The government support of small innovative business: policy and practice

The article addresses the issues of the government policy for small and mediumsized enterprises (SMEs). The main focus is on the practical aspects of implementation of the governmentfunded SubProgramme for SMEs development of the Government Programme of the Russian Federation for Economic Development and Innovative Economy. The key goals, tools and results of the SubProgramme are presented. The authors discuss the opportunities provided by the Program, as well as the barriers faced by enterprises striving to develop their innovation capacity with assistance of the Program. The case of a small manufacturing company with high innovation potential is described to highlight the contradictions of the regulatory framework for SMEs support. The procedure of confirmation of SME status has been simplified. However, some of legal entities, which fall within the definition of a Small Enterprise provided by the Federal Law On the development of small and medium-size businesses in the Russian Federation, lost the opportunity to confirm their status as a result of these changes. The need to disseminate the government support to a broader category of companies is articulated in the article. The case of a small manufacturing company with high innovation potential is described to highlight the contradictions of the regulatory framework for SMEs support. It is argued that poor business environment and unavailability of financial sources have the most significant negative impact on SMEs performance. Currently applied terms of lending turn to be unacceptable even for the SMEs participating in the government-funded program. It is demonstrated that the government is trying to solve the problem of low market demand for the products of SMEs in “manual mode”– by putting pressure on large companies. It is concluded that the main focus of the government should be to set up a favorable economic and legal environment for SMEs development.