Description
During this detailed information define entrepreneurial profiles competencies and educational needs in east and west germany.
1
Entrepreneurial Profiles: Competencies and Educational
Needs in East and West Germany
Abstract
This paper identifies entrepreneurship competencies and education needs arising from
entrepreneurial profiles in unified Germany based on an aggregate approach to international
comparisons of entrepreneurship. Given previous research about “adolescent entrepreneurs”
in economies in transition and “adult entrepreneurs” in western countries with a longer
capitalist tradition, this study links these poles of the international entrepreneurial spectrum.
East versus West and men versus women entrepreneurship showed more similarities than
differences regarding the entrepreneurial traits, the company’s strategy and its competitive
German environment. But applying the same research methodology German entrepreneurs
appear less entrepreneurial than their US and Russian counterparts. These findings indicate
the entrepreneurial competencies and educational and training needs of entrepreneurs in high-
developed and transitional economies. The pedagogical approach of integrated qualifications
needed for occupational activities – expert competency, methodical competency, social
competency – by Halfpap (1991) helps to grasp the education needs of the different
entrepreneurial profiles in Germany. Given their self-evaluation the sampled women
entrepreneurs need to be trained regarding the expert competency of technical skills (East-
German women less than West-German women) and the methodical competency of problem
solving. The picture of social competency is ambiguous.
Key Words: international entrepreneurship, entrepreneurial competencies, entrepreneurship
education, entrepreneurship training, German entrepreneurs.
2
1 Introduction
International entrepreneurship as an intersection between research in international
business and entrepreneurship gains more emphasis since the economy is globalizing and the
most of the world works under a market economy. The role of entrepreneurship education to
help foster economic development especially in economies in transition needs to be based on
international research results. Problems in developing an integrative approach occur in a
broad range of research items such as: the international new venture; the profile of the
international entrepreneur; differences in entrepreneurs and entrepreneurship education needs
related to culture, nationality, and gender; the status of entrepreneurship in market and
transition economies. Given this lack of an integrative definition and theory, the profiling of
different types of entrepreneurs and their education and training needs using an integrative
research methodology is one approach to help understand the needs in international
entrepreneurship education.
The German profile of entrepreneurs and new ventures will provide a piece of the puzzle
filling the gap between the previously researched entrepreneur in established market
economies and the entrepreneur in transition economies. This occurred in the unique
economic situation of the reunified Germany with its strong economy in the Old Laender and
the transition economy in the New Laender under one national umbrella. To understand the
differences between the two groups and their relationship with the Russian and U.S.
entrepreneur, a profile of the East and West German entrepreneur was developed using a
similar research methodology and questionnaire. Three areas were evaluated to identify the
similarities and differences between the groups: (1) the characteristics of the entrepreneur and
the new venture, (2) the company’s strategy and (3) the competitive environment.
The purpose of the study was to: (1) understand the nature of the German entrepreneur in
the unified country versus those from Russia and the United States; (2) identifying any
3
significant differences and similarities between entrepreneurs from the former East Germany
versus West Germany; (3) examine if gender affects any of these similarities or differences;
and (4) determine competencies and entrepreneurship education needs from the differing
entrepreneurial profiles developed.
2 International Entrepreneurial Profiles
2.1 Entrepreneurship in Transition Economies
While entrepreneurs have some common characteristics, they also differ due to their
gender, culture, and nationality. When evaluating international entrepreneurs, the common
traits and the national culture and context of the entrepreneur and the venture created need to
be assessed. Society and culture have a significant impact on both the acceptance and role of
the entrepreneur. While some cultures see this role as socially acceptable and beneficial to the
society, other cultures may consider it unethical and illegitimate (Fulop, Hisrich, and Szegedi
2000). Usually, entrepreneurs have a great impact on the economy of their countries; not only
do they create a substantial amount of new jobs but also they have helped change the
economy, especially in countries in transition (Chilosi 2002).
Entrepreneurs in transition economies have some additional obstacles not encountered to
the same extent in established market economies. Some of these obstacles include the
“unstable and hostile nature of the external environment and the scarcity of resources,
particularly capital” (Smallbone and Welter 2001). The lack of reliable institutions and
protection such as property rights in the external environment decreases the willingness to
become an entrepreneur or finance one (Chilosi 2002). In addition, instability in the form of
inflation and changing public policy increases the risk in starting a new venture.
To help overcome these obstacles, entrepreneurs in transition economies make use of
informal networks and influence acquired while in previous government/state positions
(Smallbone and Welter 2001). These networks prove valuable particularly when acquiring
4
resources and navigating bureaucracy. With respect to entrepreneurial development across
different Central and Eastern European countries, a strong pre-socialist industrial tradition
and successful reforms has impacted the creation of new ventures (Smallbone and Welter
2001).
The perception of entrepreneurs in some societies may discourage entrepreneurial
activity. As Chilosi indicates in transition economies, the position of the entrepreneur in
society is still somewhat problematic as some view entrepreneurs as exploiters who profit
from speculation and operate between legality and illegality (Chilosi 2002).
2.2 International Women Entrepreneurs
In researching entrepreneurs, the question of whether entrepreneurial behaviour varies
with gender often arises. Studies have focused on the various aspects of women entrepreneurs
in different countries. The role of women entrepreneurs in society also varies with the
culture; in some cultures today, women who work outside female occupations or are owners
of businesses outside these traditional occupations are not totally accepted. Women
participation in the workforce has increased significantly; for example, in the U.S. women
comprise more than 50% of the workforce. Women have also made inroads into male-
dominated occupations and have slowly established credibility as entrepreneurs. Despite this
in some cultures, the societal view of women’s role sometimes makes it harder for women to
become and succeed as entrepreneurs (Lerner, Brush and Hisrich 1997).
Although there are more similarities than differences, men and women entrepreneurs
differ in some respects. Women entrepreneurs have fewer role models, and are lacking
confidence in some business skills. Further, they are somewhat less developed than men in
terms of independence, self-confidence, assertiveness, and drive, which are considered male
traits. (Hisrich 1986).
5
Similar to the Russian entrepreneur, women entrepreneurs in US, Puerto Rico, Republic
of Ireland, and Northern Ireland tend to be married and more educated than their parents
(Hisrich, 1986). Women entrepreneurs from these countries (U.S., Republic of Ireland, and
Northern Ireland) have family and spousal support, come from middle-class families, with
self-employed fathers and homemaker mothers. The entrepreneurs identified their personality
as more like their fathers. Women entrepreneurs in Israel also are married, highly educated,
have a strong family orientation, and wait until their children were grown to become an
entrepreneur. Reflecting women’s role in Israeli society, women entrepreneurs feel that the
family has priority over the business (Lerner, Brush, and Hisrich 1997). Israeli women
entrepreneurs differ from their counterparts in other countries in having much stronger and
more robust network affiliation.
The biggest obstacle encountered for women entrepreneurs was the lack of business
education and training. Other obstacles include: obtaining credit, lack of financial planning,
lack of business experience, lack of involvement with business colleagues, and lack of
respect for businesswomen. In Turkey, the biggest obstacle for women entrepreneurs is
society’s perception of women’s role, followed by bureaucracy, lack of capital, lack of
customer confidence, and lack of respect within the community (Ufuk and Özgen 2001). It is
interesting to note that society’s view of women entrepreneurs in Turkey is similar to that of
both women and men entrepreneurs in Hungary. In both cultures, the entrepreneurs are
perceived as going against social rules and tradition.
Given this state of international entrepreneurial spectrum, what is the nature of the
international entrepreneurial spectrum in the reunified Germany? Is there a difference
between entrepreneurs from the former East Germany versus West Germany? Does gender
affect any of these similarities or differences? What are the implications for entrepreneurship
education and training?
6
3 Research Methodology
Each entrepreneur in this study received a comprehensive questionnaire which has been
used in previous research in the United States and several transition economies including
Russia (Hisrich and Grachev 1995 and 1993). The questionare was translated into German
and adapted to the unique economic situation of the reunified Germany with its strong
economy in the Old Laender and the transition economy in the New Laender under one
national umbrella. To understand the differences and similarities of East and West German
entrepreneurs, this in-depth study used the data base of the KfW Mittelstandsbank (SME
Bank). As a State-owned promotional institution, KfW SME Bank supports small and
medium-sized enterprises (SMEs), business start-ups and the self-employed in the form of
loans, mezzanine financing, equity capital and consulting services. Since it took over the
central role in promoting entrepreneurship in the New Laender after the reunification, the
KfW SME Bank has a comprehensive database of East and West German entrepreneurs,
allowing comparable sub-samples of entrepreneurs in both parts of Germany to be obtained.
The entrepreneurs were selected on a confidential basis from the ERP-
Eigenkapitalhilfeprogramm, a long term loan programme with mezzanine characteristics
focusing on start-ups and early stage. The mailing list was sampled using the criteria that the
selected companies had to have a minimum enterprise size. The entrepreneurs were chosen
based on the number of employees (mean 4.47) and the amount to be invested (mean 165,497
euros) at the time of entrance into the ERP-loan program. Additional financial support by
other KfW-programs could increase the funding of the entrepreneurial investment up to 75–
90%.
For each of the dimension being tested, the sample was split into two main groups –
either an East German or West German entrepreneur. Entrepreneurs from Berlin were kept
7
separate considering the former status of the now German capital as a split city with its
particularities in the eastern part as well as in the western part. Combined with the
entrepreneurs without a specified location, the core sample (n=220) was reduced to 204
entrepreneurs due to record completeness. Compared with the overall German economy, the
distribution of the received questionnaires (73.5% West, 26.5% East) approximated the
population of West and East German entrepreneurs. It was controlled for the East German
and West German origins of the entrepreneurs.
As in previous research in international entrepreneurship, a sub-sample was drawn based
on the gender of the participating entrepreneurs. Within the entire sample 158 male
entrepreneurs and 46 female entrepreneurs responded. Given these groups, the similarities
and differences of men and women entrepreneurship in East and West Germany along
various entrepreneurial profiles, characteristics and educational and training needs were
examined. Since this is an exploratory study, significance levels of
During this detailed information define entrepreneurial profiles competencies and educational needs in east and west germany.
1
Entrepreneurial Profiles: Competencies and Educational
Needs in East and West Germany
Abstract
This paper identifies entrepreneurship competencies and education needs arising from
entrepreneurial profiles in unified Germany based on an aggregate approach to international
comparisons of entrepreneurship. Given previous research about “adolescent entrepreneurs”
in economies in transition and “adult entrepreneurs” in western countries with a longer
capitalist tradition, this study links these poles of the international entrepreneurial spectrum.
East versus West and men versus women entrepreneurship showed more similarities than
differences regarding the entrepreneurial traits, the company’s strategy and its competitive
German environment. But applying the same research methodology German entrepreneurs
appear less entrepreneurial than their US and Russian counterparts. These findings indicate
the entrepreneurial competencies and educational and training needs of entrepreneurs in high-
developed and transitional economies. The pedagogical approach of integrated qualifications
needed for occupational activities – expert competency, methodical competency, social
competency – by Halfpap (1991) helps to grasp the education needs of the different
entrepreneurial profiles in Germany. Given their self-evaluation the sampled women
entrepreneurs need to be trained regarding the expert competency of technical skills (East-
German women less than West-German women) and the methodical competency of problem
solving. The picture of social competency is ambiguous.
Key Words: international entrepreneurship, entrepreneurial competencies, entrepreneurship
education, entrepreneurship training, German entrepreneurs.
2
1 Introduction
International entrepreneurship as an intersection between research in international
business and entrepreneurship gains more emphasis since the economy is globalizing and the
most of the world works under a market economy. The role of entrepreneurship education to
help foster economic development especially in economies in transition needs to be based on
international research results. Problems in developing an integrative approach occur in a
broad range of research items such as: the international new venture; the profile of the
international entrepreneur; differences in entrepreneurs and entrepreneurship education needs
related to culture, nationality, and gender; the status of entrepreneurship in market and
transition economies. Given this lack of an integrative definition and theory, the profiling of
different types of entrepreneurs and their education and training needs using an integrative
research methodology is one approach to help understand the needs in international
entrepreneurship education.
The German profile of entrepreneurs and new ventures will provide a piece of the puzzle
filling the gap between the previously researched entrepreneur in established market
economies and the entrepreneur in transition economies. This occurred in the unique
economic situation of the reunified Germany with its strong economy in the Old Laender and
the transition economy in the New Laender under one national umbrella. To understand the
differences between the two groups and their relationship with the Russian and U.S.
entrepreneur, a profile of the East and West German entrepreneur was developed using a
similar research methodology and questionnaire. Three areas were evaluated to identify the
similarities and differences between the groups: (1) the characteristics of the entrepreneur and
the new venture, (2) the company’s strategy and (3) the competitive environment.
The purpose of the study was to: (1) understand the nature of the German entrepreneur in
the unified country versus those from Russia and the United States; (2) identifying any
3
significant differences and similarities between entrepreneurs from the former East Germany
versus West Germany; (3) examine if gender affects any of these similarities or differences;
and (4) determine competencies and entrepreneurship education needs from the differing
entrepreneurial profiles developed.
2 International Entrepreneurial Profiles
2.1 Entrepreneurship in Transition Economies
While entrepreneurs have some common characteristics, they also differ due to their
gender, culture, and nationality. When evaluating international entrepreneurs, the common
traits and the national culture and context of the entrepreneur and the venture created need to
be assessed. Society and culture have a significant impact on both the acceptance and role of
the entrepreneur. While some cultures see this role as socially acceptable and beneficial to the
society, other cultures may consider it unethical and illegitimate (Fulop, Hisrich, and Szegedi
2000). Usually, entrepreneurs have a great impact on the economy of their countries; not only
do they create a substantial amount of new jobs but also they have helped change the
economy, especially in countries in transition (Chilosi 2002).
Entrepreneurs in transition economies have some additional obstacles not encountered to
the same extent in established market economies. Some of these obstacles include the
“unstable and hostile nature of the external environment and the scarcity of resources,
particularly capital” (Smallbone and Welter 2001). The lack of reliable institutions and
protection such as property rights in the external environment decreases the willingness to
become an entrepreneur or finance one (Chilosi 2002). In addition, instability in the form of
inflation and changing public policy increases the risk in starting a new venture.
To help overcome these obstacles, entrepreneurs in transition economies make use of
informal networks and influence acquired while in previous government/state positions
(Smallbone and Welter 2001). These networks prove valuable particularly when acquiring
4
resources and navigating bureaucracy. With respect to entrepreneurial development across
different Central and Eastern European countries, a strong pre-socialist industrial tradition
and successful reforms has impacted the creation of new ventures (Smallbone and Welter
2001).
The perception of entrepreneurs in some societies may discourage entrepreneurial
activity. As Chilosi indicates in transition economies, the position of the entrepreneur in
society is still somewhat problematic as some view entrepreneurs as exploiters who profit
from speculation and operate between legality and illegality (Chilosi 2002).
2.2 International Women Entrepreneurs
In researching entrepreneurs, the question of whether entrepreneurial behaviour varies
with gender often arises. Studies have focused on the various aspects of women entrepreneurs
in different countries. The role of women entrepreneurs in society also varies with the
culture; in some cultures today, women who work outside female occupations or are owners
of businesses outside these traditional occupations are not totally accepted. Women
participation in the workforce has increased significantly; for example, in the U.S. women
comprise more than 50% of the workforce. Women have also made inroads into male-
dominated occupations and have slowly established credibility as entrepreneurs. Despite this
in some cultures, the societal view of women’s role sometimes makes it harder for women to
become and succeed as entrepreneurs (Lerner, Brush and Hisrich 1997).
Although there are more similarities than differences, men and women entrepreneurs
differ in some respects. Women entrepreneurs have fewer role models, and are lacking
confidence in some business skills. Further, they are somewhat less developed than men in
terms of independence, self-confidence, assertiveness, and drive, which are considered male
traits. (Hisrich 1986).
5
Similar to the Russian entrepreneur, women entrepreneurs in US, Puerto Rico, Republic
of Ireland, and Northern Ireland tend to be married and more educated than their parents
(Hisrich, 1986). Women entrepreneurs from these countries (U.S., Republic of Ireland, and
Northern Ireland) have family and spousal support, come from middle-class families, with
self-employed fathers and homemaker mothers. The entrepreneurs identified their personality
as more like their fathers. Women entrepreneurs in Israel also are married, highly educated,
have a strong family orientation, and wait until their children were grown to become an
entrepreneur. Reflecting women’s role in Israeli society, women entrepreneurs feel that the
family has priority over the business (Lerner, Brush, and Hisrich 1997). Israeli women
entrepreneurs differ from their counterparts in other countries in having much stronger and
more robust network affiliation.
The biggest obstacle encountered for women entrepreneurs was the lack of business
education and training. Other obstacles include: obtaining credit, lack of financial planning,
lack of business experience, lack of involvement with business colleagues, and lack of
respect for businesswomen. In Turkey, the biggest obstacle for women entrepreneurs is
society’s perception of women’s role, followed by bureaucracy, lack of capital, lack of
customer confidence, and lack of respect within the community (Ufuk and Özgen 2001). It is
interesting to note that society’s view of women entrepreneurs in Turkey is similar to that of
both women and men entrepreneurs in Hungary. In both cultures, the entrepreneurs are
perceived as going against social rules and tradition.
Given this state of international entrepreneurial spectrum, what is the nature of the
international entrepreneurial spectrum in the reunified Germany? Is there a difference
between entrepreneurs from the former East Germany versus West Germany? Does gender
affect any of these similarities or differences? What are the implications for entrepreneurship
education and training?
6
3 Research Methodology
Each entrepreneur in this study received a comprehensive questionnaire which has been
used in previous research in the United States and several transition economies including
Russia (Hisrich and Grachev 1995 and 1993). The questionare was translated into German
and adapted to the unique economic situation of the reunified Germany with its strong
economy in the Old Laender and the transition economy in the New Laender under one
national umbrella. To understand the differences and similarities of East and West German
entrepreneurs, this in-depth study used the data base of the KfW Mittelstandsbank (SME
Bank). As a State-owned promotional institution, KfW SME Bank supports small and
medium-sized enterprises (SMEs), business start-ups and the self-employed in the form of
loans, mezzanine financing, equity capital and consulting services. Since it took over the
central role in promoting entrepreneurship in the New Laender after the reunification, the
KfW SME Bank has a comprehensive database of East and West German entrepreneurs,
allowing comparable sub-samples of entrepreneurs in both parts of Germany to be obtained.
The entrepreneurs were selected on a confidential basis from the ERP-
Eigenkapitalhilfeprogramm, a long term loan programme with mezzanine characteristics
focusing on start-ups and early stage. The mailing list was sampled using the criteria that the
selected companies had to have a minimum enterprise size. The entrepreneurs were chosen
based on the number of employees (mean 4.47) and the amount to be invested (mean 165,497
euros) at the time of entrance into the ERP-loan program. Additional financial support by
other KfW-programs could increase the funding of the entrepreneurial investment up to 75–
90%.
For each of the dimension being tested, the sample was split into two main groups –
either an East German or West German entrepreneur. Entrepreneurs from Berlin were kept
7
separate considering the former status of the now German capital as a split city with its
particularities in the eastern part as well as in the western part. Combined with the
entrepreneurs without a specified location, the core sample (n=220) was reduced to 204
entrepreneurs due to record completeness. Compared with the overall German economy, the
distribution of the received questionnaires (73.5% West, 26.5% East) approximated the
population of West and East German entrepreneurs. It was controlled for the East German
and West German origins of the entrepreneurs.
As in previous research in international entrepreneurship, a sub-sample was drawn based
on the gender of the participating entrepreneurs. Within the entire sample 158 male
entrepreneurs and 46 female entrepreneurs responded. Given these groups, the similarities
and differences of men and women entrepreneurship in East and West Germany along
various entrepreneurial profiles, characteristics and educational and training needs were
examined. Since this is an exploratory study, significance levels of