Regional Entrepreneurial Heritage in a Socialist and a Postsocialist Economy

abstract

Regions have a distinct entrepreneurial heritage, understood as a historical tradition in entrepreneurial culture. The persistence of that heritage in the former German Democratic Republic (GDR) is examined across severe ruptures in economic development. In this article, I argue that regional differences in private-sector activities under socialism—a system that was hostile toward entrepreneurs—reflect strong entrepreneurial orientations of local populations and regional cultures of entrepreneurship that were presocialist in origin. The empirical analysis suggests that an “entrepreneurial residual,” left over from the socialist experiment, positively affected startup activity after the transformation of the GDR back to a market economy. The results show that an entrepreneurial culture is an important regional resource that endures.