив развития среднего бизнеса; определены факторы, вли-
яющие на его развитие в отечественной экономике.
Ключевые слова: средний бизнес, экономичес-
кое развитие, классификация бизнеса, продуктивность.
Received by the editors: 14.11.2010
and final form in 01.12.2010
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