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Initial conditions and regional performance in the aftermath of disruptive shocks: the case of East Germany after socialism
[The knowledge spillover theory of entrepreneurship]

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  • Michael Fritsch
  • Michael Wyrwich

Abstract

We investigate how specific regional conditions found in East Germany at the end of the socialist regime impact development during the turbulent shock transition to a market economy. Both the self-employment rate (an indicator of a pre-socialist entrepreneurial tradition) and the share of the workforce with a university degree (as measure of the general qualification of the workforce) have a strong positive effect on regional development. Our results show that entrepreneurship and knowledge are key regional resources for mastering disruptive historical shocks.

Suggested Citation

  • Michael Fritsch & Michael Wyrwich, 2022. "Initial conditions and regional performance in the aftermath of disruptive shocks: the case of East Germany after socialism [The knowledge spillover theory of entrepreneurship]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 31(6), pages 1428-1459.
    • Handle: RePEc:oup:indcch:v:31:y:2022:i:6:p:1428-1459.
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    References listed on IDEAS

    as
    1. Michael Fritsch & Michael Wyrwich, 2017. "The effect of entrepreneurship on economic development—an empirical analysis using regional entrepreneurship culture," Journal of Economic Geography, Oxford University Press, vol. 17(1), pages 157-189.
    2. Michael Fritsch & Michael Wyrwich, 2019. "The Persistence of Regional Entrepreneurship," International Studies in Entrepreneurship, in: Regional Trajectories of Entrepreneurship, Knowledge, and Growth, chapter 0, pages 27-46, Springer.
    3. Radosevic, Slavo, 1999. "Transformation of science and technology systems into systems of innovation in central and eastern Europe: the emerging patterns and determinants," Structural Change and Economic Dynamics, Elsevier, vol. 10(3-4), pages 277-320, December.
    4. David B. Audretsch (ed.), 2006. "Entrepreneurship, Innovation and Economic Growth," Books, Edward Elgar Publishing, number 4130.
    5. Michael Fritsch & Michael Wyrwich, 2019. "The Role of Knowledge," International Studies in Entrepreneurship, in: Regional Trajectories of Entrepreneurship, Knowledge, and Growth, chapter 0, pages 95-117, Springer.
    6. Zoltán J. Ács & Pontus Braunerhjelm & David B. Audretsch & Bo Carlsson, 2015. "The knowledge spillover theory of entrepreneurship," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 7, pages 129-144, Edward Elgar Publishing.
    7. Ark Bart van, 1995. "The Manufacturing Sector in East Germany: A Reassessment of Comparative Productivity Performance, 1950-1988," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 36(2), pages 75-100, December.
    8. Fritsch, Michael, 2013. "New Business Formation and Regional Development: A Survey and Assessment of the Evidence," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 9(3), pages 249-364, February.
    9. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    10. Michael Fritsch & Maria Kristalova & Michael Wyrwich, 2020. "Regional trajectories of entrepreneurship: the effect of socialism and transition," Jena Economics Research Papers 2020-010, Friedrich-Schiller-University Jena.
    11. Audretsch, David B. & Keilbach, Max C. & Lehmann, Erik E., 2006. "Entrepreneurship and Economic Growth," OUP Catalogue, Oxford University Press, number 9780195183511.
    12. Michael Fritsch & Alina Sorgner & Michael Wyrwich & Evguenii Zazdravnykh, 2019. "Historical shocks and persistence of economic activity: evidence on self-employment from a unique natural experiment," Regional Studies, Taylor & Francis Journals, vol. 53(6), pages 790-802, June.
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    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
    • N93 - Economic History - - Regional and Urban History - - - Europe: Pre-1913
    • N94 - Economic History - - Regional and Urban History - - - Europe: 1913-

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