The role of government support in accompanying entrepreneurial enterprises to achieve inovation in Algeria

Journal of Social Sciences Vol. VIII, no. 3 (2025), pp. 34 - 48 Fascicle Social Science ISSN 2587-3490 Topic Economics Policy and Economic Policies eISSN 2587-3504 Journal of Social Sciences September 2025, Vol. 8 https://doi.org/10.52326/jss.utm.2025.8(3).03 CZU 005.411:334.722-053.6(65) THE ROLE OF GOVERNMENT SUPPORT IN ACCOMPANYING ENTREPRENEURIAL ENTERPRISES TO ACHIEVE INOVATION IN ALGERIA Abdelwaheb Sakhri *, ORCID: 0009-0001-3387-1887 Badji Mokhtar University, P.B 12, Annaba, 23000, Algeria * Corresponding author: Abdelwaheb Sakhri, [email protected] Received: 07. 21. 2025 Accepted: 09. 05. 2025 Abstract. The research paper aims to highlight the importance of the efforts made by state agencies to improve the ways of success of entrepreneurial enterprises in Algeria, and to focus on the innovation promoting within them in light of modern developments in the economic environment, Descriptive and analytical approaches were used, as well as the statistical approach, as required by the nature of the subject. The study reached in a set of results, the most important of which are: the Algerian government is working to provide all forms of support and accompaniment to small and medium-sized enterprises, particularly in the areas of financial support and technical advice. Algeria has also launched numerous national and international initiatives and programs to promote start-up innovation and support their entrepreneurial way. Despite all this, these businesses still suffer from weak regulatory and legislative frameworks and a lack of awareness of the importance of innovation and technological progress in the fields of finance and business. Keywords: accompanying ecosystem, creativity, project financing, young entrepreneurs. Rezumat. Lucrarea își propune să evidențieze importanța eforturilor depuse de agențiile statului pentru a îmbunătăți realizările activităților antreprenoriale din Algeria și să se concentreze pe promovarea inovării în cadrul acestora, în lumina evoluțiilor moderne din mediul economic. Au fost utilizate abordări descriptive și analitice, precum și abordarea statistică, așa cum o impune natura subiectului. Studiul a ajuns la un set de rezultate, dintre care cele mai importante sunt: Guvernul algerian depune eforturi pentru a oferi toate formele de sprijin și însoțire întreprinderilor mici și mijlocii, în special în domeniile sprijinului financiar și consultanței tehnice. Algeria a lansat, de asemenea, numeroase inițiative și programe naționale și internaționale pentru a promova inovația în startup-uri și a sprijini demersul lor antreprenorial. În ciuda tuturor acestor lucruri, aceste întreprinderi încă suferă de cadre de reglementare și legislative slabe și de o lipsă de conștientizare a importanței inovării și a progresului tehnologic în domeniile finanțelor și afacerilor. Cuvinte cheie: ecosistem însoțitor, creativitate, finanțare de proiecte, tineri antreprenori. A. Sakhri 35 Journal of Social Sciences September, 2025, Vol. 8 1. Introduction Today, entrepreneurship represents great opportunities in the markets, and it also represents the appropriate strategies that are the basis for enterprises seeking to achieve competitive advantages [1]. One of the main drivers of entrepreneurship is the creation of new enterprises, including small and medium enterprises and start-ups, due to their positive impact on their continuity [2]. Most governments focus on making entrepreneurship one of the basic strategies, with the aim of achieving economic growth and sustainable development, with a clear understanding of the factors that drive entrepreneurial enterprises to survive and succeed [3]. Entrepreneurial enterprises are considered a basic symbol in economic and social development, and most societies pay great attention to them, due to their ability to create job opportunities, ensure quality, efficiency and productivity, and they also constitute an important engine for promoting innovation, achieving business ideas and transforming economic structures [4]. In the same context, SMEs seek entrepreneurship to improve emerging competencies or to venture into new, more innovative product areas, and technology-based start-ups are often adept at identifying abundant and new entrepreneurial opportunities [5]. Over the past few years, the subject of business accompaniment has become an important topic in the field of entrepreneurship [6], various forms of accompaniment such as: incubators, government institutions and agencies, and technology parks, create a kind of dynamism, stimulate markets and encourage the creation of new companies, These structures offer a wide range of services: from accommodation to training, financing, coaching, individual and group counselling and guidance services, and play an important role in supporting small and medium-sized enterprises and start-ups and maximizing their chances of survival [7]. Algeria has implemented a series of reforms aimed at supporting entrepreneurship as a social and economic phenomenon; this is evident in the important tasks and roles played by financial and non-financial support agencies and programs, such as providing loans of various types and the ongoing and renewed efforts to provide training and technical support to entrepreneurs, and university graduates [8,9]. The study is based on the hypothesis that the Algerian government is currently helping to shape entrepreneurial intentions and capabilities. The study assumes that support and guidance mechanisms foster entrepreneurial innovation among young entrepreneurs, SME owners, and start-ups managers, facilitate access to financial support, and reduce barriers to project creation. Our contribution in this research paper is to reveal the role of accompaniment in supporting entrepreneurial enterprises, providing various financial and non-financial assistance to emerging companies, and also to cite various government agencies and programs in Algeria dedicated to supporting young entrepreneurs and project holders and supporting them towards innovation. 2. Entrepreneurial Enterprises in Algeria The term entrepreneurial enterprises refer to innovative projects and activities, that lead to the introduction of new services and products, and are also viewed as an exploration of pioneering opportunities and new activities [10], Entrepreneurial enterprises mean the presence of entrepreneurial intentions, which are interpreted as the desire to create or develop a new business venture [11]. 36 The Role of Government Support in Accompanying Entrepreneurial Enterprises to Achieve Innovation… Journal of Social Sciences September, 2025, Vol. 8 It can be said that the process of establishing an entrepreneurial enterprise targets everything that is new in terms of innovative goods and services, based on good economic knowledge, or in other words, it is entering into the new economic system, as these institutions aspire towards entrepreneurship related to change and how to expand their activities, It also involves a certain degree of management and direction, and the general pattern of organizing tasks within it has a formal and informal character, and it enjoys the advantages of flexibility in local markets. From another perspective, it can be said that the entrepreneurial project is the work in which Investors have to create their own structures, and make a set of decisions at their level, or find a ready-made structure in which they are prepared, to perform their activities and adapt to it [12]. Entrepreneurship is the ambition of all organizations regardless of their age or size (start-ups, small or medium enterprises), and its importance is reflected in supporting economic growth. It is referred to as a vision of the business opportunities that lie behind the establishment of a new institution, by integrating the knowledge and skills of entrepreneurs, and financial and technical capabilities in an environment characterized by risk and uncertainty [13]. Entrepreneurial firms are those ideas that need financial and non-financial resources, in addition to having legitimacy and market knowledge; they need resources to survive and achieve success and are often described as weak projects in their beginnings. However, entrepreneurs believe in the innovations they create, and the expected value behind their work. In many references, the initial opportunity that entrepreneurial firms exploit is highlighted, with the need to interact, adapt, and transform, while learning new information in the face of uncertainty [14]. Small and Medium Enterprises-Sized (SMEs), Start-upson the Path to Entrepreneurship There are several factors that make SMEs and start-ups similar in their reliance on entrepreneurship, While SMEs focus on niche and local markets, innovative start-ups aim to innovate and expand globally, this diversity of goals suggests that these companies do not feel threatened by each other and do not suffer from a lack of trust [15]. Small and medium enterprises play a crucial role in all national economies, and many literatures have addressed the fact that these enterprises are the most important part of entrepreneurship, SMEs have low costs, which gives innovative entrepreneurs more efficient organizational structures and streamlined decision-making processes, that enable them to quickly change their operations to take advantage of new opportunities or respond to new challenges [16]. The creation of small and medium enterprises affects any type of business activity, in urban or rural areas, Jobs, growth and investment in SMEs are achieved once the regulatory environment is cleared, strict regulations are not imposed, and the entrepreneurial climate is enhanced and jobs are created [17]. The need to develop entrepreneurship in many economies around the world cannot be denied, as the entrepreneur’s ability to innovate helps improve economic growth by developing small and medium enterprises and supporting them with the programs and capabilities they need [18]. Given the situation in Algeria, we see that small and medium enterprises are constantly increasing, meaning that these institutions are showing a great desire to move towards entrepreneurship, as their number in 2017 was approximately 1074503, but this number has increased to reach 2022by 1359803, and the overwhelming percentage belongs to the private sector at the expense of the public sector. This can be explained by the fact that project holders establish their enterprises with private funds or from family and friends, without resorting to public subsidies, and the below Table shows all of this. A. Sakhri 37 Journal of Social Sciences September, 2025, Vol. 8 Table 1 Evolution of the number of SMEs by Legal nature 2017-2022 2017 2018 2019 2020 2021 2022 Private SMEs (1) 1074236 1141602 1193096 1230844 1286140 1359580 Legal persons 609344 643493 671267 689383 720495 762769 natural persons 464892 498109 521829 541461 565645 596811 Liberal professions 222570 237457 247275 252737 262040 272726 Craft activities 242322 260652 274554 228724 303605 324085 Public SMEs (2) 267 261 243 229 225 223 Total 1074503 1141863 1193339 1231073 1286365 1359803 Source: elaborated by authors based on data [19]. As we mentioned earlier, small and medium enterprises are active in many economic activities and fields. According to the Table 2, we see that the services sector comes at the top of the list with 703499 projects, followed by craftsmanship 324085 enterprises, and then the construction and public works sector with 204452 establishments, with acceptable statistics for the industrial and agricultural sectors. Table 2 Distribution of SMEs by economic sectors Sector of activity 2017 2018 2019 2020 2021 2022 Agriculture 6687 7168 7481 7690 8010 8404 Hydrocarbons, Energy, Mines and related services 2890 2985 3066 3115 3243 3371 Public Works Building and Hydraulics 179326 185137 109170 193964 199331 204452 Manufacturing industries 95010 99938 103693 106121 109991 115992 Services 548268 585983 614375 631459 662185 703499 Craftsmanship 242322 260652 274554 288724 303605 324085 Total 1074503 1141863 1193339 1231073 1286365 1359803 Source: elaborated by authors based on data [19]. 38 The Role of Government Support in Accompanying Entrepreneurial Enterprises to Achieve Innovation… Journal of Social Sciences September, 2025, Vol. 8 Table 3 presents that most small and medium enterprises are located in the eastern regions and states, where 945153 enterprises were recorded in 2022. This is attributed to the capabilities available in the northern region, and the presence of awareness and entrepreneurial culture of the importance of establishing entrepreneurial projects, unlike the southern regions, which experience a kind of deficiency and injustice in the direction towards the entrepreneurial path with 113905 enterprises, due to weak development, which requires more efforts to enhance the establishment of small and medium enterprises. Table 3 Distribution of SMEs by Areas Areas 2017 2018 2019 2020 2021 2022 North 424659 794633 830438 856779 894882 945153 Highlands 133177 251007 262340 270736 283416 300745 South 51508 96174 100561 103558 108068 113905 Total 1074503 1141863 1193339 1231073 1286365 1359803 Source: elaborated by authors based on data [19]. The concept of startups and entrepreneurship is a group of people who have the ability to start a business and work on making it grow very quickly,or It is the search for a scalable business model, through which new products, services and innovative ideas are launched, with high income and high potential to change the competition, In many studies, start-ups are viewed from the perspective of using IT innovations and high potential, as they relate to two well-established terms of entrepreneurship: entrepreneurial orientation and entrepreneurial self-efficacy [20]. Its size does not matter because it contributes to development and growth that is higher than large businesses, but the lack of knowledge about start-ups, which is their most important feature, affects the entry of new companies into this field. Among its main factors are economic fragmentation, weak or non-existent entrepreneurship culture, and many studies have proven that intellectual capital and entrepreneurship climate have a positive impact on the establishment and survival of startups ]3 [ , many scientific research papers have provided clear evidence that entrepreneurial opportunities contribute to the creation of many new businesses and start-up companies with high growth, distinguished performance and competitiveness. They also play an important role for these companies in creating solutions to social, economic and environmental problems, ultimately leading to a positive impact on economic performance and its development [21]. According to the global ranking of the number of start-ups, Algeria ranked 17th in 2024 with 808 start-ups (expressed in Figure 1), taking the lead on the African continent, which is a good position compared to 2020, when it achieved only 41 companies. This means that Algeria is experiencing a qualitative leap in the field of promoting the establishment of start-ups and harnessing all possibilities and means to support their owners. In the same context, the first place went to the United States of America with 83373 companies. At the Arab level, in light of the trend adopted by the Gulf countries towards digitization and innovation, the United Arab Emirates ranked first among the countries of the region with 1404 start-ups. A. Sakhri 39 Journal of Social Sciences September, 2025, Vol. 8 Figure1. Number of startups in the world including Algeria in 2024 [22]. Figure 2 shows Yassir tops the list of the most successful startups in Algeria, This Company specializes in providing transportation services for the benefit of customers, Despite the intense competition with many companies in the same field, and it achieved approximately $217 million in 2022. The rest of the arrangement was as follows: Figure 2. Leading start-ups in Algeria as of 2022, by total funding (in million U.S. dollars) [23]. 3. Entrepreneurial Accompaniment and Institutional Support in Algeria Entrepreneurial Accompaniment is the long-term symbiotic relationship that takes place between the support provider and the person who owns the enterprise or project to be supported, the human factor is the focus of this process, which means that the general basis of support is a technical and psychological approach more than anything else. In general, entrepreneurial enterprises can benefit, through accompaniment, from many forms of institutional support, such as financial support, which is the most important element in the life of any project, strategic support, production and commercial planning, as well as logistical support and benefiting from advisory networks [24]. Entrepreneurial Accompaniment has become a necessity and an important public issue, which would allow enterprises to benefit from a higher survival rate than those that do not receive support, and 40 The Role of Government Support in Accompanying Entrepreneurial Enterprises to Achieve Innovation… Journal of Social Sciences September, 2025, Vol. 8 facilitate the creation of knowledge and marketing of their entrepreneurial activity, through policies to support the creation of businesses or the transfer of technology, as the industry of entrepreneurial Accompaniment and support has developed tremendously, through the multiplicity of actors, government agencies and even associations [25]. Regarding Algeria's situation in terms of entrepreneurial support, the government has made every effort to develop and grow entrepreneurial enterprises and support them in various ways, The Algerian state has established the Agency for the Development of Small and Medium Enterprises and the Promotion of Innovation by virtue of Executive Decree No. 18-170 of June 26, 2018, amended and supplemented by Executive Decree No. 25-331 of November 22, 2020, The agency is responsible for implementing the policy of developing small and medium enterprises in the field of creating, growing and sustaining these institutions in coordination with the relevant sectors. Its services include providing support and advisory centers as well as business incubators [26]: • Support and Consulting Centers. It provides programs and policies to support SMEs development and sustainability. Table 4 summarizes statistics of these centers in Algeria. Table 4 Number of enterprises benefiting from Accompaniment at the end of 2022 Sector of Activity Number of projects supported Number of innovative projects Industry 122 01 Tourism 16 0 Services 60 13 Public Works Building and Hydraulics 22 1 Crafts 29 0 Commerce 2 0 Agriculture 48 1 Renewable Energy 2 0 Environment 4 0 ICT 0 0 Agri-food 15 1 Start-up 2 1 Other services 9 0 Total 331 18 Source: elaborated by authors based on data [19]. • Business incubators is an integrated framework that provides environment containing equipment, services, facilities, support mechanisms, consultation and organization, dedicated to helping owners of ideas or newly established enterprises, and managing SMEs. The following table provides important details about local incubation data. A. Sakhri 41 Journal of Social Sciences September, 2025, Vol. 8 Table 5 Number of enterprises hosted in Incubators at the end of 2022 Sector of Activity Number of projects hosted Number of SMEs created Number of jobs created Industry 58 26 264 ICT 81 26 40 Renewable Energy 18 7 13 Services 58 27 134 Public Works Building and Hydraulics 16 6 32 Agriculture 8 7 73 Environment, recovery, sorting, recycling, waste treatment 13 1 11 Tourism 1 1 18 Agri-food 16 10 39 Aquaculture 1 1 4 Start-up 8 2 6 Total 278 114 634 Source: elaborated by authors based on data [19]. - Launch of Programme to Support Industrial Diversification and Improve the Business Climate in Algeria, supported by the European Union and the World Bank, and thanks to the renewed involvement of the Algerian authorities (particularly the Ministry of Industry and Mines), the government is trying to accelerate the pace of reforms in order to improve the business climate, the goal being to alleviate the problems and burdens of small and mediumsized enterprises, with the aim of driving the economy and increasing employment opportunities [27]. - The National Consultation Council for the Development of Small and Medium Enterprises was created in order to promote consultation and dialogue between public authorities and SMEs represented by professional associations and organizations, to form a real partnership between the two entities in terms of developing, implementing and monitoring policies set for the development of small and medium enterprises [28]. - The President Abdelmadjid Tebboune also launched the “Algeria Disrupt” program in October 2020, which provides a legal and regulatory framework to encourage start-ups and accelerate their growth, and includes the creation of the Algerian Start-up Fund and the startup accelerator A-Venture to support innovation and entrepreneurship in Algeria, the objective is to provide start-ups with the resources and support necessary to transform their projects into successes, and create a strong and diversified economy, based on knowledge and new technologies [29]. - The PAD-PME program aims to improve the general framework for the development of small and medium-sized enterprises in Algeria, by providing the necessary technical accompaniment to support and assistance agencies, so that they can provide quality services [26]. 42 The Role of Government Support in Accompanying Entrepreneurial Enterprises to Achieve Innovation… Journal of Social Sciences September, 2025, Vol. 8 - GEN Algeria launched the Women Entrepreneurship Program in 2017 to support women entrepreneurs to move from informal to formal business operations, and enhance their potential for success and sustainability, especially as they face challenges in business growth. The Women Entrepreneurship Program has achieved satisfactory results through its three editions, and has been able to target thousands of women and provide them with entrepreneurial skills and opportunities. Thus, the program has helped create a strong network of women entrepreneurs, generate new cooperation opportunities, create new jobs and contribute to the country's economic growth [30]. - Issuance of Ministerial Resolution No. 1275 dated 09/27/2022, which specifies the procedures for preparing a project thesis to obtain a university degree -a start-up project for higher education students. - Establishing university incubators pursuant to Correspondence No. 1428 dated 09/29/2022 from the Secretary-General of the Ministry of Higher Education and Scientific Research ].8[ - The creation of the Entrepreneurship House in higher education institutions (universities and graduate schools), which constitutes a fundamental element in developing entrepreneurial values among students, its mission is to develop the spirit of initiative among students, value the relationship between university institutions and organize events related to the field of entrepreneurship [31]. - The Loan Guarantee Fund was established by Executive Decree No. 02-373 issued on November 11, 2002, It is a public institution with legal personality and financial independence, working to provide guarantees for small and medium-sized enterprises, undertake the follow-up of collection operations for disputed receivables, follow up on the risks arising from the Loan Guarantee Fund, ensure advice and technical assistance to project owners, and ensure receiving information about banks and financial institutions on a regular basis [32]. - By Executive Decree No. 04-14 issued on January 22, 2004, the National Agency for Microcredit Management was created as a special entity subject to the authority of the Prime Minister, enjoying legal personality and financial independence, with branches throughout the national territory, working to support beneficiaries of the microcredit system by consulting and accompanying them in carrying out their activities, in addition to being distinguished by providing different loans without charging any rewards (see Table 6) [33]. Table 6 Credits granted by type of financingat the end of 2022 Type of financing Number Share, % Jobs created Financing Purchase of Raw Materials 868562 89.89 1261671 Triangular financing “Agency-Bank-promoter” 97740 10.11 151224 Total 966302 100% 1412895 Source: elaborated by authors based on data [34]. - The National Unemployment Insurance Fund was created by Executive Decree No. 94-187 issued on July 6, 1994, It is under the supervision of the Minister in charge of Social Security,