OBSTACLES TO THE IMPLEMENTATION OF THE CROWN LAW ON THE SMALL AND MEDIUM ENTERPRISE BUSINESS IN BOSNIA AND HERZEGOVINA

Abstract

In the world economy, small and medium sized entreprises (SMEs) dominate in the number of overall enterprises (90-99% of all enterprises, depending on the definition used) and in economic contributions (GDP growth, productivity, job creation, innovation, level of competition, etc.) (Lundström & Stevenson, 2001). Because small businesses generate jobs, tax revenue, functional products, charitable donations, technological development, and social contributions to communities, their success and sustainability are important for social and economic development. In addition to the impact on public health, coronavirus disease 2019 (COVID-19) caused a major economic shock and the greatest consequences were felt by the small and medium-sized enterprises. Due to the crisis caused by the Covid-19 pandemic, countries and their companies are facing major problems of human and business capacities sustainability. Although governments have enacted private sector policies, there are constraints that have direct implications for economic growth potential. In this paper, we investigate the impact of COVID-19 on SMEs in Bosnia and Herzegovina, focusing on the impact of the Law for mitigation negative economic consequences, better known as the Crown-Law. We first examined how the companies performed this year compared to the previous year, and then we examined whether there were barriers to the implementation of the Crowv-Law and if so, whether they were internal or external. The results of this research point to the fact that the Crown-Law is not good enough. The measures are not in line with the strategic needs of SMEs, there is a time limit and the measures are short-term. The SME development strategy should be coordinated based on the mechanism of public-private dialogue. SMEs need business services to improve their competitiveness (information, consulting, training, accounting, legal services, advertising, marketing, technical and technological services, including testing standards and certification requirements abroad, product upgrades, etc.). The results of this research provide some information of the business results and expectations of SMEs in times of crisis, while offering insight into measures designed to aid recovery. The results highlight the role that the length of the crisis will play in determining its final impact, which policymakers should consider when considering the scale of interventions needed. On the other side, the Covid-19 pandemic has opened up new challenges, but also opportunities for SMEs, such as technological advances that create new products and transform almost every phase of the business from manufacturing to marketing, procurement and logistics. Currently, only a small part of the SME sector is able to recognize and seize these opportunities and meet the challenges.