Entrepreneurship and transition in the European transition countries

Objectives: This paper aims to examine the transition process from the development and state of entrepreneurship in 15 former European socialist countries during 2006-2012. Our focus here is not on the full but on just one dimension of transition, entrepreneurship. While it is surely the case that certain transition tasks, like privatizing state-owned enterprises, remain unfinished, a perhaps more interesting question is whether the fundamental characteristics of these economies has changed to the point where starting and growing a new business in the former socialist countries is substantively different from starting and growing a new business elsewhere. Thus, we ask whether it is possible to discern differences with respect to entrepreneurship between the post-socialist countries of Europe and the non-post-socialist countries, controlling for level of economic development. Methodology: Unlike previous analyses that applied single activity related entrepreneurship measures like self-employment, or the GEM's TEA rate, we use a complex entrepreneurship measure, the Global Entrepreneurship and Development Index (GEDI). GEDI incorporates both individual and institutional factors of entrepreneurship in order to explain the role of entrepreneurship in economic development. The GEDI, with its three sub-indexes and fourteen pillars, is a particularly suitable tool for examining the level, the components, and the configuration of the National System of Entrepreneurship. Findings: Investigating the former transition countries, we can conclude that the overall level of entrepreneurship in the Central and Eastern European (CEE) countries fits their level of economic development. While the examined CEE countries have lower GEDI scores as well as institutional development than developed European innovation-driven economies; they possess slightly higher institutional and individual level of development than similarly developed efficiency-driven economies. We anticipated some kinds of characteristic differences between the former socialist and the efficiency-driven countries that would reveal that transition has not been completed. However, our results are more consistent with the conclusions that, while the post-socialist economies were qualitatively different twenty some years ago, those differences have vanished today with the exception of only one of the countries included in our analysis: Russia. Thus, these post-socialist countries (excepting Russia) are on a normal capitalist path with any differences being due to different levels of economic development rather than to having a different economic system. Originality/value: While our results imply that transition is over, there are some shared characteristics of the former socialist countries that most likely stem from their socialist heritage, such as the relatively low level of opportunity perception or cultural support. The results have important implications as they reinforce our argument that, rather than homogeneous entrepreneurship support policies, effective implementation of policies in CEE should fit the profile of the targeted territory.