Working Paper
Entrepreneurship and Proprietorship in Transition

Policy Implications for the Small- and Medium-Size Enterprise Sector

In this paper, the role of small and medium size enterprises in the economic transformation of the countries of Central Europe is assessed. It argues that although these fulfil an important role, they are less significant as agents of macroeconomic transformation than the re-structuring of large-scale corporations, often acting as joint ventures with foreign companies. The paper begins by making a distinction between entrepreneurship and business proprietorship. Drawing upon the ideas of the German philosopher Max Weber, it defines the former in terms of the capitalist's commitment to sustained accumulation such that personal consumption is sacrificed. With proprietorship, on the other hand, the ownership of assets is used for trading purposes to generate revenues which are then used primarily for personal consumption. Within the context of present economic uncertainties in Central Europe, together with the personal experiences encountered under the former state socialist regimes, motives of proprietorship rather than those of entrepreneurship are more likely to prevail. Despite this, the role of small businesses is important since it sustains an ideology of the free market, one in which there are opportunities for personal business proprietorship. It also sustains free market ideals in that consumer choice is extended through the generation of a thriving small business sector. Even so, the structural features of the economies of the former state socialist regimes are being shaped to a greater extent by the strategies and actions of large corporations. As part of this discussion, the personal biographical experiences likely to encourage agents to set up their own small businesses are identified.