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The Shadows of the Past - How Implicit Institutions Influence Entrepreneurship

Author

Listed:
  • Stefan Bauernschuster

    (University of Jena)

  • Oliver Falck

    (Ifo Institute for Economic Research)

  • Robert Gold

    (Max Planck Institute of Economics, Jena)

  • Stephan Heblich

    (Max Planck Institute of Economics, Jena)

Abstract

This paper investigates the impact of implicit institutions on the decision to become an entrepreneur. Implicit institutions are here defined as mindsets that have developed as the result of norms and traditions and we expect they will have an influence on risk attitudes and opportunity recognition. We conduct a natural experiment based on Germany's recent history and compare individuals born and raised in the former socialist East Germany (GDR) with their West Germany (FRG) counterparts. Our analysis confirms the expected difference in values between individuals from East and West Germany and also shows that these differences influence the probability of being self-employed. In the process of our analysis, we also sketch the ongoing economical transition process in East Germany, which severely disturbs a proper analysis of the institutional differences from a macro-perspective.

Suggested Citation

  • Stefan Bauernschuster & Oliver Falck & Robert Gold & Stephan Heblich, 2009. "The Shadows of the Past - How Implicit Institutions Influence Entrepreneurship," Jena Economics Research Papers 2009-044, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2009-044
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    File URL: https://oweb.b67.uni-jena.de/Papers/jerp2009/wp_2009_044.pdf
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    Citations

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    Cited by:

    1. Bijedić, Teita & Haase, Inga & Müller, Anna, 2018. "Regionale Gründungsumfelder am Beispiel ausgewählter Hot-Spots," IfM-Materialien 265, Institut für Mittelstandsforschung (IfM) Bonn.
    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 Fritsch & Alina Rusakova, 2012. "Self-Employment after Socialism: Intergenerational Links, Entrepreneurial Values, and Human Capital," SOEPpapers on Multidisciplinary Panel Data Research 456, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Stefan Bauernschuster & Helmut Rainer, 2012. "Political regimes and the family: how sex-role attitudes continue to differ in reunified Germany," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(1), pages 5-27, January.

    More about this item

    Keywords

    Implicit Institutions; Entrepreneurship; Socialism; Capitalism;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • P39 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Other

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