Michael Wyrwich

The Long Persistence of Regional Levels of Entrepreneurship: Germany, 1925–2005

Fritsch M. and Wyrwich M. The long persistence of regional levels of entrepreneurship: Germany, 1925–2005, Regional Studies. This paper investigates the persistent levels of self-employment and new business formation in different time periods and under different framework conditions. The analysis shows that regional differences regarding the level of self-employment and new business formation tend to be persistent for periods as long as eighty years, despite abrupt and drastic changes in the political–economic environment. This pronounced persistence demonstrates the existence of regional entrepreneurship culture that tends to have long-lasting effects.

Regional Entrepreneurial Heritage in a Socialist and a Postsocialist Economy

Abstract Regions have a distinct entrepreneurial heritage, understood as a historical tradition in entrepreneurial culture. The persistence of that heritage in the former German Democratic Republic (GDR) is examined across severe ruptures in economic development. In this article, I argue that regional differences in private-sector activities under socialism—a system that was hostile toward entrepreneurs—reflect strong entrepreneurial orientations of local populations and regional cultures of entrepreneurship that were presocialist in origin. The empirical analysis suggests that an “entrepreneurial residual,” left over from the socialist experiment, positively affected startup activity after the transformation of the GDR back to a market economy. The results show that an entrepreneurial culture is an important regional resource that endures.

The Long Persistence of Regional Entrepreneurship Culture: Germany 1925–2005

We investigate the persistence of levels of self-employment and new business formation in different time periods and under different framework conditions. The analysis shows that high levels of regional self-employment and new business formation tend to be persistent for periods as long as 80 years and that such an entrepreneurial culture can even survive abrupt and drastic changes in the politic-economic environment. We thus conclude that regional entrepreneurship cultures do exist and that they have long-lasting effects.

Knowledge intensive Entrepreneurship across regions: Makes being a new industry a difference?

This paper investigates regional sources of entrepreneurial opportunities of knowledge-intensive start-up activity. Thereby it is investigated whether it makes a difference if the knowledge-intensive sector is a newly emerging industry compared to the case where its location across space could develop already over a long period of time. The analysis is on knowledge-intensive business services (KIBS) in East and West Germany in the 1990s. At the time of German re-unification in 1990s in the former socialist East Germany no KIBS sector existed in contrast to West Germany. The findings indicate that being new to the region makes a difference.

Historical shocks and persistence of economic activity: evidence on self-employment from a unique natural experiment

ABSTRACT This paper investigates the persistence of self-employment in the districts of Kaliningrad, a Russian exclave, between 1925 and 2010. The area experienced a number of disruptive historical shocks during this period. This setting rules out the fact that the persistence of self-employment can be explained by the persistence of institutions and culture. Nevertheless, a high level of persistence of industry-specific self-employment rates is found. It is argued that a historical tradition of entrepreneurship created an awareness about the entrepreneurial potential of regions among the new population that was yielded after the collapse of the Soviet Union. This effect seems to be higher in regions where a specific industry was advanced in terms of technology use.

Balanced Skills and the City: An Analysis of the Relationship between Entrepreneurial Skill Balance, Thickness, and Innovation

Abstract Entrepreneurs are assumed to be multiskilled, covering a number of skills and achieving in each skill a level as high as possible. Being such a jack-of-all-trades increases the probability of running an entrepreneurial venture successfully, but what happens to the jack-of-few-trades who lacks sufficient skills? This article investigates a possible compensation mechanism between balanced skills and cities and how this compensatory measure relates to performance. Specifically, we test and find support for the idea put forward by Helsley and Strange that high market thickness, such as that found in cities, can compensate for a lack of entrepreneurial skill balance. The results indicate that entrepreneurs with low skill balance benefit more from being located in cities than their counterparts with high skill balance. Innovative firms do not differ from other businesses in this respect.

Does Persistence in Start-up Activity Reflect Persistence in Social Capital?

Emerging literature shows that spatial differences in entrepreneurship tend to persist over longer periods of time. A potential mechanism underlying this pronounced persistence is that high levels of start-up activity lead to the emergence of a regional culture and a supporting environment in favor of entrepreneurship that particularly involves social capital. This chapter summarizes the available empirical evidence on the regional persistence of entrepreneurship and elaborates in detail how different elements of such a culture, such as social capital, can exert an influence on the level of new business formation and self-employment. As a demonstration for the relevance of a regional entrepreneurship culture for new business formation, we highlight the case of Germany where we find pronounced persistence of start-up activity despite radical structural and institutional shocks over the course of the twentieth century. The German case suggests that there is a long-lasting local culture of entrepreneurship that can survive disruptive changes. We discuss the relationship between place-specific social capital and a regional culture of entrepreneurship and draw policy conclusions.

Coping with the market: Are there cohort effects for organisations in transition?

This paper investigates the employment growth of small and medium-sized firms that survived the transformation process of the German Democratic Republic (GDR). We find that firms founded in the later period of the GDR’s existence have especially low growth prospects, even 10 years after German reunification. The later phase of the GDR was marked by tightening measures intended to enhance political influence on the planned economy, accompanied by a sharp economic decline. Thus, organizations were more deeply embedded in planning structures that were more rigorous than those present in the first years of the GDR’s existence. We argue that these organizations therefore developed less appropriate practices for coping with a market economy than organizations founded in other periods.

New KIBS on the bloc: the role of local manufacturing for start-up activity in knowledge-intensive business services

ABSTRACT This study investigates the effect of local manufacturing on start-up activity across knowledge-intensive business services (KIBS) industries by relying on the natural experiment of German reunification. KIBS did not exist in the former socialist East Germany. The findings show that local manufacturing affected the co-location of new KIBS firms in East Germany while there was no such effect for West Germany, where the KIBS sector was already well established. The East German effect was fading over time when the KIBS sector became more established. The result suggests that strengthening the industrial base in peripheral regions could induce knowledge-intensive start-up activity.

Everything in Its Place: Entrepreneurship and the Strategic Management of Cities, Regions, and States

abroad, specifically to peripheral areas. The microand macro-economic effects of these relocations are not immediate; they follow complex dynamics, passing through the interaction of multinationals with local talents, institutions and actor networks. Then the patterns of production-related knowledge internationalization are discussed in Chapter 12. The case studies of TRW, Honeywell, Kirchoff and other multinationals in the automotive industry demonstrate the importance managements attribute to global clients, local problemsolving capabilities and the global labour markets. Like vocational education and training centres, and labour regulation, the localized interaction between multinationals, actor networks and institutions is still crucial to promoting regional growth and upgrading in peripheral areas. Unfortunately, currently available data are unable to show clear macro-economic trends in the upgrading of the Global South. Chapter 13 summarizes the impact of knowledge internationalization on the North, concluding that current trade statistics do not seem to reveal any alarming trends in the ‘global race for talents’. Chapter 14 provides some conclusive comments. In essence, the book is well written and well organized. The author poses a number of intriguing questions and challenges. First, other types of knowledge are being internationalized, as well as scientific– technical knowledge: these other types of knowledge involve shared values and interpretations, and raise new issues for globalization that cannot be measured by international official statistics. This means that core–periphery and traditional comparative advantage models are no longer suitable for representing the geography of knowledge and the dynamics of the international division of labour. Second, a new role seems to be emerging for regions as places where local actor networks, knowledge-related institutions and subsidiaries interact. Third, the available statistical macro-economic data are unable to capture the effects of knowledge internationalization, especially on the Global South, and the internationalization of knowledge and upgrading apparent from many case studies is consequently not reflected in major developmental trends. What was less convincing is the author’s conclusion regarding the impact on the North of the ‘global race for talents’. Although the evidence is still inconclusive, recent studies have shown that offshoring can be responsible for the polarization of jobs in advanced economies (e.g. AUTOR et al., 2006; OLDENSKI, 2014). While highly skilled knowledge workers do not seem to be affected, the negative impact on the employment and wage dynamics for medium-skilled workers (those who perform routinized tasks) has been well documented. From a general point of view, this sounds rather alarming. REFERENCES