ABSTRACT
How did small- and medium-sized enterprises (SMEs) survive the COVID-19 pandemic, taking into consideration the challenging environment for their activity in Russia? This chapter treats external shocks such as the COVID-19 pandemic as a crash test useful for studying existing principal-agent relations and their impact on SMEs’ adaptation and survival. Shall one expect similar arguments regarding the pre-pandemic relations and models of cooperation between the government and SMEs to remain robust during the pandemic? This chapter studies the behaviour of the principal, i.e., federal government regulations, to evaluate their effect on SMEs, which are treated as agents. In addition, socio-economic and political factors are tested via regression analysis to explain SME durability and adjustment. The unemployment and average population age proved to explain SMEs per capita in addition to factors such as the cost of innovation and votes for the incumbent in presidential elections in 2018. Supportive governmental measures influenced unofficial employment in SMEs and the overall number of SMEs in existence.
