Business and Entrepreneurship in Bosnia-Herzegovina

By Dana, Leo Paul | Journal of Business and Entrepreneurship, October 1999 | Go to article overview
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Business and Entrepreneurship in Bosnia-Herzegovina

Dana, Leo Paul, Journal of Business and Entrepreneurship


Among countries in transition, Bosnia-Herzegovina is unlike any other. Civil war interrupted the process of privatization, and shelling destroyed much of the industrial sector. A few entrepreneurs prospered during the war, and many new ventures were created; however, their post-war survival is uncertain. The Dayton Agreement created a federal Bosnia-Herzegovina, consisting of two political entities. One of these is the Bosnian Federation, which welcomed the post-war reconstruction boom, and is headed for a market economy. However, the other constituent of Bosnia-Herzegovina, namely Republika Srpska, has encountered a further struggle with post-war politics, and less entrepreneurship is visible there.


Bosnia-Herzegovina is a unique country; although it is divided into two legal entities, it consists of three economic entities. The country is politically divided into two legal entities, namely the Bosnian Federation and Republika Srpska. In actuality, however, Bosnia-Herzegovina operates as three economies, each with its own regional currency. Coins are scarce, and so retailers give chewing gum and tram tickets in lieu of change.

The need for post-war reconstruction has been translated into new opportunities for entrepreneurs. Given the low wage structure in BosniaHerzegovina, there is also tremendous potential in light manufacturing, especially with the technical and financial assistance of foreign partners. Yet, many issues remain unresolved. The objective of this essay is to give an account of, and stimulate future research about, small business in Bosnia-Herzegovina.


This article is the result of inductive, ethnographic research with an emic design. Research methods included participatory observation and open-ended interviews with entrepreneurs, government policy-makers, and United Nations personnel in Bosnia-Herzegovina. Also contacted were the British Overseas Development Agency; the Council of Bosniak Intellectuals; the Croat National Council; the Muslimanska Bosnjacka Organizacija (Muslim Bosniak Organization); Srpsko Gradansko Vijece Sarajevo (Serb Civil Council of Sarajevo) and Tuzlanski Demokratski Krug (Democratic Circle of Tuzla). The author intended to conduct some interviews in Potkasa, but this plan was canceled as the town's population was reduced to zero.

Interviews typically lasted between one and two hours. In total, eighteen interviews with officials (government, diplomatic, military, and NGO) were deemed usable, as were fifty-five interviews with entrepreneurs, journalists, and consumers. Special care was taken in order not to be misled by socially desirable responding, as discussed by Adair (1984), Arnold, Feldman and Purbhoo (1985), Crowne and Marlowe (1960), Lopez (1982), Rahim (1983), and Zerbe and Paulus (1987). Numerous studies (Arnold & Feldman, 1981; Golembiewski & Munzenrider, 1975; Rosenkrantz, Luthans 8c Hennessey, 1983; Stone, Ganser, Woodman, & Fusilier, 1979; Thomas 8c Kilmann, 1975) have raised concerns about the contamination of research findings by such socially desirable responding.

Several difficulties were encountered during the data collection stage of this research. Details about the Bosnian Federation and Republika Srpska are not available in any one place. Therefore, it was crucial to travel across ethnic boundaries within Bosnia-Herzegovina. According to the Dayton Agreement, this should not be a problem. However, data collection was interrupted when military police, in Serb-held areas of Bosnia-Herzegovina, repeatedly stopped and interrogated the author. In addition, countless roadblocks (some caused by military forces and others by stray cows) contributed to frequent delays. One must also be cautious, as roadside bandits have been making potholes for the purpose of damaging tires of passing automobiles; when the driver stops the car to change a tire, the bandits rob him and steal the vehicle.

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