Formal, informal, environmental and skill barriers for entrepreneurs: microeconometric evidence from 197 Turkish SMEs

Dilek Demirbas

    Research output: Contribution to journalArticlepeer-review


    SMEs play very important roles in national economies, because of their numbers and because of the large share of the workforce involved. However, despite the recognition of important roles of SMEs in the economy, some crucial barriers to innovation prevent SMEs from developing and contributing sufficiently. This paper identifies some important innovation barriers perceived and experienced by entrepreneurs in Turkish SMEs. A logit regression model was used to explain the innovation barriers of SME entrepreneurs based on a survey questionnaire of 197 respondents. An analysis of 197 Turkish SME entrepreneurs reveals the fact that “lack of government‟s R&D and technology policy” from formal barriers; “Informal economy‟s negative impact on investment” from informal barriers; “high cost of innovation” and “lack of appropriate source of finance” from environmental barriers and “lack of qualified personnel” from skill barriers, are the most important variables, and they have a significant effect on the entrepreneurs‟ innovation decisions in Turkey. There are around two million SMEs in Turkey and it is not possible to survey all of them for this research. Because of the constraints on resources only a small sample of randomly selected SMEs from a large population was analysed. Therefore our findings represent this small sample only rather than all manufacturing SMEs in Turkey. Understanding basic innovation barriers for entrepreneurs in SMEs will be a critical condition for Turkey‟s future growth and prosperity. This study provides an important theoretical insight into the innovation barriers encountered by SME entrepreneurs, and presents empirical evidence to the entrepreneurship and innovation literature with a case study from Turkish SMEs. As the findings of this research highlight some obstacles for Turkish SME entrepreneurs, it also contributes to the developing country literature.
    Original languageEnglish
    Pages (from-to)13-35
    JournalJournal of Business and Policy Research
    Issue number2
    Publication statusPublished - Sept 2011


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