The Managing of The Business on Formal and Informal Employment at The Small and Medium Enterprises-Kosovo Context

Abstract

In this research paper, we empirically investigate the impact of the business environment on small and medium enterprises employment growth. We use two samples of both formal and informal small and medium enterprises in Kosovo. The sample of formal sector consists of 1000 businesses, while the sample of informal sector consists of 250 businesses. The logistic regression models were employed to check the statistical significance of the business environment barriers on small and medium enterprises employment in both sectors. According to our econometric analysis, some institutional obstacles such as corruption and business registration procedures affect small enterprises employment in the formal sector. Results indicate that business environment barriers have no statistical significant correlation with employment of informal small and medium enterprises, which relates to the isolated institutional context where these firms operate. The compared evidences of the two samples show that formal small enterprises outperform informal ones in terms of employment growth.