Transition economy, small and medium-sized enterprises, SMEs, shadow economy, barrier, opportunity

n this article, I argue that it is difficult to arrange the development of small and medium-sized companies in Poland ignoring the role of the shadow economy. The shadow economy exists in every country. The differences are related to its scale and its category. It can be regarded as a phenomenon found in a transition economy especially. All efforts to abolish the shadow economy have proven to be ineffective. During the era of the planned economy in Poland, the shadow economy was operating at a high level, mainly due to the fact that such a planned economic model proved to be very unsuccessful. The communist era was known as the economy of shortage, and this made a considerable impact on the development of the shadow economy. The shadow economy affects many aspects of the economy, including small and medium-sized enterprises (SMEs). These companies play a fundamental role in market-oriented countries. The aim of this study is to examine the relationship among the factors fostering the activity of small and medium-sized enterprises. The study is concerned with companies operating in the legal economy in Poland. The study shows that the shadow economy is regarded as a chance for further development for many SMEs.