Financial resources for new business in Russia: Desirable vs available

Mikhail V. Gratchev and Maria A. Bobina

Venture Capital, 2001, vol. 3, issue 3, 263-274

Abstract: The article is focused on the trends in accessing the financial resources for new business formation in the Russian transitional economy. Two hundred and forty-nine managers and entrepreneurs from 18 industries (response rate 26%) surveyed differentiate available vs desirable financial resources. The authors compare entrepreneurs' assessments to those of company managers. Current low-to-medium attractiveness of main sources of financing reflects extremely high interest rates, underdeveloped banking mechanism for crediting new business formation, heavy taxation and differences in new business strategies (entrepreneurial vs privatization). The findings correlate with the current cultural and managerial characteristics of the Russian transitional economy (low uncertainty avoidance, low future orientation). At the same time, among the positive shifts in the Russian economy in the year 2000 is the commercial banks and government funds increased interest in financing not only large businesses, but new start-ups and SMEs as well. The authors discuss the desirable sources of financing and analyse the differences between the views of managers and of entrepreneurs. The survey results display growing interest to accessing medium and longterm sources of financing (bank and commercial credit, foreign credit and others), tax breaks expectations, and lower interest in personal financial contribution.

Date: 2001
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DOI: 10.1080/13691060110060655

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