In this paper we analyse the role of government in relation to the development of entrepreneurship in countries where private business activity was illegal until the beginning of the 1990s. By focusing on Estonia and Belarus we are concerned with countries with an ostensibly similar political heritage, yet with contrasting experiences during the post-Soviet period. Various authors have argued the need for entrepreneurship research to acknowledge the heterogeneity of environmental conditions, outcomes, and behaviours that exist with respect to entrepreneurship. Government policies and actions are a key element contributing to the heterogeneity of external conditions in which entrepreneurship occurs and are thus part of social embeddedness. The findings have implications for policy makers in transition and developing countries by emphasising the variety of ways in which the state can influence the nature and pace of private business development and the central role of institutional behaviour in this process. The findings also have implications for researchers interested in extending analysis of entrepreneurship into a wide range of business environments.
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