Dataset: BALKAN BAROMETER 2025 BUSINESS OPINION SURVEY

Explained variable: Growth aspirations of entrepreneurs

Factors under control: Global-regional, macroeconomic and company environments

Explanatory variables (33): business obstacles, EU influence, internal company performance, sector of the economy, demographics and individual characteristics of entrepreneurs

Method of estimation: Probit and marginal effects after probit, OLS check, cluster-robust to S00

Looking forward: EU integration, better institutions and youth inspire entrepreneurial growth in the Western Balkans Six

Economic growth does not begin with abstract macro indicators as investments. It starts from the humans, from aspirations of entrepreneurs to expand their businesses, to grow their companies, to grow the economy, to invest into new capacities. Understanding these business aspirations is critical for anticipating future development across the WB6. Our analysis, based on more than 20 control factors and over 40 variables under screening, highlights several key drivers of entrepreneurial expectations for growth over the next five years, which we shortly present below.

European integration works as a global driver of local business aspirations. Support for EU membership emerges as one of the strongest positive influences on entrepreneurial growth aspirations in all examined models. Entrepreneurs who see EU integration positively are nearly 10 percentage points more likely to have aspirations for growth of their companies. This is a powerful effect—both statistically and economically—showing how a European orientation boosts entrepreneurial confidence. Importantly, entrepreneurs are not systematically discouraged by fears of competition, whether it is coming from the WB or from the EU.

Weak institutions and perception of corruption undermine entrepreneurial optimism. Perceptions of ineffective institutions and high levels of corruption significantly reduce growth expectations. Out of more than a dozen potential obstacles considered, these two institutionally-related barriers stand out as the most damaging for entrepreneurial confidence. This reinforces the importance of institutional reforms and anti-corruption measures as preconditions for private-sector growth. Interestingly, financial obstacles are positively associated with growth optimism: ambitious companies recognise their financing needs. This suggests that policies should both expand access to finance and ensure that funds reach the most dynamic companies.

Younger entrepreneurs drive future growth expectations. Younger entrepreneurs are systematically more optimistic about growth of their businesses. Each additional year of age slightly lowers growth expectations, suggesting that generational renewal is an important factor in sustaining growth potential. Targeting young entrepreneurs with tailored support is therefore essential for future regional development, which is a powerful message that policymakers should recognise.

Investment in innovation and digitalisation fuels growth optimism. Company-level internal policies that we could control shape aspirations as well. Companies planning investments in research and development are more likely to expect growth, including those adopting digital solutions—such as online business activity. These findings show that support for R&D and digitalisation can directly strengthen entrepreneurial optimism and contribute to long-term growth.

Macroeconomic and sectoral contexts shape entrepreneurial expectations. Companies in most WB6 report higher optimism than those in Serbia, where ongoing social and political turbulence—such as mass protests at the time of the survey—might have negatively affected expectations. Sectoral variation is also visible: companies in industry and professional services are less likely to expect growth compared to those in other sectors.

Many traditional barriers do not systematically shape entrepreneurial expectations. Despite frequent claims in policy debates, political instability, crime, the size of the informal economy and informal competition, labour regulation, weak demand in the market, and labour shortages all show marginal effects close to zero. These findings suggest that such ‘classic’ obstacles, while visible in the business environment, are not the decisive factors behind growth aspirations in the WB6 once broader drivers are accounted for.

Demographic characteristics also fail to exert systematic influence. Gender does not matter for growth optimism nor does the level of education of the entrepreneur. In general, static individual traits do not provide a reliable basis for predicting entrepreneurial ambitions in this context.

Company characteristics themselves do not appear decisive either. Neither company size nor ownership status significantly alter expectations for growth. This absence of systematic patterns underlines that entrepreneurial aspirations are not anchored in background attributes of companies, but instead in forward-looking opportunities linked to European integration, institutional reforms, innovation and digitalisation.

A short view on policy implications for better growth prospects:

• Promote EU integration framework as a pro-business strategy: Given the strong positive link between EU membership support and growth expectations, policymakers can leverage EU accession processes, funding instruments, and standards to boost support to European integration which hand-in-hand will increase business confidence and future growth prospects. The entrepreneurs perceive EU integration as an important development potential for their businesses.
• Strengthen institutional quality and anti-corruption measures to increase business development: The negative effects of perceived institutional and corruption obstacles indicate that improving public institutional efficiency can directly enhance growth optimism among companies. As corruption can be treated as an institutional failure or even measure of institutional inefficiency, the both effects emphasise the importance of efficient institutional environment for growth aspirations and future developments.
• Incentivise research and development (R&D) in the private sector: Since companies planning R&D investment show markedly higher growth optimism, targeted R&D support through subsidies, tax breaks, and innovation grants could amplify this effect.
• Accelerate digital adoption to boost online business activities: Expanding broadband infrastructure, offering digital skills training, and providing e-commerce support can help more companies engage in online activities, which are strongly linked to higher growth expectations. Improvement of the IT environment in the business sector stimulates future growth.
• Support young entrepreneurs as carriers of growth in the future: Entrepreneurship programmes, mentorship schemes, and easier access to finance for younger business owners may sustain long-term job growth potentials, as they systematically boost growth aspirations.
• Address sector-specific challenges: Tailored industrial and professional services policies can reverse their relatively low growth expectations in comparison to other economic sectors.