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Regional Entrepreneurial Heritage in a Socialist and Post-socialist Economy

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  • Michael Wyrwich

Abstract

The main aim of this paper is to enhance our knowledge of the role of regional entrepreneurial culture that is important to foster economic growth. The paper sheds light on regional differences of self-employment and start-up activities in a socialist and post-socialist economy, which is to the authors' best knowledge a unique approach. The role of entrepreneurs in a socialist economy was marginal. Entrepreneurial activities were restricted mainly to handicrafts, retailing and gastronomy in the region of analysis of the present paper. This region is the eastern part of Germany which comprises the former socialist German Democratic Republic (GDR). It is shown by regression analysis that regions with a long industrial and entrepreneurial tradition had higher rates of self-employment in socialist times and remarkably higher start-up rates in manufacturing after the transition towards a market economy. Astonishingly those regions with a high share of traditional manufacturing industries with a long regional tradition and where entrepreneurship played an important role in pre-socialist times had higher self-employment rates in 1989. Regions with a high self-employment rate and a high share of traditional manufacturing industries in 1989 have higher start-up rates in manufacturing even more than 10 years after transition and a vast structural change in between. This result holds when controlling for industry structure and several other regional factors. Thus, even the "natural experiment" of four decades of socialism and one of the most severe industrial restructuring and decline of an economy in the 20th century could not destroy the entrepreneurial climate of regions. It seems that some regions have a certain entrepreneurial heritage, which is an important regionally embedded resource. An important implication for policy is that it seems to be long lasting task to turn entrepreneurial laggards into entrepreneurial hotspots since far reaching developments in industrial history seem to matter.

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  • Michael Wyrwich, 2011. "Regional Entrepreneurial Heritage in a Socialist and Post-socialist Economy," ERSA conference papers ersa10p495, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa10p495
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    Cited by:

    1. Salvatore Corrente & Salvatore Greco & Melita Nicotra & Marco Romano & Carmela Elita Schillaci, 2019. "Evaluating and comparing entrepreneurial ecosystems using SMAA and SMAA-S," The Journal of Technology Transfer, Springer, vol. 44(2), pages 485-519, April.
    2. Michael Fritsch & Michael Wyrwich, 2023. "Entrepreneurship in the Long-Run: Empirical Evidence and Historical Mechanisms," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 19(1), pages 1-125, January.
    3. Alexander Chepurenko & Maria Kristalova & Michael Wyrwich, 2019. "Historical and Institutional Determinants of Universities’ Role in Fostering Entrepreneurship," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 13(4), pages 48-59.
    4. Michael Wyrwich, 2014. "Ready, set, go! Why are some regions entrepreneurial jump starters?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(2), pages 487-513, September.
    5. Bauernschuster, Stefan & Falck, Oliver & Gold, Robert & Heblich, Stephan, 2012. "The shadows of the socialist past: Lack of self-reliance hinders entrepreneurship," European Journal of Political Economy, Elsevier, vol. 28(4), pages 485-497.
    6. Fredin , Sabrina & Jogmark , Marina, 2015. "The Formation of Local Culture and its Implications for Entrepreneurship," Papers in Innovation Studies 2015/37, Lund University, CIRCLE - Centre for Innovation Research.
    7. Michael Fritsch & Michael Wyrwich, 2017. "Persistence of Regional Entrepreneurship: Causes, Effects, and Directions for Future Research," Jena Economics Research Papers 2017-003, Friedrich-Schiller-University Jena.
    8. Michael Fritsch & Alina Sorgner & Michael Wyrwich & Evguenii Zazdravnykh, 2016. "Historical shocks and persistence of economic activity: evidence from a unique natural experiment," HSE Working papers WP BRP 143/EC/2016, National Research University Higher School of Economics.
    9. Michael Wyrwich, 2013. "In the name of my parents: Entrepreneurship and the intergenerational transmission of values," Jena Economics Research Papers 2013-031, Friedrich-Schiller-University Jena.
    10. Melita Nicotra & Marco Romano & Manlio Giudice & Carmela Elita Schillaci, 2018. "The causal relation between entrepreneurial ecosystem and productive entrepreneurship: a measurement framework," The Journal of Technology Transfer, Springer, vol. 43(3), pages 640-673, June.
    11. Michael Fritsch & Michael Wyrwich, 2012. "The Long Persistence of Regional Entrepreneurship Culture: Germany 1925–2005," Papers in Evolutionary Economic Geography (PEEG) 1214, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jul 2012.
    12. Michael Fritsch & Michael Wyrwich, 2016. "Does persistence in start-up activity reflect persistence in social capital?," Chapters, in: Hans Westlund & Johan P. Larsson (ed.), Handbook of Social Capital and Regional Development, chapter 4, pages 82-107, Edward Elgar Publishing.
    13. 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.
    14. Michael Wyrwich, 2020. "The value orientation of entrepreneurs in challenging institutional contexts: Insights from a unique historical episode," Jena Economics Research Papers 2020-001, Friedrich-Schiller-University Jena.
    15. Michael Fritsch & Michael Wyrwich, 2014. "The Effect of Regional Entrepreneurship Culture on Economic Development - Evidence for Germany," Papers in Evolutionary Economic Geography (PEEG) 1411, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Apr 2014.
    16. 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).
    17. Jinchao Wang & Changfu Luo, 2022. "Social Mobility and Firms’ Total Factor Productivity: Evidence from China," Sustainability, MDPI, vol. 14(22), pages 1-19, November.
    18. Martin Mabunda Baluku & Edward Bantu & Kathleen Otto, 2018. "Effect of Locus of Control on Entrepreneurial Attitudes and Self-Employment Intentions: The Moderating Role of Individualism," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 26(03), pages 251-283, September.
    19. Michael Fritsch & Michael Wyrwich, 2012. "The Long Persistence of Regional Entrepreneurship Culture: Germany 1925-2007," ERSA conference papers ersa12p63, European Regional Science Association.
    20. Oliver Falck & Michael Fritsch & Stephan Heblich, 2014. "Is industry location persistent over time? Evidence from coagglomeration patterns between new and incumbent firms in Germany," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 34(1), pages 1-21, February.
    21. Flade Falk & Kamosiński Sławomir, 2021. "‘Kapitalisten’ and ‘Prywaciarze’. A Comparison of Nationalisation Campaigns in the GDR and Poland," Studia Historiae Oeconomicae, Sciendo, vol. 39(1), pages 163-188, December.
    22. Ljunge, Martin & Stenkula, Mikael, 2021. "Fertile soil for intrapreneurship: impartial institutions and human capital," Journal of Institutional Economics, Cambridge University Press, vol. 17(3), pages 489-508, June.
    23. Michael Fritsch & Maria Kristalova & Michael Wyrwich, 2020. "One transition story does not fit them all: Initial regional conditions and new business formation after socialism," Jena Economics Research Papers 2020-014, Friedrich-Schiller-University Jena.

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    More about this item

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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