Abstract

The role of small and medium-sized enterprises (SMEs) is very important for transition economies because of their capacity to respond quickly to changes of the system, generate employment and income, as well as absorb new technological and organisational innovations. Many factors affect SME development, internal factors of enterprises (human capital, number of employees, exporting, network, etc.) and external ones or environmental barriers of SMEs (including corruption, tax system, competition, informal sector). The main aim of this paper is to identify the most important factors of the SMEs growth and development in Albania during the transition period and to compare their effects with other SEE countries. The paper makes use of the Business Environment and Enterprise Performance Survey (BEEPS) conducted by the World Bank/EBRD in 2005 to test a number of hypotheses regarding the determinants of SME growth.