The contribution of University in developing Entrepreneurial potential of the SMEs sector in Albania.

Abstract

The SME sector has unquestionably progressed in the years since the collapse of collapse of Communism and central planning. The initial surge of new entrants in the period 1990-1993 – overwhelmingly in the trading, importing and petty services sectors – has now subsided. The early and easy opportunities for high profits have now effectively all been found, exploited and competed away. Many prospective entrepreneurs are now setting up in more sophisticated ventures involving high levels of capital investment, technology and skills. This is a positive development for the future of Central and Eastern Europe. At the same time, new strategic policies are increasingly coming into view.

But in spite of improved environment for SMEs, and the successes in SME development so far, there remains an enormous challenge for Eastern European governments to grasp. This is to use SME development not simply as a peripheral economic policy, but to base their development strategy far more around the potential offered up by SME development. There is much evidence that other countries, in similar circumstances to those which still prevail in Central and Eastern Europe, have been able to promote rapid economic development through a very strong focus upon SME development.

The Albanian private sector during the last years is demonstrating itself as the most dynamic part of the economy. Small and medium sized enterprises in construction, production, services, trade, and transport prevailing in private sector are continuously generating new opportunities for employment, around 215,000 new jobs. There are around 62,000 active enterprise that operate in Albanian economy. Almost all enterprises in Albania can be defined as SMEs (only 0.2% of companies have more than 100 employers). About 48% of companies of the country have an annual turnover of $ 50,000 and 38% make $ 125,000 annually.

The government policy toward development of the private sector is by definition SME policy. SMEs give a considerable contribution in GDP. About 79% of them have sufficiently qualified management, but they still feel they need managerial qualification, considering the technical and economic qualification as sufficient. 74 % of them are ready to pay for this. It is more difficult to find qualified persons mainly in construction and production, and less in transport and trade. 61% of SMEs use second hand machinery but in good condition. In the service sector 31% of the machinery is new, while in production only 16% of it is new. They have a permanent and systematic quality control that covers 93% of activities in construction, and 94.8 % in production sector. In average, 85% of all SMEs have a permanent quality control. But, Albanian SME’s product still cannot be competitive with the imported goods. Quality remains Akilee’s heel, that doesn’t give a real competing power to the SMEs even in comparison with big companies that operate in the country. About 44.6 % of them perform activity to protect environment. About 87 % make use of electric energy, while none of them knows the solar energy. 65% of the construction SMEs, 62 % of production, 86 % of transport buy in the national market, and at least 80 % of “product” of every sector is sold nationally. 78 % of them are national.

Considering all their possibilities, still 94% of SMEs feel to constraints to competitiveness. These come mainly from: unequal enforcement of laws and regulations; unfavorable business legislation and regulations; corruption; unfair competition; unequal infrastructure conditions; unequal security in the region; unequal access to market information; uneasy international movement.

All these figures and other characteristics of Albanian SMEs, but at the same time they represent problems that are not new to other ex-communist countries in transition. Exchange of goods and raw materials with these countries, at the same time represents possibilities for exchange of culture and experience. Basically, these latter happen mostly spontaneously. Under the Stability Pact and other foreign aid, new opportunities and new challenges stand in front of the small and medium sized businesses in Albania.

Without continuous impulse, the entrepreneurship remains only a business with unclear future. It is the new impulse from new and unknown the risk taking that gives the potential “breath of prosperity and growth” to the small business. This opportunity becomes a reality only in favorable economic, social, political, cultural, legal environment. Does this environment in Albania support growth or fosters stagnation? What is the profile of the Albanian entrepreneur and is that “the proper” one?

University is a missing link in developing entrepreneurial potential of the SMEs sector in Albania. In this paper should be emphasized the role of our universities in developing entrepreneurial potential as well as the absence of university - business link. The university is not immune on the inertia and conformism but it is reasonable to assume that university has the potential to give important inputs in developing entrepreneurial knowledge skills and behavior as needed prerequisites for SMEs as growing sector of Albanian economy. Our universities has opportunities to respond on the challenge of demand for new know ledges about SMEs (undergraduate and graduate programs, certificate programs for entrepreneurs), to develop new programs for SMEs jointly with Business Centers, as well research activities needed to support the development of SMEs.

Methodology and criteria: A specific questionnaire was drafted and tested during summer 2002. The majority of business interviewers belong to the manufacturing area. This, not only in conjunction with opportunities to create working places, but also with the fact that a lot of manufacturing industries contribute to the import substitution, use of the countries raw materials and have export capabilities. All the countries districts were interviewed. In the same time, I am based in different programs for the different universities in Albania to develop my ideas how can contribute the university to SMEs sector.