Academic journal article Journal of East European Management Studies

Entrepreneurship and Institutional Change in Post-Socialist Rural Areas: Some Evidence from Russia and the Ukraine*

Academic journal article Journal of East European Management Studies

Entrepreneurship and Institutional Change in Post-Socialist Rural Areas: Some Evidence from Russia and the Ukraine*

Article excerpt

Are entrepreneurs in rural areas of Russia and the Ukraine any different from their urban based counterparts? What are the implications of the distinctiveness of rural entrepreneurship upon the institutional setting - given the weakness of the State? We focus upon the experience of rural areas of Novosibirsk and the Republic of Bashkortostan in Russia and Transcarpathia in the Ukraine. We argue that whilst in urban settings the advancement of post-socialist transformation resulted in increased diversity in the type of individual engaged in entrepreneurship. This raises concerns about the pace and direction of change in rural areas. However, even within the three localities under investigation there appears to be a growing divergence in the pathways of change.

Unterscheiden sich Unternehmer in ländlichen Gebieten Russlands und der Ukraine von ihren städtischen Kollegen? Was sind die Folgen der Besonderheit von ländlichem Unternehmertum auf die institutionellen Rahmenbedingungen - vor dem Hintergrund des schwachen Staates? Dabei konzentrieren wir uns auf die ländlichen Gebiete von Nowosibirsk und der Republik Baschkortostan in Russland sowie Transkarpatien in der Ukraine. Wir behaupten, dass der Fortschritt der postsozialistischen Transformation lediglich im städtischen Umfeld zu einer verstärkten Vielfalt von individuellem Engagement im Unternehmertum geführt hat, nicht aber auf dem Lande. Dies verweist auf die Problematik des Tempos und der Richtung der Veränderungen in ländlichen Gebieten. Allerdings bestehen auch zwischen den drei Regionen wachsende Unterschiede bezüglich der eingeschlagenen Wandlungspfade.

Key words: entrepreneurs; institutions; rural areas; post-socialist transformation

Introduction

The realisation of reforms and the working of market institutions in post-socialist rural areas rests heavily upon the emergence of entrepreneurial individuals. However, the emergence of such persons is conditioned by the defining characteristics of the processes of post-socialist transformation and rurality. On the supply side, the absence of positive role models in the family and the society, the inability to accumulate capital and the skills necessary to engage in the process of business enterprise, and a historical hostility towards private business - that in large parts of Russia and the Ukraine pre-dates Socialism - underline the magnitude of the task of generating entrepreneurs (Rehn/Talaas 2004). Moreover, even in Soviet Union, where the internal registration system restricted migration from villages to the town, there was widespread rural-urban migration. Up to 100 million migrants moved from the countryside to the main towns and cities during the post-war Soviet era (Barkhatova et al. 2001). On the demand side, the manifestations of post-socialist transformation in the countryside combined with diverse resource (such as the quantity of labour, the availability of land and capital, the size of local markets) endowments between urban and rural areas impact upon the quantity and quality of entrepreneurial opportunities available. However, to date there has been precious little research exploring rural entrepreneurship in Russia and the Ukraine. This relative neglect indicates that rural areas constitute political and economic periphery and are of secondary importance in the post-soviet space (Johnson et al. 2000).

One plausible explanation for the neglect of rural entrepreneurship is that rurality 'does not matter at the early stages of reform'. This means that the main constraints in the emergence of entrepreneurs emanate from the magnitude of institutional change and the volatility of the macro-economic setting that are defining post-soviet space as a whole. As a consequence, the influence of the rural is often perceived to be of secondary importance. There is some evidence to support this argument (Johnson et al. 2000). However, as the process of reform advances at a different pace between as well as within countries, the characteristics of the rural become more salient. …

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