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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

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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.

Suggested Citation

  • Michael Fritsch & Michael Wyrwich, 2012. "The Long Persistence of Regional Entrepreneurship Culture: Germany 1925-2007," ERSA conference papers ersa12p63, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa12p63
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    References listed on IDEAS

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    1. Michael Fritsch & Oliver Falck, 2007. "New Business Formation by Industry over Space and Time: A Multidimensional Analysis," Regional Studies, Taylor & Francis Journals, vol. 41(2), pages 157-172.
    2. David Audretsch & Max Keilbach, 2004. "Entrepreneurship Capital and Economic Performance," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 949-959.
    3. Nico Voigtländer & Hans-Joachim Voth, 2012. "Persecution Perpetuated: The Medieval Origins of Anti-Semitic Violence in Nazi Germany," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1339-1392.
    4. Michael Fritsch, 2004. "Entrepreneurship, entry and performance of new business compared in two growth regimes: East and West Germany," Journal of Evolutionary Economics, Springer, vol. 14(5), pages 525-542, December.
    5. Zoltán J. Ács & Pamela Mueller, 2015. "Employment effects of business dynamics: Mice, Gazelles and Elephants," Chapters,in: Global Entrepreneurship, Institutions and Incentives, chapter 16, pages 304-319 Edward Elgar Publishing.
    6. Michael Wyrwich, 2012. "Regional Entrepreneurial Heritage in a Socialist and a Postsocialist Economy," Economic Geography, Clark University, vol. 88(4), pages 423-445, October.
    7. Audretsch, D.B. & Fritsch, M., 1993. "A Note on the Measurement of Entry Rates," Papers 93-5, Bergakademie Freiberg Technical University - Faculty of Economics and Business Administration.
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    10. Davidsson, Per & Wiklund, Johan, 1997. "Values, beliefs and regional variations in new firm formation rates," Journal of Economic Psychology, Elsevier, vol. 18(2-3), pages 179-199, April.
    11. Hall, John & Ludwig, Udo, 1995. "German Unification and the 'Market Adoption' Hypothesis," Cambridge Journal of Economics, Oxford University Press, vol. 19(4), pages 491-507, August.
    12. Michael Fritsch & Pamela Mueller, 2007. "The persistence of regional new business formation-activity over time – assessing the potential of policy promotion programs," Journal of Evolutionary Economics, Springer, vol. 17(3), pages 299-315, June.
    13. Sjoerd Beugelsdijk, 2007. "Entrepreneurial culture, regional innovativeness and economic growth," Journal of Evolutionary Economics, Springer, vol. 17(2), pages 187-210, April.
    14. Martin Andersson & Sierdjan Koster, 2011. "Sources of persistence in regional start-up rates--evidence from Sweden," Journal of Economic Geography, Oxford University Press, vol. 11(1), pages 179-201, January.
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    18. 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.
    19. Michael Wyrwich, 2010. "Regional Entrepreneurial Heritage in a Socialist and a Post-Socialist Economy," DRUID Working Papers 10-20, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
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    Cited by:

    1. Jean Bonnet & Sébastien Bourdin & Fatten Gazzah, 2017. "The entrepreuneurial context, a factor of Economic Growth in the Europe Union? A GWR Analysis on the EU Regions," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2017-09, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    2. Martin Andersson, 2015. "Start-up rates, entrepreneurship culture and the business cycle: Swedish patterns from national and regional data," Chapters,in: Innovation and Entrepreneurship in the Global Economy, chapter 7, pages 162-183 Edward Elgar Publishing.
    3. Jean Bonnet & Sébastien Bourdin & Fatten Gazzah, 2017. "The entrepreuneurial context, a factor of Economic Growth in the Europe Union? A GWR Analysis on the EU Regions," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2017-09, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    4. Kuechle, Graciela, 2014. "Regional concentration of entrepreneurial activities," Journal of Economic Behavior & Organization, Elsevier, vol. 102(C), pages 59-73.

    More about this item

    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
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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