Former Communist party membership and present-day entrepreneurship

0549792 - NHÚ 2022 RIV NL eng J - Journal Article
Ivlevs, A. - Nikolova, M. - Popova, Olga
Former Communist party membership and present-day entrepreneurship.
Small Business Economics. Roč. 57, č. 4 (2021), s. 1783-1800. ISSN 0921-898X. E-ISSN 1573-0913
Institutional support: RVO:67985998
Keywords : entrepreneurship * communist party * elite networks
OECD category: Applied Economics, Econometrics
Impact factor: 7.096, year: 2021
Method of publishing: Open access
https://doi.org/10.1007/s11187-020-00364-6

After the collapse of communism in Central and Eastern Europe, former party members were particularly likely to start businesses and become entrepreneurs. What remains unclear, however, is whether this entrepreneurial activity was driven by the resources, information, and opportunities provided by former party membership or because individuals with specific individual attributes were more likely to become Communist cadres (self-selection). This study is the first to separate the causal effect of former Communist party membership from self-selection. Using individual-level Life in Transition-III survey data and a control function approach, we find that former Communist party membership has facilitated business set-up but not business longevity in Central and Eastern European countries. We also show that people who joined the former ruling party had fewer of the traits associated with entrepreneurship such as unobservable personality traits, ability, motivation, and entrepreneurial aptitude, and as such were negatively self-selected. We show that former Communist party membership still matters for business practices, business ethics, and the nature of doing business in transition economies.
Permanent Link: http://hdl.handle.net/11104/0325692