The Long Persistence of Regional Entrepreneurship Culture: Germany 1925-2007

Studies for established market economies such as West Germany (Fritsch and Mueller, 2007), and Sweden (Andersson and Koster, 2011) have shown that regional start-up rates tend to show a relatively high level of persistence and path dependency over periods of 10-15 years. One main reason for this high level of persistence observed could be that the region-specific determinants of entrepreneurship also remain relatively constant over time. Another explanation could be the existence of a regional entrepreneurship culture. Such an entrepreneurial culture could maybe even outwear considerable ‚jumps‘ in the conditions of the economic environment such as wars and drastic changes of the political regime. We analyze the persistence of regional entrepreneurship in three different scenarios with different degrees of changes of the economic conditions. The basic idea is that if we should find that high levels of regional entrepreneurship do persist disruptive changes of the economic conditions, this may be regarded an indication for the presence of a regional entrepreneurship culture. - The first scenario that we present is regional entrepreneurship in West Germany in the 1984-2005 period, a time that was characterized by relatively stable conditions without any major jumps. - For the second scenario we extend the period of analysis to 80 years and compare regional entrepreneurship in West Germany between the years 1925 and 2005. This period was has been characterized by some considerable disruptions such as the World Economic Crisis of the late 1920s, the Nazi regime and the Second World War that ended with destruction and occupation of the country, and, finally, German re-unification. - The third scenario, East Germany in the time period 1925-2005, was characterized by even more shocks that have probably been even more severe than what has been experienced in the West. We find long-term persistence in all three scenarios what is particularly remarkable for the third setting, the East German regions. Those East German regions with a relatively high level of entrepreneurship in the year 1925 also show high levels of entrepreneurship 80 years later, in the year 2005. Our findings can be regarded a strong indication for the existence of a regional entrepreneurial culture and its beneficial effects for economic development.