Entrepreneurship in transition countries: a review

The aim of this paper is to provide an overview of the key issues surrounding entrepreneurship development in transition countries focusing on six main themes. Though it can be argued that the transition countries started from more or less the same point when they embarked on their transitional path, in this paper, we indicate a number of the differences in initial conditions which further influenced SME development. By surveying the existing literature on SME development, this paper illustrates that as the transition process progresses, entrepreneurship development in transition countries is a story of increasing divergence. The transitional context provides unique opportunities for entrepreneurship activities to develop. However, at the same time this environment presents unique challenges for entrepreneurial development especially knowledge-based entrepreneurship as the free-market system matures within a context with low levels of SMEs and inherited negative views towards entrepreneurship

Which entrepreneurs expect to expand their businesses? Evidence from survey data in Lithuania

This paper presents an empirical study based on a survey of 399 small and medium size companies in Lithuania. Applying bivariate and ordered probit estimators, we investigate why some business owners intend to expand their firms, while others do not. Our main findings provide evidence that the characteristics of the owners matter. Those with higher education and ‘learning by doing’ attributes either through previous job experience or additional entrepreneurial experience are more likely to expand their businesses. In addition, the model implications include that the intentions to expand are correlated with exporting and with size of the enterprise: medium and small size companies are more likely to grow than micro enterprises and self-employed entrepreneurs. We also analyse the link between the main perceptions of constraints to business activities and growth expectations and find that the factors, which are perceived as main business barriers, are not necessary those, which are associated with low growth expectations. In particular, perceptions of both corruption and of inadequate tax systems are main barriers to growth.http://deepblue.lib.umich.edu/bitstream/2027.42/40109/3/wp723.pd

Russia: firm entry and survival

Why are there so few new firms in Russia? This paper provides further insights into the specific Russian business landscape and how it impacts the low level of new firm entry. As this paper indicates, internationally comparative data does not provide many clues since in terms of purely formal constraints, Russia fairs comparatively well. However, a deeper analysis uncovers the informal impediments associated with the lack of rule of law, inconsistent enforcement of regulations, regional autonomy and pervasive corruption. These informal constraints form impediments not only for new firm creation but also for firm survival and firm exit. Since not all industries are affected in the same way, this paper includes a comparison between a new and traditional industrial sector: software development and the textile industry

Institutions, Networks and Entrepreneurship Development in Russia: An Exploration

In this paper we explore the ways in which institutions and networks influence entrepreneurial development in Russia. By utilizing new Global Entrepreneurship Monitor (GEM) data collected in 2001, we investigate the effects of the weak institutional environment in Russia in terms of three dimensions: on the rate of productive entrepreneurial activity measured in terms of start-ups and existing business owners; on the characteristics of business owners; and on business financing. In addition, the analysis explores the effectiveness of Russia’s informal networks for circumventing the weak institutional environment for business development. Our results indicate that Russia’s business owners share many of the same characteristics as business owners in advanced western countries, though education is not associated with entrepreneurial activity. However, the main differences are in the sources of financing and the fact that relatively few individuals engage in productive entrepreneurial activity. Our results support the notion of the limited effectiveness of Russia’s networks for supporting entrepreneurial activity in its weak institutional environment.Entrepreneurship, Institutions, Networks, Russia

Entrepreneurial entry: which institutions matter?

In this paper we explore the relationship between the individual decision to become an entrepreneur and the institutional context. We pinpoint the critical roles of property rights and the size of the state sector for entrepreneurial activity and test the relationships empirically by combining country-level institutional indicators for 44 countries with working age population survey data taken from the Global Enterprise Monitor. A methodological contribution is the use of factor analysis to reduce the statistical problems with the array of highly collinear institutional indicators. We find that the key institutional features that enhance entrepreneurial activity are indeed the rule of law and limits to the state sector. However, these results are sensitive to the level of development

Size matters: entrepreneurial entry and government

We explore the country-specific institutional characteristics likely to influence an individual's decision to become an entrepreneur. We focus on the size of the government, on freedom from corruption, and on 'market freedom' defined as a cluster of variables related to protection of property rights and regulation. We test these relationships by combining country-level institutional indicators for 47 countries with working age population survey data taken from the Global Entrepreneurship Monitor. Our results indicate that entrepreneurial entry is inversely related to the size of the government, and more weakly to the extent of corruption. A cluster of institutional indicators representing 'market freedom' is only significant in some specifications. Freedom from corruption is significantly related to entrepreneurial entry, especially when the richest countries are removed from the sample but unlike the size of government, the results on corruption are not confirmed by country-level fixed effects models

Institutions and Entrepreneurship Development in Russia:A Comparative Perspective

In this paper we use a comparative perspective to explore the ways in which institutions and networks have influenced entrepreneurial development in Russia. We utilize Global Entrepreneurship Monitor (GEM) data to study the effects of the weak institutional environment in Russia on entrepreneurship, comparing it first with all available GEM country samples and second, in more detail, with Brazil and Poland. Our results suggest that Russia’s institutional environment is important in explaining its relatively low levels of entrepreneurship development, where the latter is measured in terms of both number of startups and of existing business owners. In addition, Russia’s business environment and its consequences for the role of business networks contribute to the relative advantage of entrepreneurial insiders (those already in business) to entrepreneurial outsiders (newcomers) in terms of new business start-ups.

Why Are Optimistic Entrepreneurs Successful? An Application of the Regulatory Focus Theory

Does entrepreneurial optimism affect business performance? Using a unique data set based on repeated survey design, we investigate this relationship empirically. Our measures of ëoptimismí and ërealismí are derived from comparing the turnover growth expectations of 133 owners-managers with the actual outcomes one year later. Our results indicate that entrepreneurial optimists perform significantly better in terms of profits than pessimists. Moreover, it is the optimist-realist combination that performs best. We interpret our results using regulatory focus theory.http://deepblue.lib.umich.edu/bitstream/2027.42/64399/1/wp914.pd

Size Matters: Entrepreneurial Entry and Government

We explore the country-specific institutional characteristics likely to influence an individual's decision to become an entrepreneur. We focus on the size of the government, on freedom from corruption, and on 'market freedom' defined as a cluster of variables related to protection of property rights and regulation. We test these relationships by combining country-level institutional indicators for 47 countries with working age population survey data taken from the Global Entrepreneurship Monitor. Our results indicate that entrepreneurial entry is inversely related to the size of the government, and more weakly to the extent of corruption. A cluster of institutional indicators representing 'market freedom' is only significant in some specifications. Freedom from corruption is significantly related to entrepreneurial entry, especially when the richest countries are removed from the sample but unlike the size of government, the results on corruption are not confirmed by country-level fixed effects models.market freedom, government, entrepreneurship, corruption