Frontiers of Entrepreneurship Research
1996 Edition
SUMMARIES

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BARRIERS TO ENTREPRENEURSHIP IN A TRANSITION ECONOMY: THE ROMANIAN CASE


Harold P. Welsch
Joseph S. Roberts
David Pistrui

DePaul University
1 East Jackson Street
Chicago, IL 60604

Telephone
312-362-8471

Fax
312-362-6973

Principal Topics

While it is relatively easy to identify entrepreneurship obstacles in well developed and well-documented economies, it is more difficult to identify these in a privatizing/transition economy. Earlier studies were used to identify the major factors impeding the entrepreneurship development process in five categories: economic, political, social, individual and infrastructure. The focus of this study was to identify the relative importance of these different categories of obstacles among a sample of entrepreneurs in a country undergoing transition to a market economy, Romania.

Method

The Entrepreneurial Profile Questionnaire (EPQ) was completed by 410 Romanian entrepreneurs, 75% in Bucharest and 25% in the remainder of the country. Their average age was 38.8 years old; 72% were males; and 95% were Romanian, most of the remaining 5% were Hungarian. The respondents rated the severity of a number of problems on a 5 point scale, from strongly disagree (1) to strongly agree (5).

Major Findings

About 20% of the respondent's fathers and 11% of their mothers were described as entrepreneurs. This may have been typical for a generation completing their work career in a socialist economy. In contrast, among the respondents, the current mid-career generation, 33% have two family members working full time in the business and another 41% have a part-time family member involved.

As a category, political obstacles were generally considered the most severe, such as bureaucratic red tape (4.11 on a 5 point scale); lack of clarity in regulations regarding private enterprise (3.73); corruption (3.50); and an anti-market attitude (3.29). The second most significant category of problems were related to the business infrastructure, such as finding a

good location (3.70); lack of market information (3.44); lack of international trading information (3.41); lack of technical assistance (3.14); lack of managerial services (3.14); lack of employees with marketing training (3.02); lack of distribution channels (2.99); lack of storage or warehouses (2.99); and so on. Social factors, such as a negative attitude toward profit-making (2.64); lack of understanding of entrepreneurship (2.11); or discriminatory practices toward an ethnic group (1.54) were not seen as major problems. Individual or personal factors, such as fatigue from long hours (2.50); scheduling business and family activities (2.24); or lack of encouragement (1.94) also tended not to be rated as severe problems.

Implications

Romanian entrepreneurs see the government as a major source of obstacles. Entrepreneurs themselves are not clear about directions regarding their private enterprise initiatives. It would also seem that the lack of a fully developed market economy is also considered a significant complication. A pro-active government program might alleviate some of these problems. Personal or social obstacles are reported, in comparison, as less significant. Continuous documentation of entrepreneurship obstacles is necessary so strategies can be devised for their reduction and elimination. Comparisons with other countries undergoing transition (privatizing) economies would prove useful in determining common factors or whether these barriers are unique to Romania. Additional studies are planned.

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