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The Long Persistence of Regional Entrepreneurship Culture: Germany 1925-2007

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  • Michael Fritsch

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  • Michael Wyrwich

    ()

Abstract

Studies for established market economies such as West Germany (Fritsch and Mueller, 2007), and Sweden (Andersson and Koster, 2011) have shown that regional start-up rates tend to show a relatively high level of persistence and path dependency over periods of 10-15 years. One main reason for this high level of persistence observed could be that the region-specific determinants of entrepreneurship also remain relatively constant over time. Another explanation could be the existence of a regional entrepreneurship culture. Such an entrepreneurial culture could maybe even outwear considerable ‚jumps‘ in the conditions of the economic environment such as wars and drastic changes of the political regime. We analyze the persistence of regional entrepreneurship in three different scenarios with different degrees of changes of the economic conditions. The basic idea is that if we should find that high levels of regional entrepreneurship do persist disruptive changes of the economic conditions, this may be regarded an indication for the presence of a regional entrepreneurship culture. - The first scenario that we present is regional entrepreneurship in West Germany in the 1984-2005 period, a time that was characterized by relatively stable conditions without any major jumps. - For the second scenario we extend the period of analysis to 80 years and compare regional entrepreneurship in West Germany between the years 1925 and 2005. This period was has been characterized by some considerable disruptions such as the World Economic Crisis of the late 1920s, the Nazi regime and the Second World War that ended with destruction and occupation of the country, and, finally, German re-unification. - The third scenario, East Germany in the time period 1925-2005, was characterized by even more shocks that have probably been even more severe than what has been experienced in the West. We find long-term persistence in all three scenarios what is particularly remarkable for the third setting, the East German regions. Those East German regions with a relatively high level of entrepreneurship in the year 1925 also show high levels of entrepreneurship 80 years later, in the year 2005. Our findings can be regarded a strong indication for the existence of a regional entrepreneurial culture and its beneficial effects for economic development. Keywords: Entrepreneurship, self-employment, new business formation, persistence, culture JEL classification: L26, R11, O11 References Andersson, Martin and Sjerdan Koster (2011): Sources of persistence in regional start-up rates—evidence from Sweden, Journal of Economic Geography, 11, 179-201. Fritsch, Michael and Pamela Mueller (2007): The Persistence of Regional New Business Formation-Activity over Time – Assessing the Potential of Policy Promotion Programs, Journal of Evolutionary Economics, 17, 299-315.

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa12p63.

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Date of creation: Oct 2012
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Handle: RePEc:wiw:wiwrsa:ersa12p63

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  1. Nico Voigtländer & Hans-Joachim Voth, 2011. "Persecution Perpetuated: The Medieval Origins of Anti-Semitic Violence in Nazi Germany," Working Papers, Barcelona Graduate School of Economics 551, Barcelona Graduate School of Economics.
  2. Zoltan Acs & Pamela Mueller, 2008. "Employment effects of business dynamics: Mice, Gazelles and Elephants," Small Business Economics, Springer, Springer, vol. 30(1), pages 85-100, January.
  3. Michael Wyrwich, 2012. "Regional Entrepreneurial Heritage in a Socialist and a Postsocialist Economy," Economic Geography, Clark University, Clark University, vol. 88(4), pages 423-445, October.
  4. Davidsson, Per & Wiklund, Johan, 1997. "Values, beliefs and regional variations in new firm formation rates," Journal of Economic Psychology, Elsevier, Elsevier, vol. 18(2-3), pages 179-199, April.
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  6. Michael Fritsch, 2004. "Entrepreneurship, entry and performance of new business compared in two growth regimes: East and West Germany," Journal of Evolutionary Economics, Springer, Springer, vol. 14(5), pages 525-542, December.
  7. Michael Anyadike-Danes & Mark Hart & Helena Lenihan, 2011. "New business formation in a rapidly growing economy: the Irish experience," Small Business Economics, Springer, Springer, vol. 36(4), pages 503-516, May.
  8. Fritsch, Michael & Mueller, Pamela, 2005. "The persistence of regional new business formation-activity over time: assessing the potential of policy promotion programs," Freiberg Working Papers, TU Bergakademie Freiberg, Faculty of Economics and Business Administration 2005,01, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
  9. Esteban Lafuente & Yancy Vaillant & Josep Rialp, 2007. "Regional Differences in the Influence of Role Models: Comparing the Entrepreneurial Process of Rural Catalonia," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(6), pages 779-796.
  10. David B. Audretsch & Max Keilbach, 2004. "Entrepreneurship Capital and Economic Performance," Papers on Entrepreneurship, Growth and Public Policy, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group 2004-01, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  11. Sjoerd Beugelsdijk, 2004. "Entrepreneurial Culture, Regional Innovativeness and Economic Growth," ERSA conference papers, European Regional Science Association ersa04p210, European Regional Science Association.
  12. Fritsch, Michael & Falck, Oliver, 2007. "New business formation by industry over space and time: A multidimensional analysis," Munich Reprints in Economics, University of Munich, Department of Economics 20306, University of Munich, Department of Economics.
  13. Michael C. Burda & Jennifer Hunt, 2001. "From Reunification to Economic Integration: Productivity and the Labor Market in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 1-92.
  14. Martin Andersson & Sierdjan Koster, 2011. "Sources of persistence in regional start-up rates--evidence from Sweden," Journal of Economic Geography, Oxford University Press, Oxford University Press, vol. 11(1), pages 179-201, January.
  15. Minniti, Maria, 2005. "Entrepreneurship and network externalities," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 57(1), pages 1-27, May.
  16. Jennifer Hunt, 2006. "Staunching Emigration from East Germany: Age and the Determinants of Migration," Journal of the European Economic Association, MIT Press, MIT Press, vol. 4(5), pages 1014-1037, 09.
  17. Michael Wyrwich, 2011. "Regional Entrepreneurial Heritage in a Socialist and Post-socialist Economy," ERSA conference papers, European Regional Science Association ersa10p495, European Regional Science Association.
  18. Hall, John & Ludwig, Udo, 1995. "German Unification and the 'Market Adoption' Hypothesis," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 19(4), pages 491-507, August.
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  20. Fuchs-Schundeln, Nicola & Alesina, Alberto, 2007. "Good-Bye Lenin (Or Not?): The Effect of Communism on People's Preferences," Scholarly Articles 4553032, Harvard University Department of Economics.
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Cited by:
  1. Kuechle, Graciela, 2014. "Regional concentration of entrepreneurial activities," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 102(C), pages 59-73.

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