The Case of East Germany

  • Michael Fritsch
  • Michael Wyrwich
Part of the International Studies in Entrepreneurship book series (ISEN, volume 40)


We investigate how institutional change, specifically, 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 of using West Germany as a benchmark. It took about 15 years for self-employment levels in East Germany to reach those of West Germany. Despite this catch up, we find a number of peculiarities in East German self-employment and new business formation that appear to be a continuing legacy of the socialist period. There is also a considerable correspondence of the regional levels of entrepreneurship 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 


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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Michael Fritsch
    • 1
  • Michael Wyrwich
    • 2
  1. 1.Friedrich Schiller University JenaJenaGermany
  2. 2.University of GroningenGroningenThe Netherlands

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