ABSTRACT
The evolution of new institutions in the small business sector in transitional Russia is characterised by various specifities. The following chapter shows that the adjustment of small businesses to the market environment has led, for example, to the creation of business networks and vertically integrated structures. By contrast, business associations as fully-fledged institutions that represent and protect the interests of small business have not yet been established. Far more common are business ties and transactions which are predominantly maintained through informal contracts and personal relations between entrepreneurs. Although such behaviour may be functional at times, this practice is also responsible for the development of the notorious Russian shadow economy. As such, the small business sector has also had a negative impact on the economy.
