Transcript Entrepreneurship: First Results from Russia

Entrepreneurship: First
Results from Russia
Simeon Djankov, World Bank
Edward Miguel, UC Berkeley and NBER
Yingyi Qian, UC Berkeley
Gérard Roland, UC Berkeley and CEPR
Ekaterina Zhuravskaya, CEFIR
What Drives Entrepreneurship?
• Development literature emphasizes credit
constraints (Banerjee and Newman, 1993)
• Transition literature emphasizes institutions
securing property rights (Johnson, McMillan and
Woodruff, 2002)
• Hardly any research about personal
characteristics of entrepreneurs.
Personal Characteristics
• Labor economists suggest the importance of
general purpose skills (Lazear, 2002).
• Sociologists emphasize role of values (Cochran,
1971) and social networks (Young, 1971).
• Psychologists emphasize need for achievement
(McClellan, 1961),belief in personal effort
(McGhee and Crandall, 1968), and individual
self-confidence (Liles, 1974).
The project
• Provide empirical evidence on determinants of
entrepreneurship in transition economies (Russia, China)
and developing economies (India, Nigeria, Brazil).
• Survey of entrepreneurs and non entrepreneurs to
inquire about skills, education, intellectual and
psychological personality traits, family background,
social origins, social networks, values and beliefs,
perception of the institutional, social and economic
environment.
• In this paper, results from pilot study in Russia.
Preliminary results suggest strength of social network
effects, importance of individual characteristics and only
secondary role of institutions.
The survey
• Survey in seven cities: Moscow, Nizhny Novgorod and Dzershinsk in
the Nizhegorodskaya oblast; Perm and Chaykovsky in the
Permskaya oblast in the Urals and Rostov on the Don and Taganrog
in the Rostovskaya oblast.
• 400 entrepreneurs, defined as owners of a business with 5 five or
more employees. 440 non-entrepreneurs chosen randomly
conditional on matching the general age, gender and educational
attainment of entrepreneurs from the first survey.
• Finally, short survey among a random sample of 1200 respondents
(with the same breakdown across cities) asking 9 nine questions
about their personal characteristics, including a question about
whether or not they are being or not an entrepreneur.
• Proportions of entrepreneurs in the different towns: Moscow 8%,
Nizhny Novgorod 6%, Dzershinsk 13.3%, Perm 16%, Chaikovsky
11.3%, Rostov on Don 11.3% and finally Taganrog at 18%.
Personal Characteristics
Entrepreneurs
(E)
Non-entrepreneurs
(NE)
P-value of
difference
Married
0.740
0.632
***
Were you in the top 10% in secondary school?
Cognitive ability test score
0.443
5.0
0.237
4.4
***
1.5
1.33
***
0.773
0.763
0.450
0.597
0.664
0.250
***
Number of previous professional activities
Accept a risk-neutral gamble (+/- $10 or $20)
Good or very good health (self-described)
Practice sports (regularly or from time to time)
***
***
***
Sociological Characteristics
Entrepreneurs Non-entrepreneurs P-value of difference
(E)
(NE)
Father had higher education
0.418
0.240
***
Mother had higher education
0.365
0.196
***
0.998
0.462
***
1.2
0.6
***
1.2
0.5
***
Were members of your family running a
business?
Number of 5 childhood friends who became
entrepreneurs
How many of high school / university
friends became entrepreneurs?
Perceptions of the institutional environment
E
NE
Local government is favorable towards entrepreneurs
48.0%
50.1%
Central government is favorable towards entrepreneurs
Go to court if cheated by supplier or client
Go to court if government official abuses power
54.5%
65.8%
61.5%
51.5%
76.2%
74.0%
Private entrepreneurs pay bribes to change rules
It is relatively easy in town to find money to start business
Most people in town can be trusted
49.8%
21.0%
16.0%
51.0%
13.2%
16.5%
**
***
**
**
The reasons for not running own business
(Percentage of people who indicated that the following is the reason)
I cannot find the startup money
I think, I do not have what it takes
Entrepreneurship is too risky
I would not know what kind of business to start
I would not know how to start
Business may involve breaking the law, I
cannot/ do not want to do that
The one main
reason
%
SE
21.9
[1.8]
18.7
[1.7]
15.6
[1.6]
7.6
[1.1]
6.5
[1.1]
All reasons that
apply
%
SE
45.6
[2.1]
38.1
[2.1]
50.7
[2.2]
28.3
[1.9]
30.6
[2.0]
5.0
31.9
[0.9]
[2.0]