Small Business Economics

, Volume 43, Issue 2, pp 427–446 | Cite as

How much of a socialist legacy? The re-emergence of entrepreneurship in the East German transformation to a market economy

  • Michael FritschEmail author
  • Elisabeth Bublitz
  • Alina Sorgner
  • Michael Wyrwich


We investigate how institutional change—the transition from a socialist system to a western type market economy—relates to the re-emergence of entrepreneurship in East Germany. This region is particularly well suited for such a study because of the rapid change of the institutional framework and the possibility to use West Germany as a benchmark. It took about 15 years until self-employment levels in East Germany reached those of West Germany. Despite this catch up, we find a number of peculiarities in East German self-employment that appear to be a continuing legacy of the socialist period. There is also a considerable correspondence of the regional levels of self-employment before, during and after the socialist period, suggesting the existence of a long-lasting regional entrepreneurship culture that can be regarded as an informal institution. This is in line with the hypothesis that informal institutions change much more slowly than formal institutions.


Entrepreneurship Self-employment New business formation Transformation East Germany 

JEL Classifications

L26 P3 O34 R11 


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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  • Michael Fritsch
    • 1
    • 2
    • 3
    Email author
  • Elisabeth Bublitz
    • 4
  • Alina Sorgner
    • 1
  • Michael Wyrwich
    • 1
  1. 1.School of Economics and Business AdministrationFriedrich Schiller University JenaJenaGermany
  2. 2.German Institute for Economic Research (DIW Berlin)BerlinGermany
  3. 3.Halle Institute for Economic Research (IWH)BerlinGermany
  4. 4.Hamburg Institute for International Economics (HWWI)HamburgGermany

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