CAPITALISM FROM BELOW: AN EXPLORATORY ANALYSIS OF SMALL ENTREPRENEURSHIP IN HUNGARY, POLAND, AND ROMANIA

The contours of markets and entrepreneurship are shaped by historical and politico-institutional factors. In the case of Central and Eastern Europe, the development of new entrepreneurial classes is a function of communist legacies and post-1989 political processes. Employing survey data from 2000, this article examines how political and institutional conditions influence patterns of recruitment into self-employment and income returns to small entrepreneurship in Hungary, Poland, and Romania. The results of this analysis show that human capital (captured by education) has positive significant effects on becoming a self-employed individual with employees in Hungary and Romania. As compared to other individuals, former socialist “petit bourgeois” (i.e., individuals who were business owners in 1988) are more likely to be small business operators in post-communism. Individuals who held managerial authority positions before 1989 have higher chances to become small business operators in Romania but not in Hungary or Poland. Unemployment seems to function as a push-factor for becoming a small business operator in Hungary and Poland but not in Romania. In Romania, most small entrepreneurs earn significantly more than employees in the state or private sector. Gender, age, and education have significant positive effects on income returns in all of the three countries under scrutiny