By law and by custom

The main aim of this study is to investigate the development of entrepreneurshipp and small- and medium-sized enterprise (SME) in Lithuania. Since legal andd productive forms of entrepreneurship are relatively new phenomenonin Lithuania,, this study begins by exploring the unique characteristics of entrepreneurshipp in a transition setting. An institutional approach is used based primarilyy on the work of Douglass North which highlights the effect of formal andd informal rules on economic performance. Following institutional theory, quantitativee and qualitative data were collected in order to gain insight as too the perceptions and attitudes of both SME owners and related officials towardss private business development. Thiss study explores not only the generall barriers to SME development in Lithuania but also the experiences off specific groups of SME owners such as micro-entrepreneurs trading at thee open-air market in Gariunai. Also the gendered differences between male andd female SME owners are examined. In addition, an analysis of the attitudes off SME owners and SME related officials towards barriers to private business developmentt are compared. The results suggest that though the formal institutionall environment has been changed, informal norms and practices, basedd on outdated Soviet principles and values, continue to exert a negative influence.. As a consequence, SME development occurs in a less than ideal environment. Some policy recommendations are provided at the end of this studyy specifically targeting SME developmen