The impact of economic crisis on firm relocation: Greek SME movement to Bulgaria and its effects on business performance

The 2007 global economic crisis and public policies implemented to resolve it have modified the conditions under which enterprises operate, thus having great effects on business tactics and decisions. This paper employs a comparative analysis of the pre- and post-crisis movements of Greek small- and medium-sized enterprises (SMEs) to Bulgaria in order to examine the impact of the crisis and the applied public policy on firm-internal relocation factors, such as size, sector and relocation incentive, and the effects of relocation on business performance. Greek SME movements to Bulgaria have recently increased considerably due to the adverse effects of the crisis on the Greek economy. Results demonstrate that, while in the pre-crisis period many Greek businesspeople viewed relocation to Bulgaria as an entrepreneurial opportunity for firm expansion, since 2007 relocation has been perceived as a necessity for the vast majority of Greek entrepreneurs in order to stay in business. However, evidence is provided for a clear division between businesspeople, managing strong, and medium-sized firms and seeking business growth and improved competitiveness, and entrepreneurs who own small, unproductive enterprises and who made efforts to maintain business without seeking quality improvement. Consequently, many of them failed to stay in business since they overlooked internal to firm changes.