Entrepreneurship and SME development in post-conflict societies. The case of Bosnia & Herzegovina
| DOI | https://doi.org/10.1108/JEPP-09-2012-0048 |
| Pages | 254-274 |
| Published date | 14 October 2014 |
| Date | 14 October 2014 |
| Author | Vernesa Djip |
| Subject Matter | Strategy,Entrepreneurship,Business climate/policy |
Entrepreneurship and
SME development in
post-conflict societies
The case of Bosnia & Herzegovina
Vernesa Djip
Faculty of Business and Economics, University of Sarajevo, Sarajevo,
Bosnia and Herzegovina
Abstract
Purpose – The purpose of this paper is to examine the conditions of entrepreneurship in transition
and post-conflict societies, using Bosnia and Herzegovina (B&H) as a case study. There are many
features of this country which make it an interesting case such. It was once a part of Yugoslavia and
had a socialist regime. Post-socialism, B&H turned to creating and maintaining a market-based
economy, making it a transition country. Lastly, the transition process has been disturbed and delayed
due to the war that began in 1992.
Design/methodology/approach – The author chose a single case study research design to present
a unique case and to give in-depth analysis. The author has used the method of data triangulation to
increase reliability and credibility of the case study research.
Findings – The case study’s findings reveal that three types of conditions influence entrepreneurship
in B&H: socio-political, economic and legal. The paper has several implications; mo re specifically,
inter alia, it has helped understand complexity of transitional environments and the implications of the
same on entrepreneurship development.
Originality/value – The paper adds to the existing literature on factors affecting entrepreneurial
activity within a post-conflict context by simplifying categorization into three broad categories.
By doing so, the paper emphasizes particular areas obstr ucting the development of the enterprise
sector in B&H.
Keywords Entrepreneurs, Case study, Small-to-medium-sized enterprises
Paper type Case study
Introduction
Entrepreneurship is partly created and shaped by forces that lie beyond an individual’s
control. These forces include psychological, economic, socio-political and cultu ral
factors that characterize entrepreneurs and entrepreneurship levels in e ach country.
A growing body of literature on entrepreneurial environment indicates that its nature
varies widely across countries, which leads to more inconsistency and deepens the lack
of concrete definition (Estrin and Mickiewitcz, 2010; Estrin et al., 2006; Aidis, 2005;
Aidis and Sauka, 2005; Bateman, 2000). While much of the research focussed on
western entrepreneurship, which demonstrated a convergence in the data, the discrepancy
stems from research focussing on transition economies, which vary in economic as well
as political stability.Inte restingly, these countries seem to also differ in the cultural and
social heritage that shapes cognitive thinking and behavior of entrepreneurs , which, in
turn, gives rise to inconsistency in data on entrepreneurship levels and on growth of
small-to-medium-sized enterprises (SMEs).
SMEs and entrepreneurship are closely related. While entrepreneurship may o r may
not involve new venture creation, in transition countries it is typically the case that
a new firm is formed. This is because the communist regimes allowed no private
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/2045-2101.htm
Received 17 September 2012
Revised 6 March 2013
16 April 2013
18 April 2013
Accepted 2 May 2013
Journal of Entrepreneurship and
Public Policy
Vol. 3 No. 2, 2014
pp. 254-274
rEmeraldGroup PublishingLimited
2045-2101
DOI 10.1108/JEPP-09-2012-0048
254
JEPP
3,2
ownership of assets; so no enterprise sector existed. The growing number of SMEs is
seen as a sign of transition to a market-based economy, and represents a symbol of
independence, innovation and flexibility. Consequently, the growth in the number
of SMEs and new firm formation has become an impor tant measure of entrepreneurial
activity in transition economies.
Entrepreneurs and SMEs are closely related to economic development, and
governments generally see them as the creators of economi c activity. In Europe, in
2006, SMEs comprised 99.8 percent of all registered companies, provided 67.4 percent
of total employment, and generated 57.7 percent of total value added (Eurostat, 2006).
Besides job creation, entrepreneurship has many other benefits that bring about regional
and national economic improvement, and can overhaul markets and entire industries, and
can contribute to the creation of the knowledge-based economy. For these reasons,
an increase in entrepreneurship is perceived as a sign of economic development and
progress. Consequently, research on entrepreneurship, especially in transition countries,
has become increasingly popular.
However, due to the complexity of the transitional environment , research in th is
area poses several challenges. The situation is even more complex when the
transition societies are also recovering from conflict. Post-conflict entrepreneurship
is burdened not only by infrastructural issues, but also political issues, making it
difficult for SMEs to thrive and for researchers to study. Immediately after conflict,
markets tend to be dominated by unproductive entrepreneurship and opportunistic
behavior that further suppress overall economic development. A recent example
of this is the area of western Balkans, which went to war immediately after the
collapse of the socialist regime in Yugoslavia, with the worst effects in Bosnia and
Herzegovina (B&H).
Research question and objectives
This paper’s general aim is to investigate entrepreneurship and SME development in
extreme environmental conditions. The two research questions are:
RQ1. What role does entrepreneurship play in the economic and social development
of transition economies and post-conflict societies?
RQ2. What are the features of transition and post-conflict countries that are
encouraging or discouraging entrepreneurship in such environments?
The specificity and complexity of the political and the economic history suggests
a single-country study. This research will focus on B&H. Being both a transitional,
and a post-conflict, country, it represents a unique example of complexity of
entrepreneurship development and may help us understand the interconnectedne ss
of different factors that affect SME development in such extreme environments.
Therefore, for practical reasons, the aim is to gain a general understanding of these
factors by taking a macro-perspective on the growth of SMEs across a ran ge of
different industries in the two entities. Accordingly, objectives of this study are:
(1) to examine entrepreneurship and SME development in post-co nflict countries;
(2) to identify (external and internal) factors affecting entrepreneurship and SME
growth in transition/post-conflict societies; and
(3) to evaluate role of entrepreneurs in transition/post-conflict societies.
255
Entrepreneurship
and SME
development
To continue reading
Request your trial