Centre for Entrepreneurship Business Research

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Role-Models and Entrepeneurship in Romania

Entrepreneurship is increasingly being recognised as an indispensable tool for consolidating the market based economic system adopted by transition economies. Despite this, little is known about the factors that influence the decision to become entrepreneurially active in these countries. Academic research has recently demonstrated that differences in entrepreneurship levels are in-part explained by the varied impact across territories of entrepreneurial role models. Because Romania passed from a formal institutional framework based on central planning to one oriented towards a market economy, it had a near absence of entrepreneurial role models when it abandoned central planning. These radical institutional changes happened almost two decades ago, and the question rising is how did this affect those younger individuals that have lived most of their lives under a market system?

Moreover, does the role model effect that existed under the previous institutional framework automatically disappear? Or is there an ‘institutional memory’ when it comes to entrepreneurial role models which can help maintain the influence of entrepreneurial role models beyond the change in direction of a society’s institutional evolutionary path?

In this study we argue that the presence of individuals that have started their own businesses influence others within their social network towards a similar behaviour. A positive entrepreneurial example leads to an increase in the likelihood that other agents also become entrepreneurs. Once a critical mass is overcome, the local institutional framework evolves to include a new social cognitive perception that is more fertile for entrepreneurial activity. As a consequence, the acceptance of entrepreneurial activity within the region becomes socially embedded.

The argument that supports this lies on the evolutionary institutional path that some regions adopt, which can gradually lead to the embedded character of informal institutions as a result of their cultural content. However, formal institutions are subordinate to informal ones in the sense that they are the deliberate means used to structure the interactions of a society in line with the norms and cultural guidelines that make up its informal institutions.