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Former Communist party membership and present-day entrepreneurship in Central and Eastern Europe

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  • Artjoms Ivlevs

    () (University of the West of England)

  • Milena Nikolova
  • Olga Popova

Abstract

After the collapse of Communism in Central and Eastern Europe, former party members were particularly likely to start businesses and become entrepreneurs. However, it remains unclear whether this entrepreneurial activity was driven by the resources, information and opportunities provided by former party membership or because people with specific individual attributes were more likely to become party members (self-selection). This study is the first to separate the causal effect of former Communist party membership from selfselection. Using individual-level Life in Transition–III survey and instrumental variables analysis, we find that, in Central and Eastern European countries, membership of former Communist party has facilitated business set-up but not business longevity. Our results also suggest evidence of negative self-selection, meaning that people who joined the former ruling party tended have fewer of the traits associated with entrepreneurship such as motivation, risk tolerance, and entrepreneurial spirit. We show that former Communist party membership still matters for business practices, business ethics, and the nature of doing business in transition economies.

Suggested Citation

  • Artjoms Ivlevs & Milena Nikolova & Olga Popova, 2019. "Former Communist party membership and present-day entrepreneurship in Central and Eastern Europe," Working Papers 384, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
  • Handle: RePEc:ost:wpaper:384
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    communism; communist party; elite networks; entrepreneurship; post-socialist countries;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General
    • P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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