Determinations of Firm Growth: A Study of Rural SMEs in Bosnia-Herzegovina

Rural development is identified as one of the key areas of intervention in Bosnia and Herzegovina (BiH). The main drivers of rural development can be small sized companies run by rural entrepreneurs, and intervention should be focused on enabling environment for their growth. The paper presents analysis of the factors determining growth in employment by small rural businesses in BiH, using quantitative data from original survey conducted in 2012. The direction and magnitude of different factors were further analyzed through qualitative data analysis. Findings from this research identify the key obstacles affecting growth of rural businesses, primarily related to infrastructure, access to finance, access to market, and availability of “soft” skills. The paper proposed possible ways of intervention in reducing these obstacles in order to promote rural development in BiH.