Determining the Impact of SME Development in Eastern Europe on Romania

This research project investigates the influence of small and medium-sized enterprises (SMEs) in Eastern Europe, with a particular focus on Romania after its accession to the European Union. The study begins with an abstract, followed by an overview, background, aims, objectives, research questions, and a Gantt chart outlining the project's timeline. The literature review examines the impact of new start-ups, the role of small organizations in Romania's productivity, and the relationship between trends and business growth. The methodology section details the research approach, design, data sampling, collection methods, ethical considerations, and resources utilized. The results section presents findings, followed by a conclusion, discussion, and recommendations. The project aims to determine how SME development affects Eastern Europe, specifically in Romania, and includes objectives to analyze the influence of start-ups, the impact of small organizations, and the correlation between trends and small business growth. The research utilizes both primary and secondary data collection methods, including questionnaires, to assess the perspectives of respondents. The findings suggest a positive correlation between SME development and Romania's economic growth, emphasizing the importance of SMEs for the country's success.

Research Project

Table of Contents
ABSTRACT ....................................................................................................................................1
TITLE:.............................................................................................................................................1
1.1 Overview of the Research ...............................................................................................1
1.2 Background of Research...................................................................................................2
1.3 Aims and Objectives.........................................................................................................3
1.4 Research Questions..........................................................................................................4
1.5 Gantt Chart.......................................................................................................................4
LITERATURE REVIEW................................................................................................................6
2.1 Influence of development of new start-ups in Eastern Europe.........................................6
2.2 Impact of Small organisation on growth and Productivity of Romania...........................7
2.3 Relationship between new trend and development in Romania and growth of small
business...................................................................................................................................9
RESEARCH METHODOLOGY..................................................................................................11
3.1 Type of Research............................................................................................................12
3.2 Research design .............................................................................................................12
3.3 Data Sampling ...............................................................................................................13
3.4 Data Collection...............................................................................................................13
3.5 Ethical consideration......................................................................................................17
3.6 Resources........................................................................................................................18
RESULTS .....................................................................................................................................18
Conclusion and Discussion and Recommendations......................................................................30
REFERENCES..............................................................................................................................33

ABSTRACT
Main purpose of conducting research project is identifying the impact of developing
small-medium size organisation in Eastern Europe after joining to the European Union. This
dissertation based on different chapters which includes introduction, literature review, research
methodology, results, data interpretation, conclusion and recommendation. In introduction
chapters different information related to the research project includes such as aims, objectives,
questions, reason behind conducting research and many other important details. All these are
essential and valuable for completing each and every activities of research in an appropriate and
accurate manner. In literature review, different number of authors and writers provide their
opinion about the research topic. Literature review is a part of secondary research which help an
investigator to collect accurate and appropriate amount of information from the selected
respondents. On the other hand, under methodology, different number of methods are used such
as research approach, sampling, qualitative and quantitative, primary and secondary data
collection tool i.e. questionnaire. It is prepared by the researcher to gather accurate and relevant
amount of data from the participants about the research topic. One of the main reason of
conducting dissertation is to analysis impact of developing SMEs business organisation in
Eastern Europe after Joining the European Union. As per the questionnaire, more than half of the
respondents out of 30 are agree as development of small organisation in Eastern Europe highly
impact on growth and productivity of Romania in a direct manner. As per the conclusion,
success and growth of country is depend on the SMEs. There are some recommendation to the
small organisation to develop their business operations in different countries which highly
impacted their progress and success in direct way.
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TITLE:
“To determine the influence of developing small - medium size business in Eastern
Europe after joining to the EU: - A case study on Romania”
1.1 Overview of the Research
Small and medium size businesses plays a very important role in the overall growth as
well as development of the economy, thus it becomes crucial to manage these SME Business
effectively over period of time (Audretsch, Belitski and Desai, 2015). There is a diverse impact
on business in eastern Europe when this part of the Europe has decided to enter into European
Union, Especially SME Business has seen effective growth due to the fact that various benefits
has been derived by these businesses through efficient policies of the EU regarding growth and
development of SME Businesses. A proper research in this regard would give a better idea as to
what benefits and drawbacks are there for Eastern Europe after their decision to join European
Union (Babajide, 2012).
1.2 Background of Research
The present research will try to outline the various benefits that are being derived by the
SME sector of Romania, once the country has decided to get into European Union. The research
will also help in specifying the various disadvantages that are there for entering the EU. These
disadvantages can be with regards to restrictions that will be imposed by the organisation and its
adverse effects on the working of SME Sector. Romania is the 12th largest country as well as it
among the most nations in EU. Thus, it is essential to make sure that right kind of policies is
made for the 20 million people of the country. The country is having a GDP of 0.5 Trillion
Dollars with a per capita income of around 26,000 dollars. A detail discussion will be carried out
on the SME Sector within the country and its impact on Romania’s Economy in general under
the current research (Bayne, 2017).
Romania is a semi-presidential republic and a part of European Union. The nation has
joined the EU since 2007, when they joined together with neighbouring Bulgaria. The only
junior member of the EU is Croatia as the nation joined in 2013. Romania decided to join EU in
Eastern Europe in which different number of small-medium size business are developed that
effect on that country in direct manner. Small business is an independently operated and owned
organisation that is limited in revenue and in size depending on the industry. One of the best
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example of small business is local bakery store that employs 10 people. A manufacturing facility
that workers less than 500 people is another example of small entity (Bendell, 2017). Therefore,
Small and medium size organisations are businesses that keep assets, number of employee or
revenues. In simple word, small scale organisation is business that have small number of
employees and does not have maximum amount of sales. Such type of business are generally
privately operated and owned corporations, partnership and proprietorships. Eastern Europe is
the part of European Continent. This is formed by nations with dominant Eastern Orthodox
churches such as Belarus, Republic of Macedonia, Bulgaria, Greece, Moldova, Russia, Serbia,
Montenegro, Romania and Ukraine for instance. Along with this, in developing small business
organisation in Easter Europe is highly effect on nationality and company. Main requirements
and needs to join the European Union, if any nation that fulfil the conditions or needs for
membership can follow. Such kind of situations are identified as the Copenhagen criteria and
cover a free-market economy, rule of law, stable democracy and the acceptance of the entire
European Union legislation or rules, including of the euro. Main reason behind conducting this
dissertation is to identifying the impact of development of start-ups in Eastern Europe. Thus,
development of small organisation is Eastern Europe is highly influences on productivity and
growth of Romania directly (Gereffi, 2014). Beside this, researcher needs to identify relationship
between developments and new trends in Romania and small business growth. Thus,
development of SMEs impact on country growth and development directly. Research is more
essential and significance part because it help an investigator to analysis proper and accurate
information about the topic. Large number of small organisation are work under Eastern Europe
that externally impact on Romania in direct manner. Research is also more valuable and useful
for the investigator to analysis the imp[act of development of small-medium organisation in
growth and success of specific country. This part of research also support an investigator to
overcome chances of issue and difficulties.
1.3 Aims and Objectives
The aim of this research project is “To determine the influence of developing small -
medium size business in Eastern Europe after joining to the EU: - A case study on Romania”.
Research objectives, on the other hand, are the proper strategies which described the way to
achieve research aim (Burns, 2016). All steps which take need specific lists of tasks in order to
attain goals of research project. It is identify as a main part of research which is based on
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research title. Well-designed and proper aims develop clear relation between research project
and the more. It is important and essential part of research project because research objectives
and questions are highly depended on this. Main aim of this dissertation is to “To identify the
impact of developing small - medium size business in Eastern Europe after joining to the EU: - A
case study on Romania”
Research objectives should be sensible and precisely decided (Obeng, Robson and
Haugh, 2014). They make an accurate use of concepts as well as data. Research objective is a
main part of the Dissertation (Czaika and De Haas, 2014). This section is based on two variables,
one is dependent and other one is independent. In this research project, growth of Eastern Europe
is dependent on developing small-medium size organisation after joining to the European Union.
In this, researcher need to make some important and useful objectives which will help in
completing all research activities properly and systematically. There are few research objectives
which is based on research aim is determined as under:
 To determine the influence of development of new start-ups in Eastern Europe.
 To identify the impact of Small organisation on growth and Productivity of Romania.
 To analyse the relationship between new trends and developments in Romania and
growth of small business.
1.4 Research Questions
This is another important and useful section of research project which is mainly based on
research objectives. Beside this, different questions are made according to objectives which is
essential for the researcher in order identify importance and concept of research topic (Doh and
Kim, 2014). There are some questions according to objectives which are determined as under:
 What is the influence of development of new start-ups in Eastern Europe?
 What is the impact of Small organisation on growth and Productivity of Romania?
 What is relationship between new trends and developments in Romania and growth of
small business?
1.5 Gantt Chart
A Gantt chart specifies the schedule of activities that were conducted for the purpose of
making this report and what was the duration for the same. It helps a reader in getting a
background of the research and understands the sequence in which the research has taken place,
so as to get a better view of the whole report in an effective way (Piergiovanni, Carree and
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Santarelli, 2012). The following Gantt chart gives an effective explanation of the research’s
activities as well as duration:
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LITERATURE REVIEW
A literature review is identify as an evaluative report of data analysis in the literature
related to chosen field of study. Review about literature should determines, evaluate, summarise
and clarify information (Jacoby, 2014). It is identify as one of the important and essential section
of research because in which different number of authors and scholars are give their point of
view about the research topic.
2.1 Influence of development of new start-ups in Eastern Europe
Romania is one of the biggest country of Eastern Europe and the current policies as well
as regulations of the governments in whole eastern Europe has recommended a more liberal
policies for the start-ups and Small businesses. The aim is to generate employment on local level
and also ensures a higher level of per capita for people who have been deprived of a higher
income up till now (Li and Rama, 2015). Major countries within the eastern Europe has able to
recognise the fresh talent in terms of youth that they possess, which they now want to capitalise
into by giving them a better level playing field for as well as effective performance over period
of time. Studies have suggested that Its way much easier to start a company in countries like
Poland and Romania then in Big countries like UK and France. This is because, the restrictions
and policies of the government for fresh start-ups and SME’s is not much and they have made a
better investment climate in their concerned regions, which has further boosted the overall
sentiments of entrepreneurs as well as businessman. The investment in early stages of business in
Eastern Europe has risen from 10 million$ to 230 million$ that is a huge increase and is growing
rapidly as well. There are around 30,000 start-ups in Eastern Europe and these have contributed
in the overall growth of the economy of these countries over period of time ( A quick tour of
Eastern Europe’s startup hubs, 2018). The availability of the resources in Eastern Europe is not
as much as Western Europe but this has not made them feel discouraged and they tried to keep
up the pace with Western Europe by drawing a large amount of investment within themselves.
The countries in Eastern Europe are now trying to open up their economies more, which has
created a better and effective business environment that leads to higher growth of small business
in the longer run (Rudina, 2013).
As per the point of view of Ciszewski, (2017) Different of them target the international
market and implement their products or services in that country, and various seek most of their
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incomes from Western European and United State customers. Venture capital investment in
Europe has develop from $5.7 billion in year 2012 to $14.1 billion in year 2015 and approx $8.7
billion of 2016. Information collected, venture investment is grow last few years, In 2011, $9.5
million to $283 million in 2016.
According to the David, (2017) Owners of a small business come from a different
background or aspect, each with their own opinion for following self-employment. Often times
business operated and owned independently and have less workers. Small business are more
significant and essential to the better future of the Eastern Europe. There are three primary and
effective ways that SMEs contributes to particular country. They provide more opportunity to
people in order to attain financial independence, create employment opportunities and encourage
innovation. Small business create a broad and large variety on effective or unique employment
possibility.
There are several forms of trading bloc such as Preferential Trade Area, Free Trade Area
and Customs Union. There are some advantages for members of trading blocks, including, free
trade within the bloc, market access and trade creation, economics of scale, jobs, protection etc.
All these are essential and important for success and growth of SMEs in direct manner. Small
businesses organisation play most essential role in success and growth of country by increasing
living standard, providing job opportunities and also increasing per capital income of people.
Start-ups are a more chance or possibility for small Eastern European. Their relative
significance for the gross domestic product of country is much maximum than in the United
State, Germany or United Kingdom (Kimura and Obashi, 2016). Main reason behind this
governments of specific country are willing in order to support and help teach hubs by making
effective infrastructure and simply developing public venture capital funds. There are different
opportunities available for the people who not have job. Furthermore, secure conditions of labour
market mainly come with maximum wages for labours.
SMEs play a key and important role in transition and developing nations. These firms
atypically account for around 90% of all firms external the agricultural sector, constitute a main
source of employment and make important domestic as well as export earnings also. As such,
SME development come out as a key way in poverty reduction efforts.
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2.2 Impact of Small organisation on growth and Productivity of Romania
New startup company is small in size that has freshly been started by someone. A startup
is a fresh and new organisation that is just beginning in order to develop. Stratus are mainly
small and initially operated and financed by an individual. Development of start-up organisation
is also essential because it provide job opportunities to the unemployed people which is also
effective for the success of that country. Romania, Population wise, is one of the biggest
countries of Europe and thus is able to garner a lot of investment for the purpose of new start-ups
as well as businesses over period of time. According to Sterlacchini, 2017, The government of
Romania has came up with a comprehensive plan to ease out the process of conducting business
in the country, and they have been able to make a conducive environment for Start-ups as well as
SME to flourish and grow. It has been ranked at number 68th in terms of offering a conducive
business environment to its investors. This has resulted in drawing a large number of investors
for the economy as a whole. Most of the capital has gone to people who are being regarded as
Cyber- Entrepreneur as their capital is invested in businesses like E-commerce and other net
based ventures. Also there were a large number of set-ups which were continuously conducting
business on a smaller scale, policies have been framed to make them grow and compete
effectively on national as well as international level. Small organisation has been able to draw a
huge amount of VC Funding from various international sources, because of the fact that
Romania is considered as one of the most attractive destination for investing in Eastern Europe.
This has generated sustainable employment along with making necessary innovation growth in
the economy (Laszlo and Zhexembayeva, 2017). This kind of progress has boosted the
confidence of investors within the country, thus a higher capital formation can be seen within the
country due to these factors (Omri, Frikha and Bouraoui, 2015). It is also expected that the
Romanian Economy will going to be among the largest in Eastern Europe, if a higher growth
track can be achieved by the country going forward. The technological progress that has taken
place within the nation in recent past is one of the primary reasons for SME Growth and
Prosperity. The aim should be to maintain the same kind of government policies that will boost
the sentiment of investors as well as entrepreneurs. Small organisation has big and more impact
on the Romania by providing different number of job opportunities to the unemployed people.
The economy of Romanian, between 2000-2010, accomplished essential transformations
in the procedures of integration and accession in the structure of EU. It reflected or impacted at
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both level of SME sector and macroeconomic level. Until, 2008, Romania had an essential and
important procedures of economic success, fact impacted by the favourable evolution of actual
gross domestic product, the average GDP rate is approx 5.84% was above the European Union-
27 mean value of about 2.24%. along with this, in year 2009 based on a complex of internal
factor as well as global economic crisis. In Romania rate of gross domestic product fell by up to
6.6%, maximise that continue basis to get in 2010.
Although Romania accomplished essential progress or development in economic success.
For example: rate of gross domestic product increase from approx 2700 in year 2000, to 4200
Euro in 2010. Therefore small business organisation is highly impact on growth and productivity
of Romania (Mearsheimer, 2014). The positive impacts generated or created by small business
enterprise are multiple such as enhancing the competitive environment, developing possibilities
for adaptation and creation of advanced technology, working niche markets that are not
beneficial for large organisations, anchoring in national economies by funding local resources
like financial, material of informational and labour.
Encouraging Small business industry in an essential concern at the level of European
Union, including that SMEs are core factors or aspects for economic recovery. Between the year
of 2002 and 2010, approx 85% jobs rising in Europe were developed by SMEs. In total
employment, percentage exceeds by 67%. During the time period, total employment maximised
essentially by a mean of 1.1 million innovative jobs each and every year. Thus, small business
enterprise play an important and essential in the growth of Romanian economy by maximising
dynamism, innovation, competitiveness and employment of progressive labour. SMEs small size
contributes to enhancing human relations, effecting employment in forms of job satisfaction and
performance (Medve‐Bálint, 2014). Small and medium size organisation also have the benefit of
occupying or working those niche marketplace that are nor essential for large enterprise. On the
labour marketplace, small organisation generate more opportunities of jobs and with a lower
capital cost, state an essential alternative to battle unemployment.
Accordinf to the Mariah Brown, 2018,A regional trading bloc is a unite of nations within
a geographical region that assist themselves from imports from non-members. These are a type
of economic integration, and progressively shape the structure of world trade. The significance
of small organisation to local communities or societies is emotionally rooted in purchasing and
selling with neighbours and friends. Small firms is essential and important in big cities as well as
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rural areas also is seen in the economic welfare of purchasing nationally. In some towns, a small
organisation is the only form that can live on while serving a decreased population. In a large
city, small organisation often provide a more diverse merchandise or specialize in giving new or
personalized client experiences. They also present new or effective employment chances and do
as the building blocks of the US largest corporations.
Romania has joined European Union in year 2007. Until 2009, economic growth of
country was fastest in Europe as Romania get a leader in sectors like information technology and
vehicle production. In year 2009, the nation has been powerfully deed by the crisis and their
economy has go through a heavy contraction. In 2011, expected growth of Gross domestic
product, low level of unemployment, increased exports and low government gross Dept are all
marks of the figure that Romania display positive developments. Thus small organisations has
more and direct impact on productivity and growth of Romania.
SMEs are regarded by investors and creditors as high-risk borrowers beside this low
capitalization and insufficient assets, high mortality rates and vulnerability to market
fluctuations. SME establishment is considered to be essential at present days. They consist in job
development in this recent day economy. In actual times it would have been detected that the
unemployment diminution all over the universe is due to the different of emerged small and
medium size organisation. Out of the SMEs contribution, there is a essential growth in gross
domestic product and accurate money flow crosswise the economy of Romania is noticed. SME
charges lower rates to their customers by giving a quality concern. When the economy of state is
in amended condition, the small and medium size organisation will flourish. If the economy of a
country is volatile, the small size organisation will face a hazard of going down, as they live on
within a small budget. Along with this, SMEs boost the Romania economy by spending
additional revenue and employment.
2.3 Relationship between new trend and development in Romania and growth of small business
The recent trends as well as developments that are taking place within Romanian
economy have lead to a better as well as effective growth of the small business. As per the Views
of Santarelli, 2017, the fairly young generation within the country along with economic and IT
Boom that is hitting the country has to a perfect blend for growth of small and medium scale
organisations. The youth has demanded a better place in the Government systems in terms of
better jobs as well as employment. This has ignited protest within the country also, this has
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