Managerial fragility: The invisible obstacle of the Albanian economy

In every discussion on economic development in Albania, the word “business” is frequently mentioned—investments, taxes, startups, exports, subsidies. But what remains out of focus, although it deeply affects economic success or failure, is the quality of business management. This is not merely a technical aspect—it is a structural limitation, a deeply rooted obstacle that is holding back the Albanian economy from growing, coping with crises, and being competitive in the region and beyond.

A system built on unsupported micro-businesses
The Albanian economy is dominated by micro and small enterprises, over 95% of the total, which are usually run by the owners themselves, with minimal staff and a lack of divided functions (management, marketing, finance, human resources). The family business, which is the prevailing form, creates a strong dependency on an individual or family, making management emotional, intuitive, and often informal.

These businesses are built on a logic of survival, not development. Decision-making is based on intuition, personal experience, and emotions, while financial documentation is minimal and informal.
The lack of qualified human capital and a functioning capital market means that these businesses do not grow beyond a small size, becoming closed off to investments, innovation, and strategic partnerships.

Losing a growth generation: Why SMEs don’t develop
There is a fundamental difference between starting a business and having the capacity to turn it into a sustainable enterprise. What is missing is not the idea or the will to do business, but the capacity to structure growth through strategic planning, risk assessment, human resource organization, and financial transparency.
Albanian businesses often:

• do not have medium- or long-term plans;
• do not use performance indicators (KPIs);
• do not conduct audits or risk analysis;
• do not share management responsibilities.

This creates a fragile system, where crises (such as the pandemic or inflation) hit harder than in any other country in the region, precisely because of the lack of business continuity plans. Without these elements, no grant, subsidy, or open market can guarantee success.

Albania outside the map of modern business governance
While in Europe and the region the separation between ownership and executive leadership has become the norm, in Albania it is seen as a luxury. The creation of advisory boards, the use of international financial reporting standards (IFRS), or the qualification of human resources remain exceptions, not the rule.
As a result, Albania is not only less competitive but also less resilient to economic shocks.
Their absence in most of the economy hinders access to serious financing, the building of trust with investors, and growth beyond a family-based limit.

Who should act and how?

1. Businesses themselves through a change in management culture
Small and medium enterprises (SMEs) must shift from a model of “management by feeling and perceptions” to one based on data and analysis.
They should invest in trained managers, not just trusted ones.
Even on a small scale, simple governance structures can be created, such as committees or advisory councils.

2. The state must initiate policies that stimulate good governance
Fiscal policies and support programs (grants, subsidies, soft loans) should be linked to the level of internal organization of the firm.
The state can promote the use of management certifications (ISO, B-Corp, etc.) as a condition for receiving benefits.
Through cooperation with universities, centers can be established for the education and training of local managers, especially in priority sectors.

3. Business organizations and chambers of commerce to promote networking and mentoring
Business organizations can offer mentoring from larger businesses for SMEs that want to grow—an effort that has started but needs to be organized and coordinated with all other parts of the business management mosaic.
Together with initiatives like the “Business House” and similar ones, they can organize governance incubators, where businesses learn to build structures, plans, and reporting systems.

4. Financiers and international partners to require conditions that foster development
Banks and donors should push businesses to increase transparency and governance through conditions tied to support.

Change begins with how we think about business
It is not enough to only discuss low taxes, free markets, or fiscal relief. If the core of the firm remains informal, ungoverned, and unprotected from risks, any other development policy will be destined to fail. Albania cannot build a modern economy on the unstable foundation of instinctive management and family-based informality.
What is missing is not just capital or markets—what’s missing is management as a discipline and governance as a practice. If we aim for an economy that grows sustainably, attracts investment, exports, innovates, and survives crises, then we must start from within: with the professionalization and formalization of business management in Albania.
Without this foundation, every development effort, from EU funds to strategic investments, will crash into the greatest limitation of our time: the fragile and ungoverned structure of Albanian entrepreneurship.
Until we place internal structure and discipline at the center of business development, Albania will remain an underachieving economy—a race we start with energy, but rarely finish.