IDEAS home Printed from https://ideas.repec.org/p/jrp/jrpwrp/2020-010.html
   My bibliography  Save this paper

Regional trajectories of entrepreneurship: the effect of socialism and transition

Author

Listed:
  • Michael Fritsch

    (Friedrich Schiller University Jena and Halle Institute for Economic Research (IWH), Germany)

  • Maria Kristalova

    (Friedrich Schiller University Jena, Germany)

  • Michael Wyrwich

    (University of Groningen, The Netherlands, and Friedrich Schiller University Jena, Germany)

Abstract

We investigate how major historical shocks affect regional trajectories of economic activity. To this end, we conduct a comparative analysis of the development of entrepreneurship in East and West Germany after World War II. The introduction of an anti-entrepreneurial socialist economy in East Germany in 1949, and the subsequent transformation to a market economy four decades later were major historical shocks to the economy in general, and to entrepreneurship specifically. Our comparative analysis of East and West Germany assesses how these shocks affected the level of entrepreneurship at the regional level. Surprisingly, our results show that socialism does not have a long-run negative effect on the prevalence of self-employment in East Germany, despite the severe anti- entrepreneurial policies prevalent in Soviet-style socialism. Quite to the contrary, there is actually a positive treatment effect of German separation and reunification. Further analyses suggest that current structural differences in regional levels of self-employment in Germany are not pre- dominantly due to the socialist legacy of the East, but mainly a result of the shock transformation that occurred with reunification.

Suggested Citation

  • Michael Fritsch & Maria Kristalova & Michael Wyrwich, 2020. "Regional trajectories of entrepreneurship: the effect of socialism and transition," Jena Economic Research Papers 2020-010, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2020-010
    as

    Download full text from publisher

    File URL: http://www2.wiwi.uni-jena.de/Papers/jerp2020/wp_2020_010.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, vol. 7(5), pages 575-601, September.
    2. Stephen J. Redding & Daniel M. Sturm, 2008. "The Costs of Remoteness: Evidence from German Division and Reunification," American Economic Review, American Economic Association, vol. 98(5), pages 1766-1797, December.
    3. Pontus Braunerhjelm & Ding Ding & Per Thulin, 2018. "The knowledge spillover theory of intrapreneurship," Small Business Economics, Springer, vol. 51(1), pages 1-30, June.
    4. Oliver Falck & Christina Guenther & Stephan Heblich & William R. Kerr, 2013. "From Russia with love: the impact of relocated firms on incumbent survival," Journal of Economic Geography, Oxford University Press, vol. 13(3), pages 419-449, May.
    5. Nir Kshetri, 2009. "Entrepreneurship in post-socialist economies: A typology and institutional contexts for market entrepreneurship," Journal of International Entrepreneurship, Springer, vol. 7(3), pages 236-259, September.
    6. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-368, June.
    7. Bauer, Thomas K. & Schmucker, Alexandra & Vorell, Mathias, 2008. "KMU und Arbeitsplatzdynamik : eine Analyse auf Basis der Beschäftigten-Historik-Datei," IAB-Discussion Paper 200802, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Sternberg, Rolf, 2009. "Regional Dimensions of Entrepreneurship," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 5(4), pages 211-340, May.
    9. Smallbone, David & Welter, Friederike, 2001. "The Distinctiveness of Entrepreneurship in Transition Economies," Small Business Economics, Springer, vol. 16(4), pages 249-262, June.
    10. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sorgner, Alina & Wyrwich, Michael, 2021. "Calling Baumol: What Telephones Can Tell Us about the Allocation of Entrepreneurial Talent in the Face of Radical Institutional Changes," IZA Discussion Papers 14458, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wyrwich, Michael, 2013. "Can socioeconomic heritage produce a lost generation with regard to entrepreneurship?," Journal of Business Venturing, Elsevier, vol. 28(5), pages 667-682.
    2. Michael Fritsch & Elisabeth Bublitz & Alina Sorgner & Michael Wyrwich, 2014. "How much of a socialist legacy? The re-emergence of entrepreneurship in the East German transformation to a market economy," Small Business Economics, Springer, vol. 43(2), pages 427-446, August.
    3. Michael Wyrwich, 2014. "Ready, set, go! Why are some regions entrepreneurial jump starters?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(2), pages 487-513, September.
    4. Bauernschuster, Stefan & Falck, Oliver & Gold, Robert & Heblich, Stephan, 2012. "The shadows of the socialist past: Lack of self-reliance hinders entrepreneurship," European Journal of Political Economy, Elsevier, vol. 28(4), pages 485-497.
    5. Petrik Runst, 2013. "Post-Socialist Culture and Entrepreneurship," American Journal of Economics and Sociology, Wiley Blackwell, vol. 72(3), pages 593-626, July.
    6. Sorgner, Alina & Wyrwich, Michael, 2021. "Calling Baumol: What Telephones Can Tell Us about the Allocation of Entrepreneurial Talent in the Face of Radical Institutional Changes," IZA Discussion Papers 14458, Institute of Labor Economics (IZA).
    7. Alexander Chepurenko, 2017. "Entrepreneurial Activity in Post-Socialist Countries: Methodology and Research Limitations," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 11(3), pages 11-24.
    8. Aidis, Ruta & van Praag, Mirjam, 2007. "Illegal entrepreneurship experience: Does it make a difference for business performance and motivation?," Journal of Business Venturing, Elsevier, vol. 22(2), pages 283-310, March.
    9. Michael Fritsch & Korneliusz Pylak & Michael Wyrwich, 2019. "Persistence of Entrepreneurship in Different Historical Contexts," Jena Economic Research Papers 2019-003, Friedrich-Schiller-University Jena.
    10. Niklas Elert, 2014. "What determines entry? Evidence from Sweden," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 55-92, August.
    11. Paul A. Coomes & Jose Fernandez & Stephan F. Gohmann, 2013. "The Rate of Proprietorship Among Metropolitan Areas: The Impact of the Local Economic Environment and Capital Resources," Entrepreneurship Theory and Practice, , vol. 37(4), pages 745-770, July.
    12. Joanna Tyrowicz & Joanna Nestorowicz, 2010. "Cynicism Starts Young: Age and Entrepreneurship over Transition," Working Papers 2010-02, Faculty of Economic Sciences, University of Warsaw.
    13. Andrew Burke & Serhiy Lyalkov & Ana Millán & José María Millán & André Stel, 2021. "How do country R&D change the allocation of self-employment across different types?," Small Business Economics, Springer, vol. 56(2), pages 695-721, February.
    14. Chengguang Li & Rodrigo Isidor & Luis Alfonso Dau & Rudy Kabst, 2018. "The More the Merrier? Immigrant Share and Entrepreneurial Activities," Entrepreneurship Theory and Practice, , vol. 42(5), pages 698-733, September.
    15. Wim Naudé, 2007. "Peace, Prosperity, and Pro-Growth Entrepreneurship," WIDER Working Paper Series DP2007-02, World Institute for Development Economic Research (UNU-WIDER).
    16. Harris, Jared D. & Sapienza, Harry J. & Bowie, Norman E., 2009. "Ethics and entrepreneurship," Journal of Business Venturing, Elsevier, vol. 24(5), pages 407-418, September.
    17. Alfredo Monte & Sara Moccia & Luca Pennacchio, 2022. "Regional entrepreneurship and innovation: historical roots and the impact on the growth of regions," Small Business Economics, Springer, vol. 58(1), pages 451-473, January.
    18. Aidis, Ruta & Estrin, Saul & Mickiewicz, Tomasz, 2008. "Institutions and entrepreneurship development in Russia: A comparative perspective," Journal of Business Venturing, Elsevier, vol. 23(6), pages 656-672, November.
    19. Vi Dung Ngo & Frank Janssen & Marine Falize, 2016. "An incentive-based model of international entrepreneurship in emerging and transition economies," Journal of International Entrepreneurship, Springer, vol. 14(1), pages 52-74, March.
    20. Alessandra Colombelli & Elena Grinza & Valentina Meliciani & Mariacristina Rossi, 2021. "Pulling Effects in Immigrant Entrepreneurship: Does Gender Matter?," Economic Geography, Taylor & Francis Journals, vol. 97(1), pages 1-33, January.

    More about this item

    Keywords

    Entrepreneurship; self-employment; transition; socialism; regional development; GDR;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • N94 - Economic History - - Regional and Urban History - - - Europe: 1913-
    • P25 - Economic Systems - - Socialist Systems and Transition Economies - - - Urban, Rural, and Regional Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jrp:jrpwrp:2020-010. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.wiwiss.uni-jena.de/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Markus Pasche (email available below). General contact details of provider: http://www.wiwiss.uni-jena.de/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.