Impact of SMEs on Standards of Living of Czech Rural Households

Abstract

(ProQuest: ... denotes formulae omitted.)IntroductionIn the last decades, many European countries have to face many negative trends. It applies to many issues, especially rural areas, which are struggling with high unemployment level, high average age, low population density or less accessible services and markets (Terluin, 2003; OECD, 2006). These trends result in deteriorating level of infrastructure, education or business activity, considered as a major factor of rural development (e.g. Bourne, 2011; Mainardes, Alves and Raposo, 2011).Development of the rural areas is closely connected with small and medium-sized enterprises - SMEs (Holmes and Smitchz, 1990). These companies create new jobs (for example, SMEs employed 61% of Czech population and 67% population of European Union - MPO, 2013; EC, 2014) and innovations or increase income level, causing an increase in standards of living and prevent population migration into the cities (Walsh et al., 2012; Milbourne and Doheny, 2012; Mottiar and Ryan, 2007).It is obvious, that SMEs play a crucial role in social, cultural and economic development and without basic rural services (e.g. grocery, post office and restaurant) or sufficient job opportunities, development of standards of living would not be possible.Although, many authors are focused on the issue of standards of living and SMEs, impact of SMEs on households' standard of living is still unexplored area - especially in terms of the Czech Republic. Therefore, the aim of the authors is to focus on the issue and fill this gap. The main purpose of this article is to determine how households assess the role of SMEs in context of rural development. If they perceive SMEs' activity in the context of standards of living development and if there exist some SMEs' characteristics influence this perception.1. Literature reviewIt is difficult to think of something else with a greater preoccupation than the standard of living, which is part of people's everyday thoughts. Today's idea of the standard of living is full of contrasts, conflicts and even contradictions. Without general definition, the views on this issue vary and create a disorganized unit (Sen, 1989).Bennett (1937) already expressed the idea that the standard of living is the most complex and difficult-to-grasp concept. Cottam and Mangus (1942) agree with that and add that some definitions of the standard of living focus more on material consumption.Vad'urova and Muhlpachr (2005) come with a fundamentally different view, stating that today there is actually a tendency to purely subjective evaluation of quality of life, which indicates a decisive approach.The category which is intertwined with quality of life is happiness. Many thinkers argue that the existence of the human species is based on happiness and every person should try to get it because it is the most essential goal of human existence (Tefler In Shin and Inoguchi, 2009). Shin and Inoguchi (2009) adds that in professional public it is prevailing a consensus that happiness has a significant impact on quality of life.The concepts 'standard of living' and 'quality of life' overlap in many areas and their definitions are clearly reserved. Some authors try to include their penetration to the concept of welfare. The thing that the experts agree with is that all these concepts are closely linked to human needs.Vecernik (2012) explains the concept of multidimensional welfare which is a quantifier of standard of living. An important stimulus for the research was Sarkozy's report drawn up by the commission led by Stiglitz, Sen and Fitoussi. According to them, well-being and welfare are influenced by the following external factors-material living standards, consumption and wealth, health, education, personal activities including work, political environment, social contacts and relationships, natural environment, personal and economic uncertainty (Stiglitz et al. …