Scholarly record

“SHOOT” THE SHADOW ECONOMY OR “GAME OVER” FOR THE SMES: THE CASE OF TOURISM INDUSTRY

I. Makedos

Abstract

This paper discusses the negative impact of shadow economy on Small and Medium Enterprises (SMEs) in Tourism Industry, where SMEs constitute 98 percent of the national economy. Our findings indicate that shadow economy widens the gap between SMEs and large enterprises, and presents the biggest obstacle for the development of SMEs. Moreover, our research confirms that the shadow economy has the potential of destroying national economies in smaller countries, like Greece. Our research was based on a questionnaire survey amongst 213 owners of tourism SMEs in Greece. We used an innovative statistical method for data analysis combining Chi-Square Test, ANOVA and Econometric Analysis, in order to obtain high quality results, according to validity and reliability criteria. Our groundbreaking research offers practical implications and suggestions on how to address the crucial issue of shadow economy as a hampering block to the development of SMEs as well as Foreign Direct Investment. We suggest that the survival of SMEs is impossible without the reduction of the shadow economy, and that a change in the institutional framework is necessary to achieve this goal.

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