The Impact of Financial Factor on Family Entrepreneurship Development in Latvia

Anotace: The business environment is a multi-factor framework for economic activity, divided into the internal and external environment. Internal environmental factors can be influenced, managed and controlled by entrepreneurs, while external environmental factors cannot. External environmental factors are determined and regulated by the highest authorities – the national government. The government shapes the external environment of business. The main external factors of the business environment most often identified by researchers are: political, economic, legal and technological. The financial factor is classified as an internal factor of the business environment. Experience shows that the financial factor in the case of Latvia cannot be seen in the context of the internal factors of the business environment as defined by the world's leading scientific sources. Given the international nature of financial decision-making and the inability of entrepreneurs to influence it, the financial factor of the Latvian business environment should be viewed in the context of the external factors of the business environment. Latvian family entrepreneurship should be seen in the context of small and medium-sized enterprises. The aim of the study is to analyse the impact of the financial factor, which includes financial policy and financial system planning at the national level, on the Latvian family business environment. The results of the study show that the national financial policies developed in Latvia since the 1990s have posed a threat to the Latvian business environment. The newly established tax structure, based on labour and consumption taxes, has not been able to ensure the generation of internal sources of finance at national level to foster the development of the business environment. Despite the fact that family entrepreneurship was initially envisaged in policy planning documents, it is not even mentioned in financial policy and planning documents, and hence has not been stimulated or supported by taxation.