Who are Russias entrepreneurs

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Who are Russia’s entrepreneurs?: 

Who are Russia’s entrepreneurs? Simeon Djankov, World Bank Edward Miguel, UC Berkeley and NBER Yingyi Qian, UC Berkeley and CEPR Gérard Roland, UC Berkeley and CEPR Ekaterina Zhuravskaya, CEFIR and CEPR

Motivation: 

Motivation Entrepreneurial dynamism and SMEs growth are strongly emphasized as a priority in policy agenda of most developing and transition countries Yet, determinants of entrepreneurship are not very well understood In this project we want to learn what are the distinguishing features of entrepreneurs in Russia and what kind of social and institutional environment is more conducive to entrepreneurship

Structure of the survey: 

Structure of the survey Survey in seven cities in October 2003 – March 2004: Moscow; Nizhny Novgorod and Dzershinsk in the Nizhegorodskaya oblast; Perm and Chaykovsky in the Permskaya oblast; Rostov on the Don and Taganrog in the Rostovskaya oblast A random sample of 400 entrepreneurs Defined as owner-manager of a business with 5 or more employees An additional sample of 540 individuals who are not entrepreneurs A short survey among a random sample of 1200 respondents about personal characteristics Entrepreneurship varies greatly: from 1.1% of labor force in Nizhny Novgorod to 12.5% in Perm

Comparison of E and NE: Individual characteristics: 

Comparison of E and NE: Individual characteristics Entrepreneurs are more educated, smarter, more mobile both across jobs and geographically; they are more tolerant towards risk Entrepreneurs are happier and have better perception of their own health

Comparison of E and NE: Motivation: 

Comparison of E and NE: Motivation Entrepreneurs are more wealthy Much lower proportion of entrepreneurs (18%) that non-entrepreneurs (49%) will retire if won 500-times GDP pc More greedy: among those who would not quit; 49% of E say they want more money (compared to 24% of NE).

Sociological characteristics: 

Sociological characteristics Entrepreneurs have better educated parents, wealthier parents and father – boss and communist party member Entrepreneurs have higher number of family members, childhood and adolescent friends who run their own business

Values: 

Values Entrepreneurs value work, power and intellectual achievement more Entrepreneurs value freedom, service to others, financial security, friends and family to the same extent Entrepreneurs have more trust in general population and colleagues They are more tolerant to taking and accepting bribes

Institutions: 

Institutions Regulatory environment matters: towns with more benign governments and with less spread-out corruption have higher incidence of entrepreneurship

Attitude of population: 

Attitude of population Overall, both entrepreneurs and non-entrepreneurs assess the attitude of general population in their towns towards entrepreneurs as rather friendly But it gets worse with entrepreneurial growth:

Sources of finance: 

Sources of finance 97% of all start-ups and 88% of all expansions are financed only with Personal funds, Family funds and Retained earnings

Why not start your own business? : 

Why not start your own business? Administrative barriers – not important Credit constraints – play a role Main reason – absence of abilities needed

Relative importance of individual, social, and institutional characteristics: 

Relative importance of individual, social, and institutional characteristics The most important (in magnitude) and robust factors that have influenced entrepreneurial choice in Russia are: Greed; parents’ education; family and adolescent friends’ entrepreneurship experience; and perception of institutional environment Social characteristics should not be overlooked in the policy debate

Concluding remarks: 

Concluding remarks Even in Russia where market-supporting institutions are notoriously underdeveloped and are perceived to be the main obstacles to SMEs growth, culture, social networks, and personality traits play a very important role in determining who becomes an entrepreneur

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