Subject Informal dealings of small and medium-sized businesses threaten the economic security of the State. Thus, it is necessary to analyze the extent to which shadow transactions spread among SME, and outline recommendations to reshaping the institutional environment and subsequently decriminalize SME's activities. Objectives The research comprehensively studies key institutional characteristics of SME in the Russian Federation, identifies the extent to which shadow transactions are common to this community. The article provides basic recommendations for rearranging the institutional environment so as to curb the informal activities of SME. Methods The research applies methods of logic and statistical analysis. Results We examined key characteristics of SME development in Russia, its current state and operational issues of shadow dealings. Most small and medium-sized business are found to operate in the informal sector of economy, thereby signifying the overall inefficiency of the economy. Conclusions and Relevance Undermining the national economic security, high criminalization of SME is one of the main factors preventing the sector from contributing to the comprehensive economic result. Furthermore, the Russian economy will not be able to abandon the export-based model and adopt the innovation-driven one without addressing a set of issues to encourage the legal development of SME.
Keywords: SME, shadow economy, informal sector, business criminalization, economic security
Vorotnikov D.S., Rozhkova N.K. [Small and medium business in Russia: Problems and ways of development]. Vestnik Universiteta, 2016, no. 10, pp. 26–33. URL: Link (In Russ.)
Artem'ev N.V. Organizatsionno-ekonomicheskie problemy dekriminalizatsii malogo biznesa v Rossii: monografiya [Organizational and economic issues of small business decriminalization in Russia: a monograph]. Moscow, YUNITI-DANA, Zakon i pravo Publ., 2015, 247 p.
Kalganova O.O., Vlasova N.Yu. [The role of small and medium enterprises in the regional economy]. Gumanitarnyenauchnyeissledovaniya, 2017, no. 1, pp. 27–32. (In Russ.) URL: Link
Ivanchenko L.A., Leonidova A.I. [Methodological approaches for the effectiveness assessment of the regional programs for the small and medium-sized enterprise support]. Vestnik KrasGAU = Bulletin of KrasGAU, 2014, no. 8, pp. 17–21. URL: Link (In Russ.)
Burov V.Yu., Servatinskii V.V., Ortykov A.U. [Features of governmental influence on economic activities of small business entities in modern Russia]. Baikal Research Journal, 2017, no. 1, pp. 45–57. (In Russ.) URL: Link
Latov I.V., Latova N.V. The Russian Economic Mentality in the World Context. Sociological Research, 2003, vol. 42, iss. 1, pp. 45–52. URL: Link
Latov Yu.V. [Russian shadow economy in the context of national economic security]. Ekonomicheskii vestnik Rostovskogo gosudarstvennogo universiteta = Economic Bulletin of Rostov-on-Don State University, 2007, vol. 5, no. 1, pp. 16–26. (In Russ.)
Tirole J. The Theory of Industrial Organization. Cambridge, MA, MIT Press, 1988, 267 p.
Coase R. Firma, rynok, pravo [The Firm, the Market, and the Law]. Moscow, Delo Publ., 1993, 385 p.
Coase R. The Nature of the Firm. Economica, 1937, vol. 4, iss. 16, pp. 386–405. URL: Link
Yashina N.I., Ginzburg M.Yu., Sukhova E.A., Kudryavtseva M.O. [Social and economic welfare as a guarantee of SME progress: Evidence from the Volga Federal District]. Regional'naya ekonomika: teoriya i praktika = Regional Economics: Theory and Practice, 2016, vol. 14, iss. 7, pp. 89–104. URL: Link (In Russ.)
Orekhova T.R. Ekonomicheskaya bezopasnost' sovremennoi Rossii v usloviyakh krizisa: monografiya [The economic security of modern Russia during the crisis: a monograph]. Moscow, INFRA-M Publ., 2014, 105 p.
Nureev R.M. Politicheskaya ekonomiya rossiiskoi vertikali vlasti. V kn.: Ekonomicheskaya svoboda i gosudarstvo: druz'ya ili vragi? [Political economy of the Russian vertical line of power. In: Economic freedom and the State: friends or enemies?]. St. Petersburg, Leontief Center Publ., 2012, pp. 81–87.
De Soto H. The Other Path. The Invisible Revolution in the Third World. Harpercollins, 1989, 271 p.
Von Hayek F.A. [Competition as a discovery procedure]. Mirovaya ekonomika i mezhdunarodnye otnosheniya = World Economy and International Relations, 1989, no. 12, pp. 15–36. (In Russ.)
De Soto H. The Mystery of Capital: Why Capitalism Triumphs Is the West and Fails Everywhere Else. Basic Books, 2003, 288 p.