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Institutions, Networks and Entrepreneurship Development in Russia: An Exploration

  • Aidis, Ruta


    (University College London)

  • Estrin, Saul


    (London School of Economics)

In this paper we explore the ways in which institutions and networks influence entrepreneurial development in Russia. By utilizing new Global Entrepreneurship Monitor (GEM) data collected in 2001, we investigate the effects of the weak institutional environment in Russia in terms of three dimensions: on the rate of productive entrepreneurial activity measured in terms of start-ups and existing business owners; on the characteristics of business owners; and on business financing. In addition, the analysis explores the effectiveness of Russia’s informal networks for circumventing the weak institutional environment for business development. Our results indicate that Russia’s business owners share many of the same characteristics as business owners in advanced western countries, though education is not associated with entrepreneurial activity. However, the main differences are in the sources of financing and the fact that relatively few individuals engage in productive entrepreneurial activity. Our results support the notion of the limited effectiveness of Russia’s networks for supporting entrepreneurial activity in its weak institutional environment.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2161.

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Length: 26 pages
Date of creation: Jun 2006
Date of revision:
Publication status: published in: Journal of Business Venturing, 2008, 23 (6), 656-672
Handle: RePEc:iza:izadps:dp2161
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  1. Vadim Radaev, 2002. "Entrepreneurial Strategies and the Structure of Transaction Costs in Russian Business," Problems of Economic Transition, M.E. Sharpe, Inc., vol. 44(12), pages 57-84, April.
  2. Simon Johnson & John McMillan & Christopher Woodruff, 2000. "Entrepreneurs and the Ordering of Institutional Reform: Poland, Slovakia, Romania, Russia and Ukraine Compared," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(1), pages 1-36, March.
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  5. Simon Johnson & John McMillan & Christopher Woodruff, 1999. "Contract Enforcement in Transition," CESifo Working Paper Series 211, CESifo Group Munich.
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  7. Pissarides, Francesca & Singer, Miroslav & Svejnar, Jan, 2003. "Objectives and constraints of entrepreneurs: evidence from small and medium size enterprises in Russia and Bulgaria," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 503-531, September.
  8. Klapper, Leora & Sarria-Allende, Virginia & Sulla, Victor, 2002. "Small and medium size enterprise financing in Eastern Europe," Policy Research Working Paper Series 2933, The World Bank.
  9. Radaev, Vadim, 2001. "The Development of Small Entrepreneurship in Russia," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  10. André van Stel & Roy Thurik & Ingrid Verheul, 2004. "Explaining female and male entrepreneurship across 29 countries," Scales Research Reports N200403, EIM Business and Policy Research.
  11. Roy Thurik & Lorraine Uhlaner, 2004. "Post-Materialism: A Cultural Factor influencing Total Entrepreneurial Activity across Nations," Scales Research Reports N200321, EIM Business and Policy Research.
  12. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
  13. Simon Johnson & Daniel Kaufmann & Andrei Shleifer, 1997. "Politics and Entrepreneurship in Transition Economies," William Davidson Institute Working Papers Series 57, William Davidson Institute at the University of Michigan.
  14. Smallbone, David & Welter, Friederike, 2001. " The Distinctiveness of Entrepreneurship in Transition Economies," Small Business Economics, Springer, vol. 16(4), pages 249-62, June.
  15. Timothy Frye & Andrei Shleifer, 1996. "The Invisible Hand and the Grabbing Hand," NBER Working Papers 5856, National Bureau of Economic Research, Inc.
  16. John McMillan & Christopher Woodruff, 2002. "The Central Role of Entrepreneurs in Transition Economies," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 153-170, Summer.
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  21. repec:oup:qjecon:v:117:y:2002:i:1:p:1-37 is not listed on IDEAS
  22. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
  23. Ardichvili, Alexander & Cardozo, Richard & Ray, Sourav, 2003. "A theory of entrepreneurial opportunity identification and development," Journal of Business Venturing, Elsevier, vol. 18(1), pages 105-123, January.
  24. Davidsson, Per & Honig, Benson, 2003. "The role of social and human capital among nascent entrepreneurs," Journal of Business Venturing, Elsevier, vol. 18(3), pages 301-331, May.
  25. David G. Blanchflower, 2004. "Self-Employment: More may not be better," NBER Working Papers 10286, National Bureau of Economic Research, Inc.
  26. Frederic Delmar & Per Davidsson, 2000. "Where do they come from? Prevalence and characteristics of nascent entrepreneurs," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 12(1), pages 1-23, January.
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