A new study will reveal how socialization strengthens the financial resilience of young small businesses
In the European Union (EU) and Lithuania, small businesses constitute over 90 percent of all enterprises; however, more than half of such enterprises face difficulties or cease operations within their first year. The success of young small businesses heavily depends on the entrepreneur, who serves as both the founder and the primary generator of ideas, in making various strategic and daily business decisions. These decisions are significantly influenced by the entrepreneur’s knowledge, skills, values, and social networks, which form from early childhood.
Nevertheless, scientific and practical understanding of the entrepreneur socialization process, its key agents, and determinants remains limited. Additionally, sociocultural and other environmental characteristics within different societies affect how acquired knowledge, competencies, attitudes, and connections during socialization impact small entrepreneurs’ ability to successfully establish a business and position themselves in the market, as what works for one country or market may not apply to another.
Development of a Financial Resilience Model for Young Small Businesses
This September, researchers Vytautas Kavolis Transdisciplinary Research Institute of Vytautas Magnus University, led by Prof. Dr. Renata Legenzova, commenced three-year scientific research on the impact of entrepreneur socialization on the financial resilience of young small businesses (SOPFA). Based on this evaluation, a model assessing the impact of entrepreneur socialization on the financial resilience of young small businesses will be developed. This project has received funding from the Research Council of Lithuania (LMTLT), agreement No [S-MIP-24-71].
The research will not only define concepts of small entrepreneur, socialization, and financial resilience, or establish methods and criteria for assessing financial resilience, but will also have significant practical implications for small businesses in Lithuania and the entrepreneurs establishing them. The project will evaluate the financial resilience of young Lithuanian small businesses, identify peculiarities in Lithuanian entrepreneur socialization, and their impact on the financial resilience of young Lithuanian small businesses.
Recommendations for State Institutions
The Institute’s researchers will formulate both general recommendations for enhancing the financial resilience of young small businesses through entrepreneur socialization, as well as specific recommendations for Lithuanian small businesses and entrepreneurs. These will be valuable in the broader EU context and will highlight the socio-cultural nuances of the Lithuanian small business environment. The project’s findings and recommendations will also be directed to state institutions, financial resource providers, academics, and other stakeholders.
The research will not only employ the classical questionnaire survey method to assess the current state of financial resilience in Lithuanian small businesses and the peculiarities of entrepreneur socialization but will also utilize a unique methodology to provide theoretical depth and practical benefits to small Lithuanian businesses and entrepreneurs. The scientific methods applied include the measurement of a resilience index and its sub-indices, as well as a Structural Equation Modeling (SEM) approach to evaluate the impact of entrepreneur socialization on the financial resilience of young small businesses.
Project Team – Experts in Financial and Economic Socialization Research
The research project team consists of members from the Department of Finance at the Faculty of Economics and Management, Vytautas Magnus University (VMU). They share similar research interests, such as financial and economic socialization, as well as the behaviour of market participants. The project leader, Dr. Renata Legenzova, a professor at the Department of Finance, focuses on research and experiments related to socio-economic, political, and financial stability, as well as sustainable growth. Assoc. Prof. Dr. Asta Gaigalienė conducts research on financial literacy, taxpayer behaviour, and network analysis. Dr. Gintarė Leckė investigates the rationality of financial market participants’ behaviour and the process of financial socialization. The research group also includes Mantas Rimidis, a PhD student in economics, who has conducted in-depth studies on income inequality.
