Entrepreneurship in transition economies diversity, trends, and perspectives

3Alexander Chepurenko and Arnis Sauka Staying in the Family: The Impact of Institutions and Mental Models on Entrepreneurship Development in Post-Soviet Transition Countries.. Lately, du

in Transition

Economies

Arnis Sauka

Alexander Chepurenko Editors

Diversity, Trends, and Perspectives

Societies and Political Orders in Transition

political orders in transition, for example in Central and Eastern Europe but alsoelsewhere in the world By comparing established societies, characterized by well-established market economies and well-functioning democracies, with post-socialist societies, often characterized by emerging markets and fragile politicalsystems, the series identifies and analyzes factors influencing change and continuity

in societies and political orders These factors include state capacity to establishformal and informal rules, democratic institutions, forms of social structuration,political regimes, levels of corruption, specificity of political cultures, as well astypes and orientation of political and economic elites

This series welcomes monographs and edited volumes from a variety of plines and approaches, such as political and social sciences and economics, whichare accessible to both academics and interested general readers

disci-Topics may include, but are not limited to, democratization, regime change,changing social norms, migration, etc

More information about this series at http://www.springer.com/series/15626International Advisory Board:

Bluhm, Katharina; Freie Universita¨t Berlin, Germany

Buckley, Cynthia; University of Illinois at Urbana-Champaign, SociologicalResearch, USA

Cox, Terry; Central and East European Studies, University of Glasgow, UKFish, Steve; Berkeley University, USA

Ilyin, Michail; National Research Universiy Higher School of Economics, RussiaMelville, Andrei; National Research University Higher School of Economics, RussiaRadaev, Vadim; National Research University Higher School of Economics, Russia

Stockholm School of Economics

in Riga

Riga, Latvia

National Research University Higher School

of EconomicsMoscow, Russia

Societies and Political Orders in Transition

ISBN 978-3-319-57341-0 ISBN 978-3-319-57342-7 (eBook)

DOI 10.1007/978-3-319-57342-7

Library of Congress Control Number: 2017939939

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Entrepreneurs are often seen as the drivers of growth What are their main teristics from the perspective of economics? For Schumpeter (1934), they were theleaders of technological innovation, bringing new products and technologies to themarket and creating economic wealth and jobs in the process By hiring capital andworkers into new firms in high-return activities, they are also seen as ensuring thatthe national allocation of resources improves (Kirzner 1973) Of course, the profitsfrom new products or technologies are not guaranteed, so entrepreneurs are alsoviewed as risk-takers (Knight 1921).

charac-Unsurprisingly, therefore, the levels of entrepreneurial activity are often taken asindicators of national economic health, especially with respect to the ability to growand to create jobs For example, American business dynamism is often linked to therelatively high levels of entrepreneurial activity; Reynolds (2007) points out thatapproximately half of American men have a period of self-employment during theirlives, a very high figure by European or Japanese standards But not all countries,even successful ones, have high rates of entrepreneurship; as the Global Entrepre-neurship Monitor data shows (see Reynolds et al 2005), there is great cross-countryvariation with very high levels of entrepreneurial activity in some developedeconomies, such as the United States or Finland, as well as emerging economiessuch as Uganda or Chile As we will see in this book, there is now also greatheterogeneity of experience within the transition economies

The economies of Central and Eastern Europe began their transition to a marketsystem under highly unpromising circumstances with respect to entrepreneurship(Estrin et al 2006) Entrepreneurship had been frowned upon in the plannedeconomies of Eastern Europe, and as this book documents, the cultural legacyand lack of an entrepreneurial ecosystem remain issues to this day in manycountries To illustrate the problem, Aidis et al (2008) explored whether the factorsleading to lower levels of entrepreneurial activity in Central and Eastern Europecould be explained by the differences in the standard determinants of entrepreneur-ship: personal skills, education and human capital, financing and institutions Theyfound that, while these factors were all relevant, the former socialist economies still

v

had systematically less entrepreneurship than elsewhere in the world Furthermore,the differences were more pronounced for the former Soviet Union than for theeconomies of Central and Eastern Europe These factors, along with many others,will be explored in greater analytical and empirical depth in this book aboutentrepreneurship in Central and Eastern Europe and the Commonwealth of Inde-pendent States.

Unsurprisingly, much of the analysis in the book concerns the effects of tutions on entrepreneurial activity Baumol (1990) argued that, even if all countrieshad similar supplies of entrepreneurship, economic growth and performance woulddiffer as a consequence of heterogeneity in institutions The resulting effects onincentives meant that countries with weak institutions would not create productiveentrepreneurship but rather either unproductive or even destructive entrepreneur-ship For example, it might be argued that because the Soviet Union had weakmarket-supporting institutions and poor incentives for wealth-creating entrepre-neurship, much of its entrepreneurship was probably of the unproductive or evendestructive type The problem was systemic; in the Soviet legal code, entrepreneur-ship of the productive type was seen as criminal activity

insti-Even so, many reformers viewed the creation of new firms as the principalmechanism whereby the over-industrialised structures of planning would betransformed into a market-oriented system (Kornai 1990) In practice, as thisbook demonstrates, the development of an innovative and entrepreneurial societyhas been uneven Thus, consider the data from the Global Entrepreneurship Monitor

2014, using as our measure of entrepreneurial activity the Total Early-StageEntrepreneurial Activity (TEA) We find that 13 countries are covered by thesurvey, falling into three broad groups The first group have relatively high levels

of TEA as compared with other Western European economies such as Germany andItaly, with a TEA of around 4.7 and 4.9, respectively, in 2015 This group includesKazakhstan, Lithuania, Slovakia, Poland, Hungary and Romania, with TEA in 2014between 9.2 (Poland) and 13.7 (Kazakhstan) The second group of countries havelevels of TEA between 7.0 and 8.0, respectable by Western European standards andcomparable to the Netherlands at 7.2 (2015) but low by the standards of someemerging markets like Brazil or Mexico with TEA of around 21.0 This group ofcountries in 2014 are Georgia and Slovenia Finally, the transition economies have

a group of countries with very low levels of TEA, below four entrepreneurs perthousand of working population; these countries in 2014 were Russia and Kosovo

In this volume we find long-overdue detailed studies of countries in each of thesethree categories, including the Baltic states; several Central European economiessuch as Poland, Hungary and the Czech Republic; and of course Russia

When the process of transition began, the large variety of economies under theformer socialist banner tended to be treated as a single group, but in the past

25 years, their experiences have diverged, in no small part because of deep-rootedhistorical, geographical and cultural differences Many of these facts have partic-ular significance for understanding the evolution of entrepreneurship in eachcountry A good monograph analysing and comparing these developments is long

overdue, and Arnis Sauka and Alexander Chepurenko have done a great job infilling this gap in the literature There is much of value to be learnt from these pages.

Estrin, S., Meyer, K E., & Bytchkova, M (2006) Entrepreneurship in transition economies In

M Casson, B Yeung, A Basu, & N Wadeson (Eds.), The Oxford handbook of ship Oxford: Oxford University Press.

entrepreneur-Kirzner, I (1973) Competition and entrepreneurship Chicago, IL: University of Chicago Knight, F (1921) Risk, uncertainty and profit New Work: Houghton-Mifflin.

Kornai, J (1990) The road to a free economy: Shifting from a socialist system: The example of Hungary New York: Norton.

Reynolds, P (2005) Entrepreneurship in the United States New York: Springer.

Reynolds, P., Bosma, N., Autio, E., Hunt, S., De Bono, N., Servais, I., Lopez-Garcia, P., & Chin,

N (2005) Global entrepreneurship monitor: Data collection design and implementation 1998–2003 Small Business Economics, 24, 205–231.

Schumpeter, J (1934) The theory of economic development New Brunswick, NJ: Transaction Publishers.

Part I Differing Pathways: Concepts and Theories

Introduction: Systematic “Transition” and Entrepreneurship Theory 3Alexander Chepurenko and Arnis Sauka

Staying in the Family: The Impact of Institutions and Mental

Models on Entrepreneurship Development in Post-Soviet Transition

Countries 15Ruta Aidis

Part II Entrepreneurship Ecosystems: Cross Country Analysis

A Multidimensional, Comparative Analysis of the Regional

Entrepreneurship Performance in the Central and Eastern European

EU Member Countries 35La´szlo´ Szerb, E´ va Komlo´si, and Bala´zs Pa´ger

Institutions and Export Performance in 26 Transition Economies 57Besnik A Krasniqi and Sameeksha Desai

Technology-Driven Internationalization: Central-Eastern European

Perspective 75Ewa Lechman

Is Innovation a Determinant for SME Performance? Cross-Country

Analysis of the Economies of Former USSR Countries 97Nejdet Delener, Omar Farooq, and Mukhammadfoik Bakhadirov

Part III Country Studies from the CEE Region

Entrepreneurship in Estonia: Combination of Political

and Entrepreneurial Agenda 115To˜nis Mets

ix

The Business Cycle and Early-Stage Entrepreneurship in Latvia 135Marija Kr
umin¸a and Anders Paalzow

The Role of Education on Entrepreneurship in Lithuania 153Mindaugas Laužikas and Aiste˙ Mili
ute˙

Entrepreneurship Ecosystem and Policy Development in Slovenia 171Miroslav Rebernik and Barbara Bradacˇ Hojnik

Entrepreneurship in Poland: Determinants and Development

Perspectives 187Robert Rumin´ski

Entrepreneurship Development in the Czech Republic 209Martin Lukesˇ

Entrepreneurship Development in Slovakia 225Anna Pilkova and Marian Holienka

The Network Entrepreneur in Small Businesses: The Bulgarian Case 243Tanya Chavdarova

Part IV Country Studies: Evidence from Selected CIS Countries,

Georgia and Ukraine

Entrepreneurial Intentions and Initiatives in Georgia 261Levan Bzhalava, Giorgi Jvarsheishvili, Paata Brekashvili, and Boris LezhavaThe Path of Belarusian Entrepreneurship to a Socially Oriented MarketEconomy 279Anna Pobol and Marina Slonimska

Small and Medium Enterprises’ Sector in an Adverse Business

Environment of Ukraine: The Role of Cooperation 299Nina Isakova

Cross-regional Variations in the Motivation of Early-Stage

Entrepreneurial Activity in Russia: Determining Factors 315Alexander Chepurenko, Ekaterina Popovskaya, and Olga Obraztsova

Part V Role of Institutions: Special Topics

The Entrepreneurial Role of Families in Transitional Economies:

The Case of Lithuania 345Olga Stangej and Rodrigo Basco

The Impact of Competition on the Economic Behavior and Performance

of Manufacturing SMEs in Russia 367Tatyana Alimova

Motivation of Women Business Owners: Case of Russia and Norway 381Tatiana Iakovleva

Entrepreneurial Potential in the Digital Freelance Economy: Evidencefrom the Russian-Language Internet 401Andrey Shevchuk and Denis Strebkov

Part VI Conclusions and Policy Suggestions

Diverging Paths of Entrepreneurship in Transition Countries:

A Comparative View 423Bruno Dallago

Arnis Sauka is an Associate Professor at the Stockholm School of Economics inRiga Arnis has a Ph.D from the University of Siegen (Germany) and has been aVisiting Scholar at J€onk€oping International Business School (Sweden) and Univer-sity College London (UK) His academic research findings, which deal with theshadow economy, tax morale, competitiveness, social responsibility, international-ization of companies, and entrepreneurship policies, have been published in anumber of peer-reviewed journals and books.

Alexander Chepurenko is head of the Sociology Department of the NationalResearch University Higher School of Economics (Moscow) He has over

25 years of experience in comparative analysis of transitional societies, focusingespecially on entrepreneurship and private sector development in CIS and CEEeconomies He contributed to several monographs on socio-economic models, SMEand SME policy in Russia and former Socialist countries He participated in severalinternational projects, among them the Global Entrepreneurship Monitor(2006–2011), and is a member of international academic associations and societies(ESBE, EACES)

xiii

Differing Pathways: Concepts and Theories

and Entrepreneurship Theory

Alexander Chepurenko and Arnis Sauka

The term “systemic transition” is quite established in the literature on the change ofsocioeconomic models in a big group of former Socialist countries, mostly inCentral and Eastern Europe (CEE) and the Commonwealth of Independent States(CIS) Since the very beginning of the “transition,” i.e., the collapse of the SovietUnion, it has been assumed that the main direction should be from a plannedeconomy toward a market-oriented economic model Yet, even during the firstdecade of transition, it became evident that (1) transition economies cannot betreated as a unified group and that it is important to distinguish between countries atdifferent stages of market reforms and (2) the transition process is not a linearprocess (Kolodko 1999; Smallbone and Welter 2001; Aidis and Sauka 2005).Meanwhile, though there is still no consensus on “when and whether the transition

is over,” there are clear doubts as to whether the assumption with regard to themovement toward a market economy is really valid for all transition countries.Therefore, in the present volume, we use the term “transition” in quotes to stress ourdistance from the conventional meaning of this term

Still, regardless of the direction in which “transition” countries have chosen todevelop, emergence of private sector activity is evident in all of these countries.Especially in the early 1990s, most “transition” countries exemplified at least someelements of creative destruction of old economic structures and forms of gover-nance This was, however, inevitably followed by growing bottom-up entrepre-neurial activity, which left fingerprints on both the economic and social situation inthe region Yet, the process of entrepreneurship development took place at different

© Springer International Publishing AG 2017

A Sauka, A Chepurenko (eds.), Entrepreneurship in Transition Economies,

Societies and Political Orders in Transition, DOI 10.1007/978-3-319-57342-7_1

3

speeds and was also of different types in various “transition” countries (Smallboneand Welter2001,2009) Moreover, it turned out that the Schumpeterian innovativeentrepreneurship concept works somewhat differently than expected in “transition.”Namely, a number of studies suggest that most bottom-up private entrepreneurs in

“transitional” economies are in fact more pushed than pulled to start-ups, havingvery limited resources or none whatsoever, little knowledge, and a survival-oriented motivation (Earle and Sakova2000; Peng2001)

Furthermore, we know from studies exploring entrepreneurship in various sition contexts that, influenced by an institutional framework that is not alwaysproperly established, entrepreneurs often followed an unproductive path (Estrin andMickiewicz 2012) In particular, in many “transition” countries, proportionallybigger private companies were often run by representatives of former communistparties’ nomenclature, using their ties to national governments, privatization agen-cies, and even international organizations to transform their political influence anduseful contacts into economic power Even though this activity also potentiallygenerated some productive output, it involved a substantial proportion of litigationand rent-seeking elements These “predatory entrepreneurs” became good exam-ples of Baumol’s (1990) idea of unproductive and destructive entrepreneurship,instead of reflecting Schumpeterian productive entrepreneurship (Sauka 2008;Sauka and Welter2007)

tran-In line with the notion that “context matters,” shaping both the role of neurship in general and the structure and performance of companies (e.g., Karlssonand Dahlberg2003), many researchers have attempted to explore the developmentpatterns of entrepreneurship in various “transition” countries Most of this research,however, has focused on single countries and lacks a comparative perspective thatwould allow for a more in-depth understanding of various development patterns indistinct “transition” countries Lately, due to the efforts made by several interna-tional research projects, especially the Global Entrepreneurship Monitor (GEM),data enabling researchers to fill in this knowledge gap about entrepreneurial activity

entrepre-in several “transitional” economies became available

By now, a fruitful and intensive interconnection between “general” neurship theories and exploring “transitional” societies has been established On theone hand, various entrepreneurship theories provide a number of useful paradigms,methods, and tools to produce informed research on entrepreneurship and entre-preneurial ecosystems in a “transition” setting The paradigm of entrepreneurship

entrepre-as exploration and exploitation of new market opportunities, the idea of microlevelinstitutions (such as the family or school) and their impact on entrepreneurialperformance, the thesis on the different impacts of opportunity vs necessity moti-vation on entrepreneurial strategies, and the role of networks in establishingmarkets for entrepreneurial products are only a few examples

On the other hand, the experience of researching “transitional” landscapesenriches entrepreneurship theory with some new insights and evidence Arguably,among the most important contributions in this regard is the notion of contextual-izing entrepreneurship (Welter2011), thus making assumptions based on evidencefrom relatively more established market economies more relevant within the

framework of a “transition” setting often characterized by imperfect markets andcompetition, unproductive entrepreneurship, and informality Furthermore, entre-preneurship theory is making progress in developing methods for a cross-countrycomparison of entrepreneurial ecosystems Some of the output of this developmentcan also be found in the research on diverging paths of entrepreneurial ecosystems

in post-Socialist countries

All in all, theoretical developments within the entrepreneurship researchdomain, the availability of cross-country data, and the increasing number of singlecountry studies have generated substantial knowledge on the development ofentrepreneurship in “transition” countries Yet, entrepreneurship development,especially in a transition setting, which tends to be more dynamic compared tomore advanced market economies, needs to be constantly reassessed In the context

of the above discussion, this volume aims to contribute to this debate by providingup-to-date evidence with regard to recent developments: trajectories and specificforms as well as the performance of entrepreneurship in different transitionalenvironments Given the nature of the “transition” process, we believe that suchevidence could be of use to both academic society engaging in entrepreneurshipresearch and policymakers and international organizations interested in gainingcontemporary, nuanced insights into the similarities and differences of entrepre-neurship development in CEE and the CIS

This volume brings together some of the leading scholars engaging in neurship research within the “transition” context and consists of six parts:

entrepre-Part I seeks to provide a more general theoretical explanation of the impact ofinstitutions on the development of entrepreneurial practices in different transitionalenvironments Part I starts with an introduction, written by the editors of thisvolume, who discuss the interconnection of the aspects of “transition” and entre-preneurship theory, and introduces the contributors to the volume More impor-tantly, however, Part I includes a contribution by Ruta Aidis that attempts to explainthe diverging paths of entrepreneurship development in 15 “transition” countries.Aidis’s contribution explores transition processes after the collapse of the SovietUnion within two main country groups: the Baltic countries (Estonia, Latvia, andLithuania) and the Commonwealth of Independent States (CIS), consisting of nineother former Soviet republics Entrepreneurship development within these countrygroups is explored through the lenses of individual cognition, perceptions ofinstitutional arrangements, and attitudes toward entrepreneurship To do this,Aidis draws on institutional theory and introduces the use of mental models,using inter-CIS migration patterns and media freedom to illustrate how certaintypes of attitudes toward institutions and weak institutions can impede the devel-opment of productive entrepreneurship in a transition setting

Part II of the volume is devoted to a comparative analysis of entrepreneurialdevelopment in transition environments Part II starts with a contribution by La´szlo´Szerb, E´ va Somogyine´ Komlo´si, and Bala´zs Pa´ger that aims to examine theentrepreneurial performance of the Central and East European (CEE) region byapplying the Regional Entrepreneurship and Development Index (REDI) approach.The very idea of a complex index which would enable one to make comparisons ofthe entrepreneurial environment and entrepreneurship development in differentsocieties vs different regions is not new Yet, until recently, scholars were strug-gling to develop an effective methodology to address this issue After the concept ofthe GEDI was developed in 2008 by Acs and Szerb, a new stream of data andevidence was produced Still, until now, this method has not been used much toanalyze and compare the state of entrepreneurship ecosystems in “transition”societies The chapter by Szerb, Komlo´si, and Pa´ger fills this gap.

More specifically, using the REDI index to compare the overall entrepreneurialperformance of the CEE region, Szerb et al find that it is below that of the other twoEuropean macro-regions, South Europe (SE) and the Northwestern Europe (NWE).They also find that the CEE region is still behind other regions of Europe regardingsuch indicators as “entrepreneurial attitudes” but relatively strong in “entrepreneur-ial aspirations.” Drawing on these results, the authors also formulate some politicalrecommendations based on the “penalty of bottleneck” methodology Namely,Szerb et al argue that the weakest performing elements of entrepreneurship should

be improved to achieve maximal improvement in overall REDI scores Hence, atailor-made policy for each country is needed, as opposed to the “one-size-fits-all”approach, often used both in academic literature and by various internationalorganizations, which over-evaluates the similarities of post-Socialist countriesduring a certain period of “transition.”

In many “transitional” economies, export-oriented entrepreneurial firms areimportant players, significantly contributing to the development of the entrepre-neurship ecosystem and the growth of the economy The next chapter in the Part II,

by Besnik A Krasniqi and Sameeksha Desai, examines the influence of institutionalconditions, both formal and informal, as well as firm demography on exportperformance in 26 “transition” economies After identifying clusters of explanatoryvariables, the study tests for the influence of explanatory and control variables onfirms’ export performance Krasniqi and Desai report that the quality of formalinstitutions does not directly influence export performance in “transition” econo-mies, whereas the dominance of informal institutions improves it The contributorsargue that this could be the result of the “exodus” of local firms because ofunfavorable home country conditions Moreover, neither the size nor the age of afirm explains export performance These results are important for decision-makerstrying to expand the export efforts of domestic entrepreneurial firms

Eva Lechman’s chapter on technology-driven internationalization furtherbroadens this theme by offering new empirical evidence on firm internationaliza-tion through intensification of technology-driven export activities across sevenselected CEE countries (the Czech Republic, Estonia, Latvia, Lithuania, Poland,Slovakia, and Slovenia) between 1995 and 2015 The author concludes that the

rapid development of new technologies in these economies led to significantstructural shifts in their trade flows, increasing the role of ICT sectors in CEEeconomies However, after 2010, in the Czech Republic, Poland, and Slovakia,slight drops in high-tech and ICT exports occurred, while in the other countries,growth became moderate, as a result of the slowdown of the global economy Thisevidence is important, as it shows certain limits of positive structural changes in theprivate economy in “transitional” economies established by globalization patterns.Part II concludes with a contribution by N.J Delener, Omar Farooq, andMukhammadfoik Bakhadirov on the impact of engaging in innovation activity onSMEs’ growth in former Soviet countries (Armenia, Azerbaijan, Belarus, Estonia,Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Russia, Tajikistan,Ukraine, and Uzbekistan) and its relevance to the country-specific environment andfactors associated with it Delener et al analyze firm-level statistics of innovationactivity on the country level and indicators of the business environment, includingtaxation, ease of doing business, and corruption, across selected countries Theauthors point out that the intensity of innovation and investment in innovationpositively correlate with such indicators of firms’ economic performance as salesand sales per employee growth Moreover, due to the structural specifics of theseeconomies, innovations by nonmanufacturing firms have a greater influence onsales per employee than innovations by manufacturing SMEs This is importantevidence, because it shows that incremental innovations in trade and services in

“transition” societies may have a greater impact on economic prospects thandisruptive innovations in manufacturing industries, which need different frame-work conditions and more economic capacities to become a trigger of economicdevelopment

Parts III and IV of this volume offer new insights on the state and developmenttrends of entrepreneurship in “transition” countries, exploring the specifics ofentrepreneurship in country-specific contexts Following an often-used categoriza-tion of transition economies, Part III concentrates on the recent developments inentrepreneurship in CEE countries, including Baltic countries, whereas Part IVincludes Georgia, Ukraine and CIS countries—economies with somewhat differenttransition trajectories

The most important incremental knowledge that these two parts provide is aclear vision of diverging paths of entrepreneurship in different “transition” envi-ronments Namely, a number of “transition” countries indeed show significantprogress in entrepreneurship performance and establishment of transparent andstable framework conditions, while others are still at an early stage with regard tothe preconditions for sustainable development of private entrepreneurship It shouldalso be stressed that some of the chapters included in Parts III and IV offer the veryfirst opportunity to get acquainted with entrepreneurship-related issues in therespective countries (e.g., in Georgia) and also introduce the most recent results

of GEM-based observations of entrepreneurial activity (e.g., in Latvia, the CzechRepublic, and Slovakia)

Part III starts with an exploration of entrepreneurship development in the threeBaltic countries—Estonia, Latvia, and Lithuania The contribution by To˜nis Mets

focuses on the history of entrepreneurship in Estonia, which became legal withperestroika at the end of the long period of Soviet occupation Therefore, thepolitical agenda of transition from command to market economy also marks theentrepreneurship development trajectory Efforts on the part of the Estonian gov-ernment with regard to ICT development starting in the 1990s and entrepreneurshippromotion in the twenty-first century are manifestations of political entrepreneur-ship In a combination of these two aspirations, the technology start-up boomcharacterizes Estonian entrepreneurship in the second decade of the twenty-firstcentury.

Marija Kr
umin¸a and Anders Paalzow look at the business cycle and its cations for early-stage entrepreneurship in Latvia employing data from the GEMLatvia reports covering the period of 2005–2015 The authors draw on conceptualand empirical studies exploring the relationship between the business cycle andentrepreneurial activity—in both macroeconomics and entrepreneurship literature.According to their findings, (1) overall GDP development has a counter-cyclicalimpact on entry into entrepreneurial activity in Latvia; (2) unemployment rateshave a positive influence on entrepreneurial entry rates—high unemployment leads

impli-to high entry rates, whereas low unemployment leads impli-to low entry rates (and exit);and (3) entrepreneurship plays an important role, mainly through necessity-drivenentrepreneurship, in stabilizing the economy during a recession Furthermore, theirresults also confirm that it is somewhat misleading to look at the aggregate level ofstart-up activities only; instead, a distinction has to be made between low ambitionand high ambition entrepreneurship, which is closely related to whether individualsare pushed into entrepreneurship by labor market conditions or attracted byopportunities

Mindaugas Laužikas and Aiste˙ Mili
ute˙, meanwhile, explore the recent ment trends of entrepreneurship in Lithuania, focusing on the role of education inentrepreneurship, including entrepreneurial intention, attitude, perception, motiva-tion, and activities In this contribution, the authors emphasize that literature oneducation’s effects on entrepreneurship is rather scarce and clearly show that suchstudies are of particular importance in transition environments where changes in thenational education system are still ongoing Drawing on GEM data, qualitativeinterviews, and available statistics, Laužikas and Mili
ute˙ present recommendations

develop-to the Lithuanian government and educational organizations on improving preneurship education and thus enhancing education’s positive effects on entrepre-neurship development in Lithuania Even though the recommendations aredeveloped for Lithuania, in many ways they may also be relevant for other

entre-“transition” countries, especially those included in Part III of this volume.The following chapter by Miroslav Rebernik and Barbara Bradacˇ Hojnik inves-tigates entrepreneurship trends in Slovenia in the context of the evolution ofentrepreneurship policy and the development of the entrepreneurship ecosystem

in the country It is argued that even in Slovenia, one of the leaders in CEE,company performance, and entrepreneurship activity are lagging behind the EUaverage, particularly as regards early-stage entrepreneurship and established entre-preneurship rates Moreover, entrepreneurship policy so far has not led to

significant achievements in terms of access to finance and administrative ency; administrative burdens are relatively high, while entrepreneurship education

transpar-is only just beginning However, the start-up ecosystem as a part of the neurship ecosystem is developing rapidly Based on insights into entrepreneurshipactivity and the progress of entrepreneurship policy and the entrepreneurshipecosystem up to this point, the authors suggest some entrepreneurship policymeasures that could improve the functioning of the entrepreneurship ecosystemand increase the quality of entrepreneurship in Slovenia

entrepre-The role of entrepreneurship and small businesses in the economic “transition”and stable development of Poland is unquestionable, argues Robert Rumin´ski in achapter addressing entrepreneurship development in Poland Indeed, using variousdata sources, Rumin´ski demonstrates that within the last 25 years, rapid develop-ment of entrepreneurship has led to significant improvement of the country’smacroeconomic performance Rumin´ski also shows that some aspects of entrepre-neurship development in Poland already exceed the EU average level, whereasothers are still comparably less developed The chapter is concerned with entrepre-neurship, growth, and development perspectives of small businesses and their role

in the economic development of Poland It also verifies whether the businessenvironment is favorable and identifies the most important entrepreneurship con-straints, including the barriers to small business development Key determinants ofsmall business development, the country’s competitive position, the business envi-ronment, and the support of state initiatives contributing to further business devel-opment are discussed

The next contribution in Part III is written by Martin Lukesˇ and looks at thecurrent state and development trends of entrepreneurship in the Czech Republic.Lukesˇ utilizes outputs of previous studies on entrepreneurship conducted in theCzech Republic as well as various available datasets, among them the GEM data,which enable him to explore the state of entrepreneurship and its specific features inthe country This contribution focuses on the sectors of the economy in whichentrepreneurial activity is most prevalent It further discusses entrepreneurship inacademia in terms of both entrepreneurship education and entrepreneurshipresearch and proceeds to a description of the entrepreneurial ecosystem, entrepre-neurial culture, and the role of the government The chapter concludes with adescription of future trends and detailed policy recommendations

Similarly, Anna Pilkova and Marian Holienka present the main trends in preneurial dynamics and development of entrepreneurial framework conditions inSlovakia over the last 5 years using the GEM and other relevant data Generally,entrepreneurship in Slovakia is characterized by relatively high levels of entrepre-neurial activity throughout all its types and phases of the entrepreneurial process.Involvement of individuals in entrepreneurial efforts is fostered in particularthrough high levels of self-confidence, intense networks, and improving (but stillrather low) opportunity perception and social attitudes toward entrepreneurship.The contributors show that the overall high activity is unevenly distributed acrossage groups and genders Thus, specific attention is paid to inclusivity of entrepre-neurship, with the main focus on disadvantaged groups such as women, youth, and

entre-seniors Also, the entrepreneurial environment in the country, despite some able conditions, reflects generally insufficient state support for entrepreneurialactivity, especially for new and growing businesses Moreover, societal attitudesand cultural and social norms related to entrepreneurship do not stimulate but ratherinhibit individuals from engagement in entrepreneurial efforts Based on theirfindings, the contributors develop policy implications in favor of entrepreneurshipsupport programs and education In particular, the authors stress issues relevant tothe development of innovative start-ups.

favor-Part III concludes with a chapter written by Tanya Chavdarova, who discussesthe applicability of the theoretical distinction between market and network entre-preneurs on the basis of data from various sociological studies conducted inBulgaria Strategic networking is examined in relation to intraorganizational ties(nepotism, dual agreements with employees) and the ties among informally self-employed workers It is argued that network entrepreneurs shape markets on thebasis of their networks Such practices have gained social legitimacy and are wellestablished, albeit informal by nature, constituting a labor market adjustmentmechanism in Bulgaria

Part IV explores the state of entrepreneurship and related institutional work conditions in Georgia, Ukraine and the CIS Part IV begins with a chapter byLevan Bzhalava, Giorgi Jvarsheishvili, Paata Brekashvili, and Boris Lezhava, whoprovide the first overview of entrepreneurial intentions and initiatives in Georgia inthe current literature Using the Georgian data of the GEM, the chapter exploresfactors that influence the formation of necessity and opportunity-based entrepre-neurial intentions Moreover, the export performance of new enterprises is exam-ined based on necessity and opportunity motives Bzhalava et al find that bothbusiness training acquired as a part of primary or secondary school education andbusiness training acquired after secondary school are significantly and positivelyassociated with opportunity-based entrepreneurial intentions Also, the authorssuggest that there is no significant difference between necessity- and opportunity-driven entrepreneurs in Georgia in terms of the international performance Incontrast, new enterprises motivated by both necessity and opportunity performbetter in international markets than those motivated by only one of these factors.Thus, the evidence presented by Bzhalava et al draws attention to entrepreneurswith mixed motivation, who thus far have been investigated less, but in factconstitute the dominant group

frame-The case of Belarus, explored by Anna Pobol and Marina Slonimska, provides areview of the process of entrepreneurship evolution and traces the efficiency ofvarious entrepreneurship policies in this CIS country Employing the context studymethodology, the contributors examine the changes in the dynamics of entrepre-neurship in Belarus in its historical, temporal, institutional, spatial, and socialcontexts The authors complement their general analysis of entrepreneurship devel-opment in the country with the cases of three particular industries—agriculture, IT,and manufacturing—where the sustainability and performance of entrepreneurialfirms are quite different This allows them to demonstrate that different approaches

on the part of the state toward private entrepreneurship in different areas might

heavily influence the respective performance of entrepreneurship in fragileenvironments.

Further, Nina Isakova presents an excellent overview of the current state anddevelopment trends of entrepreneurship in Ukraine This chapter attempts to con-tribute to research on the cooperation of enterprises, also drawing on the increas-ingly accepted notion that one prerequisite of success for small businesses is theirintegration within the overall “business system.” Specifically, against the back-ground of the analysis of SME status and policy development trends, the issue ofcooperation of small and large businesses is discussed in this contribution Thebasic idea presented by Isakova is that cooperation between small and largebusinesses is potentially an important tool to support small businesses, but enter-prises often fail to realize this potential This is due to the limitations of theenvironment, the business competence of entrepreneurs, lack of a proper combina-tion of various types of cooperation, and gaps in business support infrastructure.Contemporary entrepreneurship theory draws attention to the motivation ofentrepreneurial activity which might influence the decision-making and strategies

of entrepreneurs It is well known that people inspired by the idea of improving aremore often able to establish fast growing and innovative firms, while necessity-driven entrepreneurs are less inclined to create new jobs and to expand Thestructure of entrepreneurial activity of a country or a region might be dominated

by different types of entrepreneurs and, hence, provide more or less driving force

In the context of this discussion, the concluding contribution in the Part IV of thisvolume, the chapter by Alexander Chepurenko, Ekaterina Popovskaya, and OlgaObraztsova, explores the development of entrepreneurship in Russia Given the size

of the country, however, the authors focus on exploring regional differences inentrepreneurship development in Russia

In particular, Chepurenko et al seek to address factors influencing the lence of opportunity-driven entrepreneurial activity in the structure of motivation ofearly entrepreneurs in certain regions measured by another index: the share ofopportunity-based early entrepreneurs (SOBE) It is shown that differences inSOBE levels among Russian regions are statistically significant; they reflect acertain set of regional, social, and economic factors immediately or with a short-,medium-, or even long-term (10 years) lag; factors are identified which have eitherincreased or boosted the SOBE level of a region Based on this evidence, a morenuanced policy on the regional level should be implemented to improve entrepre-neurial motivation in less dynamic regions and to support the positive structure ofentrepreneurial motivation in a few prospering regions

preva-Part V includes contributions addressing specific topics such as family nesses, freelancing, female ownership, and entrepreneurship in the manufacturingsector in transition economies, mostly using a cross-country perspective In such away, the volume aims to contribute to the debate on the interplay of variousinstitutions—both formal and informal—which, on the one hand, shape the envi-ronmental context of entrepreneurial activity in “transition” and, on the other hand,are shaped by the preceding period and the cultural specifics of their countries andregions We argue that regardless of whether entrepreneurship processes are

busi-observed in family firms, the manufacturing sector, or other “specific areas,”exploring the interplay of these institutions has the potential to provide knowledgethat could be important in understanding entrepreneurship processes in contextssuch as CEE and CIS countries.

The family often forms the backbone of entrepreneurial activities, offering theentrepreneur a pool of physical, financial, human, and social resources, especially atthe very start of a venture In some “transitional” societies where the humanheritage of entrepreneurship was still alive due to the planned economy havingbeen rather short-lived, bottom-up family entrepreneurship soon filled the gap inentrepreneurial activities However, the interplay between family and entrepreneur-ship cannot be taken for granted First, even in successful cases, families andentrepreneurship are driven by differing logic Second, both the family and entre-preneurship are context-embedded—economically, culturally, and politically.Looking through this lens, Olga Stangej and Rodrigo Basco explore the interplay

of family and entrepreneurial practice in the context of the Lithuanian economy,observing how the “transition” environment affects the development of familyfirms On this basis, the contributors explore the entrepreneurial role of families

in transition economies and develop a conceptual framework that has both ical and practical implications

theoret-The chapter by Tatiana Alimova looks at the impact of competition on theeconomic performance of Russian manufacturing SMEs Based on the data of anempirical survey of 1500 manufacturing SMEs, it examines the impact of perceivedcompetition with big domestic competitors and with foreign companies on SMEs’investment and innovation activity It also examines the main exogenous factorsrelated to competitiveness and growth potential of domestic manufacturing SMEs

A strong positive effect of competition on manufacturing SME performance isfound only in cases when both domestic and foreign manufacturers are the maincompetitors of Russian manufacturing SMEs In contrast, competition with solelydomestic manufacturers encourages the presence of manufacturing SMEs with lowefficiency that are not concerned about the modernization of production andinnovations In the latter case, as the contributor shows, a mechanism of compet-itive selection of the most efficient market participants does not work

Gender-related differences of entrepreneurial strategies belong to the greens” of entrepreneurship research but have been explored less in the “transi-tional” context Tatiana Iakovleva’s chapter focuses on the motivation of femaleentrepreneurs to start their own business Based on a comparative study of 33 femaleentrepreneurs in Norway (12) and Russia (21), she illustrates that the motivation tostart a business among females is often driven by a desire to solve social problems.However, different contexts—a “transitional” economy as in Russia or a developedmarket economy as in Norway—seem to influence the motivation to establish abusiness differently The study finds a stronger desire to contribute to society’sneeds among female business founders in Norway in comparison to female foun-ders in Russia, who are driven by “masculine” needs, i.e., income and growth Thisindicates that the cultural and social context in a society like Norway may provide

“ever-women with more possibilities to focus on societal issues in business in comparisonwith the “transitional” context of Russia.

In “transitional” societies, some IT-based phenomena of the “new economy”also emerge and come into play, such as freelancing Research of the entrepreneur-ial potential of Internet freelancers contributes to a better understanding of how soloself-employment may transform into new businesses in knowledge-intensive andcreative industries which are crucial for modernizing economies in “transition.” Intheir chapter, Andrey Shevchuk and Denis Strebkov, using their own dataset ofaround 10,000 Internet freelancers, focus on the Russian-speaking online labormarket and point out that more than half of freelancers clearly have entrepreneurialorientations and abilities Moreover, the analysis of Internet freelancers shows thatthere exist strong differences between cohorts of actual entrepreneurs, potentialentrepreneurs, and non-entrepreneurs as regards their socio-demographics andprofessional as well as behavioral characteristics Especially in the context ofLechman’s research on the role of ICT-driven entrepreneurship in the moderniza-tion of “transitional” economies, attention to the possible role of the entrepreneurialpotential of Internet freelancers in knowledge-intensive and creative industries insuch economies becomes crucial

The volume concludes with Part VI, written by Bruno Dallago, which provides

an in-depth look at the prospects of entrepreneurship research related to “transition”economies and societies Altogether, the book captures both conceptual and empir-ical explorations of entrepreneurship in CEE and the CIS, providing up-to-dateinformation on the development patterns of entrepreneurship in the transitioncontext Considering the influence of the context in shaping entrepreneurshippractices as well as the nonlinearity of “transition,” the findings of the book should

be relevant both to policymakers in shaping focused, context-specific ship policies and to academics interested in exploring entrepreneurship in a “tran-sition” setting

entrepreneur-Acknowledgements Contribution of Arnis Sauka to this volume has been supported by the National Research Program 5.2 EKOSOC-LV.

References

Aidis, R., & Sauka, A (2005) Entrepreneurship in a changing environment: Analyzing the impact

of transition stages on SME development In F Welter (Ed.), Challenges in entrepreneurship and SME research Inter-RENT 2005 online-publication.

Baumol, W J (1990) Entrepreneurship: Productive, unproductive, and destructive Journal of Political Economy, 98, 893–921.

Earle, J., & Sakova, Z (2000) Business start- ups or disguised unemployment? Evidence on the character of self employment from transition economies Labour Economics, 7(5), 575–601 Estrin, S., & Mickiewicz, T (2012) Shadow economy and entrepreneurial entry Review of Development Economics, 16(4), 559–578.

Karlsson, C., & Dahlberg, R (2003) Entrepreneurship, firm growth and regional development in the new economic geography: Introduction Small Business Economics, 21, 73–76.

Kolodko, G (1999) Transition to a market and entrepreneurship The systematic factors and policy options Paper for the UNU/WIDER project ‘Small and medium enterprises: How does entrepreneurship develop in postsocialistic states ’ Helsinki.

Peng, M W (2001) How entrepreneurs create wealth in transition economies Academy of Management Executive, 15(1), 95–108.

Sauka, A (2008) Productive, unproductive and destructive entrepreneurship: A theoretical and empirical exploration Frankfurt am Main: Peter Lang GmbH.

Sauka, A., & Welter, F (2007) Productive, unproductive and destructive entrepreneurship in an advanced transition setting: The example of Latvian small enterprises In M Dowling &

J Schmude (Eds.), Empirical entrepreneurship in Europe Cheltenham: Edward Elgar Smallbone, D., & Welter, F (2001) The distinctiveness of entrepreneurship in transition Econ- omies Small Business Economics, 16(4), 249–262.

Smallbone, D., & Welter, F (2009) Entrepreneurship and small business development in socialist economies Routledge studies in small business London: Routledge.

post-Welter, F (2011) Contextualizing entrepreneurship—Conceptual challenges and ways forward Entrepreneurship Theory and Practice, 35, 165–184.

Alexander Chepurenko is head of the Sociology Department of the National Research sity Higher School of Economics (Moscow) He has over 25 years of experience in comparative analysis of transitional societies, focusing especially on entrepreneurship and private sector development in CIS and CEE economies He contributed to several monographs on socio- economic models, SME and SME policy in Russia and former Socialist countries He participated

Univer-in several Univer-international projects, among them the Global Entrepreneurship Monitor (2006–2011), and is a member of international academic associations and societies (ESBE, EACES).

Arnis Sauka is an Associate Professor at the Stockholm School of Economics in Riga Arnis has

a Ph.D from the University of Siegen (Germany) and has been a Visiting Scholar at J €onk€oping International Business School (Sweden) and University College London (UK) His academic research findings, which deal with the shadow economy, tax morale, competitiveness, social responsibility, internationalization of companies, and entrepreneurship policies, have been published in a number of peer-reviewed journals and books.

of Institutions and Mental Models

As elsewhere, entrepreneurship is considered a key contributor to economicgrowth, innovation, and development in transition countries (Nikolova et al

2012) After the breakup of the Soviet Union, the 15 newly independent countrieshad a decision to make: to reinstate their old economic and political ties or to enterinto new economic alliances Two main country groups emerged: the EuropeanUnion (EU)-oriented and Commonwealth of Independent States (CIS)-orientedgroups The EU-oriented group is comprised of the three Baltic states (Estonia,Latvia, and Lithuania) which formally joined the EU in 2004 and Moldova1, theUkraine2, and Georgia3which all have signed an association agreement with the EU

in 2014 The Commonwealth of Independent States (CIS)-oriented group is

2 The Ukraine was never a full member of the CIS but retains its CIS associate member status.

3 Georgia withdrew its membership to the CIS in 2008.

© Springer International Publishing AG 2017

A Sauka, A Chepurenko (eds.), Entrepreneurship in Transition Economies,

Societies and Political Orders in Transition, DOI 10.1007/978-3-319-57342-7_2

15

comprised of Russia, Armenia, Azerbaijan4, Belarus, Kazakhstan, Kyrgyzstan,Tajikistan, Turkmenistan5, and Uzbekistan In 2014, the Eurasian EconomicUnion (EAEU) was introduced to strengthen the economic ties between CISmembers Currently the EAEU has five CIS member countries: Russia6, Belarus,Kazakhstan, Armenia, and Kyrgyzstan The EAEU may further expand to includethe political, military, and cultural integration of its members.

For post-Soviet countries, the choice of alliances has had a great impact onentrepreneurship development EU membership for the Baltic countries has createdthe conditions for productive entrepreneurship development to thrive In contrast,even as they introduced market-oriented institutions, the CIS-focused countriescontinue to retain Soviet-influenced institutions that interfere with productiveentrepreneurship development This in turn has influenced the further entrenchment

of institutions and attitudes that impede the development of productive neurship that could support further economic growth and stability

entrepre-Institutional theory has played a pivotal role in terms of providing an standing of the role formal and informal institutions play in the economic devel-opment of transition countries (North1997; Djankov and Murrell2002; Aidis2006;Aidis et al.2008; Smallbone and Welter2001) However, less attention has beenpaid to the possible role of individual cognition for path-dependent institutionaloutcomes Denzau and North (1994) argue that mental models are the means bywhich individuals interpret the environment, while institutions are the externalmechanisms that have been created by individuals to structure the environment.Regardless of socioeconomic conditions, all individuals use mental models as theyare essential for day-to-day decision-making (WB2015a,b) Examples of mentalmodels include stereotypes, worldviews, and concepts However, mental modelscan also become antiquated and, in some cases, detrimental to individuals, com-munities, and nations Mental models have been studied in terms of their influences

under-on entrepreneurial behavior and entrepreneurial success but have not been applied

as an extension to institutional theory

Though institutions are formed through shared mental models, it is the tion between institutions and mental models that creates the conditions for change.One of the primary conduits for transforming mental models is exposure to newideas and experiences (Denzau and North 1994) In this chapter we explore theperpetuation of antiquated mental models in the CIS-oriented post-Soviet transitioncountries that may have a detrimental impact on productive entrepreneurshipdevelopment and influenced by internal migration and the control of the media.This chapter provides an initial attempt to apply mental models to the post-Soviet transition context We incorporate existing data and country examples tocompare, contrast, and evaluate the current and future conditions for entrepreneur-ship development This chapter is structured as follows: Sect 2 provides an

interac-4 Even though Azerbaijan is a member of the CIS, it has cultivated strong ties with Turkey.

5 Turkmenistan never officially joined the CIS; however, it is an associate member of the CIS.

6 Russia and Belarus forged a politico-economic union in 1996.

overview of institutional theory, and Sect.3elaborates on the connection betweeninstitutions, incentives, and mental models as they influence entrepreneurshipdevelopment Section 4 contrasts the differing institutional context for entrepre-neurship development in Estonia, Russia, and Tajikistan It highlights some of theexisting characteristics of the CIS countries through internal migration and mediacontrol that can interfere with productive entrepreneurship development Thischapter ends with a conclusion in Sect.5.

Institutions create the incentive structures that influence the types of entrepreneurialactivity that develop (Baumol1990) In any given context, the institutional envi-ronment is made up of both formal and informal institutions Put simply, formalinstitutions are the visible “rules of the game” such as constitutional law, which can

be altered quickly to adapt to changing economic circumstances (North 1990).These formal rules are generally enforced by governments In contrast, informalinstitutions are the invisible “rules of the game” made up of norms, values,acceptable behaviors, and codes of conduct Informal rules tend to be sociallyprescribed but not legally enforced (North1997) Change to informal rules occursmore indirectly and usually as a result of accidents, learning, natural selection, and,most of all, the passage of time (North 1990: 82) Informal rules most oftencomplement formal rules Organizations such as firms will adapt their activitiesand strategies due to the opportunities and limitations in formal and informalinstitutions Institutional development may also be intentionally affected by orga-nizational players such as entrepreneurs (North2005) Often, informal and formalinstitutions coevolve In that sense, entrepreneurial behavior is shaped by existinginstitutions, but at the same time, entrepreneurial behavior might trigger institu-tional change (Smallbone and Welter2001)

Though ideally formal rules are designed to facilitate exchange by reducingtransaction costs and informal rules are developed to complement the efficiency offormal rules, institutions can be maintained for long periods of time, even if they areinefficient (North1997) There are several reasons for inefficient institutional out-comes First of all, even when they clash with new formal rules, informal rules have

a tenacious survival ability because they have become part of habitual everydaybehavior and because they provide a sense of stability Second, informal institutionsmay change more slowly due to the influence of path dependence History matters

in the sense that pre-existing incentive structures in the environment based on initialconditions provide indications of the direction institutions are likely to develop.This occurs because institutional change is usually incremental and is seldomdiscontinuous (North1990: 10)

Thirdly, “lock-in” can occur as a result of a symbiotic relationship betweenexisting institutions and organizations that have evolved as a consequence of theprevailing incentive structure As a consequence, even when the formal rules

change, organizations which benefitted from the outdated informal rules and whichwould lose their benefits if they adopted new informal practices complementary toformal rule changes will continue to participate in detrimental informal rule prac-tices in order to retain their position of power Fourthly, when formal and informalinstitutions clash as in the case where formal rules are changed but informal ruleshave not changed, noncompliant behaviors proliferate and can result in the forma-tion of underground economies (Feige1997: 22).

and Entrepreneurship

The dynamics of the entrepreneurial process can be vastly different, depending onthe incentive structure In other words, if the benefits of engaging in illegalentrepreneurial activity outweigh their costs, entrepreneurs tend to be more inclined

to engage in destructive entrepreneurship, i.e., entrepreneurship that is detrimentalfor economic development such as drug production and distribution or prostitution(Baumol1990) Similarly, nonproductive entrepreneurship is activated in contextswhere rent seeking and corruption are rewarded through privileged monopolypositions or individual tax and regulatory exemptions Conversely if the incentivesstimulate the development of “productive” entrepreneurship which contributespositively to economic growth, then this form will predominate In each caseentrepreneurs will weigh the incentives present in the environment both in theform of regulations (formal rules) and in terms of the prevailing cultural values andnorms (informal rules) During the transition process, it is possible that the sameindividual shifts from unproductive or even destructive entrepreneurship to pro-ductive entrepreneurship depending on the incentive structure For example, illegalviolent entrepreneurs transformed to legal private security firms in mid- to late1990s in the midst of economic transition in Russia (Volkov2002) However, it ismuch more common for different individuals to embark on entrepreneurial activ-ities under different incentive structures (Aidis and Estrin2014)

Under Soviet rule, business ownership and making a profit was for the most partillegal and punishable behavior However, though officially despised and criminal-ized, entrepreneurship existed throughout Soviet rule (Aidis2006) It may seem like acontradiction in terms, but the very nature of a planned economy inadvertentlypromoted the development of widespread yet illegal entrepreneurial values, attitudes,and behavior This was mainly due to the constant shortages of consumer goods thatplagued the Soviet system Entrepreneurs identified opportunities and developedtheir business know-how and skills running illegal activities For the first time, inthe mid-1980s, the individual sale of handicrafts or produce grown on private gardenplots was legalized Regulations were further relaxed, and by the late 1980s, indi-viduals were allowed to form limited forms of cooperative style enterprises How-ever, private enterprise was only legalized after the dissolution of the Soviet Union

In institutional theory, social norms are a way of understanding the impact ofattitudes on entrepreneurship development However, the individual cognitivedimension is absent in the analysis Mental models are internal mental representa-tions that individuals create to interpret the environment around them Examples ofmental models include categories, concepts, identities, prototypes, stereotypes, andworldviews (WB2015b) Mental models tend to embody broad ideas about how theworld works and one’s place in it A general characteristic of mental models is theytend to pull toward path dependence for institutional development (Denzau andNorth1994) Though similar in ways, social norms and mental modes are distinctlydifferent Whereas social norms tend to focus on particular behaviors and to besocially enforced, mental models are not enforced by direct social pressure More-over, individuals can hold multiple and sometimes contradictory mental modelsutilizing one or another mental model when the context triggers a particular view orperspective (WB2015b).

Originally applied in studies on cognitive behavior and psychology, the ence of mental models is gaining recognition for the important role they play in theprocess of socioeconomic development The World Bank’s 2015 World Develop-ment Report highlighted the importance of understanding of mental models as the

influ-“human factors” that affect economic development outcomes Addressing mentalmodels that are outdated is a critical and overlooked component that influences thesuccess of economic development programs in developing countries

In the entrepreneurship literature, mental models have been primarily used tobetter understand the cognitive processes of entrepreneurs For example, Hill andLevenhagen (1995) used mental models to analyze how entrepreneurs deal withuncertainty in the USA Milan et al focused on how an entrepreneur’s mentalmodels can influence the differences in organizational performance in Brazil(2010) However, mental models have not explicitly been for entrepreneurialbehavior

Collectively mental models exert tremendous influence on social and economicdevelopment since they form the basis for the manifestation of culture (DiMaggio

1997), institutions (Denzau and North1994), and firm behavior (WB 2015a,b).Mental models and institutions are closely related in the sense that a change in amental model may require a change in an institution (WB2015b: 63) An individ-ual’s mental models can be out of sync with the real world and substantially limitthe amount of information used and may result in decisions being made based onincorrect or biased assumptions (WB 2015b: 63) For example, mental modelsmay result in the entrenchment of poverty (ibid) Mental modes may also play arole in enhancing the legitimacy of oligarchic institutions especially if there is ahistorical precedence (Anderson et al.2015)7 As a result, mental models have theability to influence individuals to ignore, suppress, or forget observations that

7 A study of clientelism in the Indian state of Maharashtra showed that even though the prevailing institutions are detrimental, the historical distribution of power and prestige between groups affects perceptions of their credibility and thus can perpetuate these inequities (WB 2015b : 70).

would tend to undermine their beliefs (WB 2015b: 69) In other words, mentalmodels are ways of seeing the world, and even if this viewpoint is no longerefficient, it perseveres.8

An individual’s adherence to specific mental models can change most readily inresponse to exposure to new information, new experiences, new ideas9, as well asnew role models either in real life or in fiction and through public deliberation(WB2015b: 63) Existing research indicates that exposure can have a measureableinfluence on mental models and on behaviors A recent study shows that through theexposure to other mindsets, small but tangible changes to mental models can occur(Bernard et al.2014)

data-a distorted view data-and limit the development of data-an overdata-all perspective

More recently, though not explicitly identified by the authors, two studies helpilluminate the possible impact of mental models on entrepreneurship developmentfor the Baltic countries and Russia: The first study by Laszlo Szerb and WilliamTrumbull (2016) reviewed 83 countries that included four post-Soviet countries(Estonia, Latvia, Lithuania, and Russia) in addition to five Central and EasternEuropean countries (the Czech Republic, Hungary, Poland, Slovakia, and Romania)

as well as six countries from the former Yugoslavia (Bosnia and Herzegovina,Croatia, Macedonia, Montenegro, Serbia, and Slovenia) The authors utilize datafrom the Global Entrepreneurship and Development Index (GEDI) and find thatthough there are differences between transition countries and non-transition coun-tries in Europe, there is very little difference found in terms of attitudes towardentrepreneurship

8 In his autobiography, Nelson Mandela, the first black president in South Africa, recounts an incident that helps illustrate the unconscious and often contradictory impact of mental models Mandela noticed that the pilot of his airplane in Ethiopia was black and his initial reaction was to doubt the abilities of the pilot because he had never seen a black man fly a plane before (in WB 2015b : 68).

9 In West Bengal India, a policy change was adopted to increase the numbers of women holding political offices through affirmative action As a result, some villages had female leaders for the first time Just 7 years exposure to women leaders reduced men ’s bias in evaluating women in leadership positions (Beaman et al 2012 ).

Applying the mental model perspective we have adopted in this chapter, theseresults suggest institutional changes that support entrepreneurship developmentwill likely follow the increasing levels of entrepreneurial spirit Russia was theonly country in the study that did not follow the pattern of either Europeantransition or non-transition countries Both entrepreneurial spirit and institutionaldevelopment were found to be lagging in the Russian context which may beindicative of other CIS countries.

The second study is by Peter van der Zwan et al (2011) and compares formertransition and non-transition economies in Europe and Asia in terms of the oppor-tunities available to achieve entrepreneurial progress measured using five levels ofincremental entrepreneurial involvement Data from the 2009 Flash EurobarometerSurvey on Entrepreneurship was used for 36 countries: 27 EU member countriesand 9 additional countries The data include 11 transition economies, of which threeare post-Soviet countries: Estonia, Latvia, and Lithuania

The authors find that transition countries perform well with respect to neurial spirit as compared to their non-transition counterparts in the same region,yet the perception of administrative complexities has a larger impeding effect inEuropean transition countries than in European non-transition countries TheEuropean transition countries included in the study were the three Baltic countriesall of which are EU members, and so the extent of its application to post-Soviettransition countries is questionable Nevertheless, the results provide some supportfor the research findings of Szerb and Trumbull (2016) since the EU-focusedtransition countries show little difference from other European countries Furtherresearch is needed to more clearly examine the connections between mental modelsand entrepreneurship through quantitative analysis

in Transition Countries

The three Baltic states have been characterized by a distinctly different focus fromthe rest of the post-Soviet transition countries Though they are culturally different,the Baltic states share one pivotal historical legacy: All three were independentmarket-oriented economies prior to being illegally annexed into the Soviet Unionduring World War II As a result, not only was entrepreneurship and privatebusiness development a historical reality, but there was a strong desire within allthree countries to rekindle their connections to Western Europe

Therefore it should come as no surprise that the three Baltic countries were thefirst to reinstate their independence from the Soviet Union Their Nordic neighborsresponded quickly, eager to reestablish diplomatic ties and to assist the Balticcountries in reintegrating with Western Europe through EU membership EachBaltic country was paired up with a Nordic EU member counterpart: Estonia waspaired with Finland, Latvia was paired with Sweden, and Lithuania was paired with

Denmark Economic advisors were placed in country to work with local officials topush through some of the less popular and more challenging aspects of economicreform The concerted efforts were successful, and all three Baltic countries becamefull members of the EU in 2004.

Estonia’s rapid path of economic development stands out as an example of apost-Soviet republic that used the limitations of its initial situation to its advantage

In the 1990s the newly elected government in Estonia realized it needed to build anew administration efficiently and inexpensively It did so by prioritizing theadoption of information technology As a result, Estonia now has one of the world’smost digitized bureaucracies which provides a virtually paperless government andallows voting for elections online and the use of digitalized national ID cards

In addition, in 2011, only 7 years after becoming an EU member, Estoniabecame the first ex-Soviet republic to join the eurozone This has had positivespillover effects for entrepreneurship development as it created an online savvypopulation that has the possibility to register their businesses quickly and easilyonline It also has created a pool of experienced software developers that can freelyaccess the EU market

In 2011, Estonia also gained international visibility as a tech startup hub whenSkype, a popular Internet phone service which was developed in Tallinn by Estonianprogrammers with Danish founders, was sold As a result, it has become easier forpromising Estonian firms to raise capital from international sources For example, in

2014, TransferWise, an Estonian startup, raised 6 million USD from internationalinvestors including sizeable investments from serial entrepreneur Peter Thiel.10

In contrast, Russia chose a different path Instead of a European Union ment, Russia focused on consolidating and perpetuating its regional influencethrough the formation of the CIS and later the EAEU (Eurasian EconomicUnion) In Russia, entrepreneurial development was not prioritized due largely toRussia’s abundance of natural resources but also influenced by state capture ofeconomic policies by Russian oligarchs The Russian government enjoyed thewindfalls of its oil-driven economy, while other sectors became less competitivedue to the “resource curse.”11Yet the recent decline in oil prices has exposed theneed for economic diversification and has renewed interest in supporting entrepre-neurship development

align-In Russia, entrepreneurs are still largely viewed with skepticism and routinelycriminalized: In the last 10 years, Russia has imprisoned nearly three millionentrepreneurs, and approximately 7% of Russia’s prison population are convictedfor business-related activities12(Kesby2012) Though some of these entrepreneurs

10 Peter Thiel is best known as the cofounder of PayPal in the USA.

11 A paradoxical situation in which countries with an abundance of nonrenewable resources experience stagnant growth or even economic contraction

12 In 2013, an amnesty for thousands for Russian businessmen convicted of economic crimes was announced but in reality affected only 12,000 prisoners, while thousands more remain behind bars (Boyde 2013 ).

may deserve to be imprisoned, anecdotal evidence indicates that many neurs are jailed for small transgressions where a warning would have been a betterapproach This is often the result of unproductive entrepreneurial activity in theform of corruption and government official rent seeking which can effectively sup-press productive entrepreneurial activity Moreover, the existence of high-profile,politically motivated cases such as the arrest of oligarch Mikhail Khodorkovsky(arrested in 2003 and released 11 years later in 2013) creates a climate of uncer-tainty for entrepreneurs where political action can be taken arbitrarily.

entrepre-At the same time, in Russia, the high-tech sector has been singled out forgovernment funding and support As a result, in 2015, Moscow was ranked in13th place out of the world’s top 20 startup hubs buoyed by high levels of humancapital and support13for business startups (Compass2015) But there is growingconcern that this sector’s further development is being actively blocked by thegovernment Legislation passed in 2014 calls for all Russian Internet user data to behoused on servers located on the territory of the Russian Federation As part of thelegislation, all bloggers with more than 3000 daily visitors need to register withRoskomnadzor, Russia’s media regulator (Appell 2015) Critics view these mea-sures as the beginnings of the Kremlin’s control of the Russian-language Internet14

In addition, the sudden self-exile of Pavel Durov, creator of VK, the Russianequivalent of Facebook, exemplifies the harassment that Russian entrepreneursmay experience who express their critical viewpoints regarding government activ-ities If, in turn, larger numbers of tech entrepreneurs leave Russia, this may result

in brain drain that can further stunt the development of Russia’s tech sector.Moreover Russia exerts a dominant position in both the CIS and EAEU whichresults in the export of its policies, practices, and attitudes beyond its nationalborders Furthermore, according to the Eurasian Development Bank’s (EDB) 2015Integration Barometer, the attitudes are favorable toward strengthening ties withRussia and former Soviet republics through the Eurasian Economic Union (EAEU)

in most post-Soviet transition countries (EBD2015).15Figure1depicts this trend.Surprisingly the younger generation comprised of “Millennials” shares similarfavorable attitudes toward EAEU as does the older generation In fact in Kazakh-stan, Kyrgyzstan, and also Russia, Millennials tend to be more favorably disposedtoward the EAEU than the population as a whole (ibid) Research focused on theyounger generation in Russia indicates that these views may be less ideologicallydriven but rather influenced by a pragmatic attitude toward how to best succeed inthe current political climate (Hemment2016)

Maintaining close ties with former Soviet republics, however, can also uate antiquated mental models such as condoning illegal entrepreneurial activities

perpet-13 According to the 2015 Global Startup Ecosystem Ranking by Compass ( 2015 )

14 Google, Twitter, and Facebook which currently have operations in Russia have been warned not

to violate Russia ’s Internet rules (Kharpal 2015 ).

15 The EDB ’s analysis excludes the three Baltic states (Estonia, Latvia, and Lithuania) which are all members of the European Union.

or expecting entrepreneurs to be involved in exploitative activities characterized bydestructive entrepreneurial activity This is especially the case in Tajikistan whereillicit drug trade developed during the Soviet war in Afghanistan in the 1980s.Soviet soldiers deployed to Afghanistan had access to heroin and opiates, andofficial statistics indicate that more than 50% of Soviet conscripts used drugs(CIA 1986) Furthermore, little was done to curb drug production by Soviet orAfghan officials, and returning Soviet military troops often brought back theseillicit drugs for resale in their home markets which resulted in generating localdemand (ibid).

Tajikistan was the poorest republic in the Soviet Union and is currently thepoorest country in Central Asia After independence in 1991, Tajikistan wascrippled by a 5-year civil war (1992–1997) Currently, Tajikistan’s national income

is based on two main sources: remittances and drug trafficking Close to half ofTajikistan’s GDP takes the form of remittances from abroad (The Economist2013)

In fact, according to the World Bank, Tajikistan is the country with greatestdependence on remittances in the world (World Bank2016) It is estimated thatabout half of working age Tajik males are abroad, mostly working in Russia (TheEconomist2013) The other half of Tajikistan’s GDP comes from the heroin drugtrade (The Economist 2012) In Tajikistan, the main domestic entrepreneurialactivity is arguably the illegal drug trafficking bringing heroin produced in Afghan-istan to Russia Given these hostile conditions, migration to Russia may serve as an

Total respondents Milleniral respondents (aged 18 - 34 yrs.)

Fig 1 Favorable opinion for Eurasian Economic Union (EAEU) membership Key: Asterisk EAEU member Based on a representative sample of 1050–2100 respondents per country The responses shown indicate the favorable opinion to EAEU membership (for existing EAEU members) or favorable opinion of their country ’s joining the EAEU Total respondent data is based on a 2012–2015 survey average Data for millennial respondents based on 2015 survey data only 2015 data was not available for Uzbekistan and Azerbaijan Source: Eurasian Development Bank ’s (EDB) Integration Barometer 2015 (EDB 2015 )

outlet for “mobile entrepreneurs”16 unable to operate in Tajikistan Census andsurvey data confirm that Tajikistan remains overwhelmingly a donor of migrantworkers, 93% of which are bound for the Russian Federation (IOM2014) Thoughlucrative, the high national dependence on destructive entrepreneurship has had anoverarching negative impact on productive entrepreneurship development in otherindustrial sectors in Tajikistan as it crowds out productive forms of entrepreneur-ship Moreover, the close ties between the government and drug lords “sanction”the rise of a corrupt elite and ineffective law enforcement.

Of all the former post-Soviet transition countries, Russia and Kazakhstan havebecome migration hubs: migrants originating from Kazakhstan, Kyrgyzstan, Tajik-istan, and Uzbekistan account for 40% of all foreign residents in Russia (EDB

2015) In Kazakhstan, the share of Kyrgyz, Tajik, and Uzbek migrants amongregistered nonnationals in Kazakhstan exceeds 73% (IOM 2014) In fact whileKazakhstan and Russia register a positive balance of migration, Kyrgyzstan andTajikistan consistently register negative balance of external migration

Financial remittances are often the focus of migrant behavior, yet migrantinteractions in host countries also influence mental model formation and retention.One of the key pull factors for migration of Central Asian workers and mobileentrepreneurs to CIS countries is the shared Soviet institutions and familiar cultural,legal, and administrative arrangements In other words, these migrant workers(a large portion of whom are undocumented workers) continue to engage ininstitutional environments that retain Soviet-influenced characteristics

The high level of inter-CIS region migration is captured in Fig.2which showsthe primary destination for migration in 12 post-Soviet transition countries Theresulting percentages indicate the numbers of respondents interested in temporaryworking in the CIS countries and the EU countries or those interested only in thedomestic labor force

More than half of the respondents in Tajikistan are interested in temporarymigration to CIS countries, but a much smaller percentage are interested in tem-porary migration to EU countries Most post-Soviet transition countries follow asimilar pattern of higher percentages for temporary migration to CIS countries(such as Kyrgyzstan) or higher percentages for remaining in the domestic market(such as Russia, Belarus, and Turkmenistan) than migration to EU countries Theexceptions are Moldova and Ukraine In Moldova, the percentages for all threecategories were at about the same levels in terms of working in the EU and the CIS

16 Mobile entrepreneurs are entrepreneurs who cross several national boundaries with a minimum reference to the relevant state legal systems making economic gains often in the informal sector (Turneva 2014 ).

countries or working in the domestic market Ukraine exhibits the highest age of respondents interested in temporary migration to EU countries and arelatively low percentage of respondents interested in temporary migration in CIScountries These results are likely influenced by the continuing Russian-Ukrainianconflict (EDB2015).

percent-The large number of migrants to Russia especially from Kyrgyzstan and istan and other post-Soviet transition countries is likely to expose whole genera-tions of workers to the Russian language and culture as well as to the Russianworldview as portrayed through the main Russian media outlets In addition tofinancial remittances, migrants participate in “social remittances,” i.e., the ideas,behaviors, identities, and social capital that flow from the receiving country back tothe sending country (Levitt1998) Research indicates that migrants can contribute

Tajik-to the diffusion of democratic values and norms either directly upon return orthrough contacts with relatives or indirectly through social networks connectingthe diasporas with groups in the origin country (Docquier et al.2011) Other authorshave also suggested that return migrants can increase the demand for politicalaccountability and so improve governance in their home countries (Batista andVincente2010) It would also seem plausible that migrants can serve as conduits fornew attitudes toward entrepreneurship from their host countries Yet in the case ofthe CIS countries, it can be argued that attitudes toward entrepreneurship are based

on antiquated mental models inherited from the common Soviet past

CIS regin EU countries Only interested in domestic work

Fig 2 Economic integration (Source: Eurasian Development Bank 2015 ) Key: Asterisk EAEU member Based on a representative sample of 1050–2100 respondents per country Total respon- dents data is based on a 2012–2015 survey average 2015 data was not available for Uzbekistan and Azerbaijan Data for Turkmenistan only available for 2013

4.2 The Role of the Media

Russia, one of the main migration hubs for CIS member countries, is also terized by media control and censorship17 As a result, the media is not able to act aswatchdogs to ensure institutional integrity and accountability of the governmentand elected officials In addition, control of the media further limits its ability touncover institutional weaknesses and corrupt practices at the national and locallevels that interfere with entrepreneurship development Moreover, Russian mediaplays a dominant role beyond its own borders For example, Kazakhstan is thelargest consumer of Russian media outside of Russia influenced by the largeRussian population living in Kazakhstan but also due to the fact that most cable

charac-TV packages include all Russian channels (Jardine2015)18 In contrast, regionalmedia outlets are often small scale and underfunded and unable to compete with thewell-funded, government-supported Russian media (ibid) The media also plays animportant role in encouraging entrepreneurial activity A quantitative study byKevin Hindle and Kim Klyver based on data from 37 countries spanning a 4-yeartime period indicates that there was a significant association between the volume ofentrepreneurship media stories and the rate of new business startups (2007) Inparticular, a strongly positive association was found with opportunity-orientedbusiness startups (ibid)

Figure3 presents a diagram that plots two indicators for media freedom thatwere available for all 15 post-Soviet transition countries: “the World Press FreedomIndex” (WPFI) and “Voice and Accountability”(V&A) The WPFI, compiled byReporters Without Borders, assesses the ability of journalists to cover the newsfreely without abuse, censorship, or harassment The index scores shown in thescatterplot address seven issues: pluralism, media independence, environment andself-censorship, impact of the legislative framework, transparency, infrastructure,and abuse of journalists The V&A indicator compiled by the World Bank’s WorldGovernance Indicators reflects perceptions of the extent to which a country’scitizens are able to participate in selecting their government, as well as freedom

of expression, freedom of association, and a free media

The scatterplot results indicate that the relationship between a country’s pressfreedom and voice and accountability is significant, with anR2of over 0.77 whichshows that a variation in world press index scores explains close to 77% of thevariation in scores for “Voice and Accountability.” The trend line for the scatterplotalso indicates that in general, post-Soviet transition countries receive higher scores

17 As are many post-Soviet Central Asian countries For further discussion see Freedman and Shafer ( 2011 ).

18 However, Kazakhstan has introduced new regulations to reclaim media control in its borders Starting in 2016, no foreign channels carrying advertising will be allowed to be retransmitted in the country Given that all Russian channels have advertising, this will in effect mean a ban on these channels Further, from the beginning of 2017, foreign TV companies will have to open offices in Kazakhstan A 20% limit on foreign ownership of such companies operating in Kazakhstan will also come into effect.

for Press Freedom than for Voice and Accountability which may reflect that in anumber of countries, the governments are less democratic and restrictive of indi-vidual freedoms which more strongly affects Voice and Accountability scores.The results also show that the three Baltic states (Estonia, Latvia, and Lithuania)are characterized by a much greater degree of media freedom according to bothmeasures used than the other post-Soviet transition countries The other threeEU-oriented post-Soviet transition countries, Moldova, Ukraine, and Georgia,show relatively higher levels of media freedom The lower overall scores forRussia indicate that to a large extent media is controlled and freedom of expression

is limited

This chapter’s goal was to provide an initial exploration of the possible impact ofmental models on entrepreneurship development in the 15 transition countries thatused to be part of the Soviet Union Institutional theory has proved a very usefultheoretical perspective to understanding the differences among transition countries.However, as Denzau and North (1994) argue, mental models are “the internalrepresentations that individuals create to interpret the environment and institutionsare the external mechanism individuals create to structure and order the

Azerbaijan

Estonia

Latvia Lithuania

Russia Tajikistan

Turkmenistan

Uzbekistan

R² = 0.7663 0

Voice and AccountabilityFig 3 Media freedom in transition countries (Source: Own Research) Key: Press Freedom Index based on the 2014–2016 final score averages rescaled to 0–100 so that 100 is the highest score sourced from the World Press Freedom Index; Voice and Accountability based on the 2010–2014 final score averages sourced from the World Bank ’s World Governance Indicators

environment.” Therefore, it would seem useful to take a closer look at the influence

of mental models in the context of post-Soviet transition countries

Mental models are necessary for individual decision-making but may alsobecome antiquated and exert a detrimental influence for individual and nationalwelfare For example, antiquated mental models have been shown to perpetuateintergenerational poverty (WB2015b: 62) Mental models most commonly changewhen individuals are exposed to new ideas, experiences, and beliefs When theseopportunities are unavailable, however, individuals are less likely to question thestatus quo and accept it “as the way it has always been,” even in situations that areinefficient and detrimental (ibid)

We use this framework together with specific country examples and existingdata to assess the current and future prospects for entrepreneurship developmentand specifically explore the issues of international integration, migration, and mediafreedom We also take a closer look at the impact of joining the European Union(EU) versus joining the Commonwealth of Independent States (CIS) We find thatwhereas the integration or association with the EU introduces a new institutionalframework that supports entrepreneurship and a functioning free market system, theCIS tends to perpetuate institutional structures that sanction rent-seeking, monop-olistic behavior and corruption that create barriers for productive entrepreneurshipdevelopment In addition, the insular nature of the CIS, whose members are all post-Soviet transition countries, can perpetuate antiquated and often detrimental views

of entrepreneurship as illegal, exploitative, or criminal behavior We examine thepossible perpetuation of these mental models for countries who have chosen to jointhe CIS in terms of two issues that influence entrepreneurship development: migra-tion and media control

When taking net migration patterns of post-Soviet countries into account,countries such as Russia exert an even greater impact on mental model formationand retention For example, controlled and censored media in the CIS members canhave serious repercussions for entrepreneurship development Free media serves as

a watchdog for corruption and is essential to ensure the accountability of electedofficials and civil servants The existing lack of media freedom can affect entre-preneurship development in two key ways: by perpetuating stereotypical images ofentrepreneurs that do not reflect reality and perpetuating outdated and detrimentalmental models Secondly, the lack of transparency and accountability perpetuatesweak institutional environments that have a detrimental effect on entrepreneurshipdevelopment

Another area that influences mental model formation are migration patterns.Overwhelmingly, migration for CIS members is primarily oriented toward Russiaand to a lesser extent other CIS countries Especially for Tajikistan and Kyrgyzstanwhich both heavily depend on remittances, Russia is the desired destination formigrants Though migrants are driven by financial gain, they also receive socialremittances Social remittances take the form of ideas, behaviors, and identitiesmigrants bring back to their home countries Social remittances can influence thedevelopment of new mental models and can provide the incentive to initiateinstitutional change based on the examples seen while working abroad However,