Abstract
This book provides a significant contribution to the entrepreneurship research, as it sheds light on the role of historical antecedents in the current development of entrepreneurship. Both co-authors are well known for their previous contributions to entrepreneurship theory, especially as regards the reasons for regional differences in entrepreneurship development (see Fritsch et al., 2018a, 2018b; Fritsch and Wyrwich, 2017, 2018; Wyrwich, 2015). This monograph summarises their investigations in recent years on the role of historical legacies in current entrepreneurship development.
The monograph is based on the German experience which is unique due to three reasons. First, in so far as the modern history of this country showed there were many disrupting developments which could have brought an end to any historical tradition of enterprise in the country, such as the Nazi regime and the disaster of World War II. Second, the entrepreneurial activity of former GDR citizens after the reunification offers a unique possibility to speculate about the reasons of this revival. Third, the statistics on self-employment and so on since the beginning of the 20th century (German census of 1907 and 1925, as well the West German statistics from 1976 onwards) enabled authors to check several hypotheses regarding the potential role of many factors in the cross-regional differentiation of entrepreneurial activity in Germany.
The ultimate point of the monograph is that the history, that means first of all the entrepreneurial culture as a set of informal institutions, matters. The authors trace the relations between entrepreneurial culture, historical levels of self-employment, availability and role of universities and technical universities which can be viewed as triggers of the knowledge spillover, start-up activities and general economic growth of respective regions.
The book shows a long-term persistence of regional differences in entrepreneurial activity between regions for over almost a century. Regions with higher levels of self-employment in the early 20th century still show higher levels of new business formation today, while regions with lower levels of self-employment in the beginning of the 20th century have low start-up rates even today. The authors conclude that ‘this persistence indicates the presence of a culture of entrepreneurship … that leads to a social legitimacy of entrepreneurs and their activities’ (p. 133). Thus, the demand for it and the scope of resources invested in entrepreneurial activity in such regions are higher. This social acceptance of entrepreneurship within a society forms a part of the informal institutions (which are defined as codes of conduct as well as norms and values among the regional population) of a community, region and so on.
Historically, entrepreneurial culture is measured by historical levels of self-employment. The evidence shows that regions with high levels of self-employment in the early 20th century have remarkably higher rates of employment growth more than 50 years later. Spectacularly, this is true even for East German regions. Those regions that had high levels of self-employment in the first quarter of the 20th century inherited this entrepreneurial tradition and could better cope with the transformation to a market economy after German reunification in 1990.
The significantly positive relationship between a relatively well-developed regional knowledge base at the beginning of the 20th century and regional innovation activity even 100 years later is coupled with high levels of self-employment. Moreover, the authors found a significantly positive relationship between the regional levels of historical self-employment and the share of population with an entrepreneurial personality profile today.
All in all, the evidence demonstrates that historical specifics of regions (development of entrepreneurship, knowledge infrastructure and innovation inclinations) have a significant positive effect on its current performance, as regards the rate of self-employment, innovativeness and economic growth. Hence, the authors stress ‘historical constellations may produce a long lasting regional culture, i.e., an informal institution that is able to persist disruptive changes of the political, social, and economic framework conditions’ (p. 135).
These results have both theoretical and political implications. The monograph helps clarify rather cloudy concepts as ‘historical path dependence’ and ‘entrepreneurial culture’ with a clear empirically measurable content. It brings new arguments to support the knowledge spillover theory. Differences in the historical experiences and the existing cultures of entrepreneurship ‘clearly confirm the recognition that … different measures and strategies may be needed for different kinds of regions, such as areas with high and low levels of an entrepreneurial culture’ (p. 136). It also leads to some ‘sad’ conclusions – for instance, that in regions with historically weak entrepreneurial culture and underperforming knowledge it might be rather optimistic to expect a boom in entrepreneurial activity. In addition, generating an entrepreneurship-friendly ecosystem may take a long time and, until it is not the case, the entrepreneurially minded population might migrate to regions with better preconditions for a start-up. The latter is exactly the case of several post-Socialist countries now.