Impact of formal and informal institutions on innovative activity of Polish small and medium-sized enterprises

Abstract

The sector of small and medium-sized enterprises in Poland (unlike in the US) is much less active in terms of undertaking innovative activities, than large companies. Small and medium-sized enterprises engaging in innovative activity, face many problems connected with their small-scale activities, such as lack of internal or external funding for innovation. In addition, innovation spending involves mainly fixed assets, such as buildings and structures, means of transport and machinery, not R & D. Due to low survival rate on the market during the first five years, small and medium-sized enterprises are not able to carry out innovative activities without the support of formal and informal institutions. The aim of this article is to identify key areas, where the cooperation between formal and informal institutions result in synergies innovativeness of Polish national economy. Article is based on statistical studies of Central Statistical Office of Poland and the Polish Agency for Enterprise Development for years 2004–2015. Cooperation between formal and informal institutions has an influence both on the creation of an environment supportive for the development of entrepreneurship and innovation. Formal institutions can influence the higher level of R & D expenditures by increasing the availability of R & D expenditure support through grants or tax credits, as well as by ensuring the stability of the legal environment and the protection of intellectual property rights. Informal institutions, on the other hand, stimulate the bottom-up energy of entrepreneurship, creativity and innovation through a cultural system of standards conducive to risk-taking, individualism, cooperation and self-fulfillment.