Research on entrepreneurship development in transition
economies has acknowledged the important
role that the external environment plays in inducing
entrepreneurial behaviour. Research has also
shown that entrepreneurship in these contexts can
emerge spontaneously and develop despite the
absence of formal institutions due to the use of
trust and social institutions or repeated behaviours
within a small circle of business contacts (Smallbone
and Welter, 2001a; McMillan and Woodroff,
2002). However, the experience in some of these
countries has also shown that entrepreneurship in
these contexts remains fragile and its contributions
to economic development rather small.
In this respect, government is one of the main
actors in establishing the necessary institutional
arrangements for durable development or productive
entrepreneurship in post communist economies.
Moreover, variations between countries in
government policies and actions contribute to
heterogeneous external conditions and variations
in patterns of entrepreneurial behaviour and outcomes.
Based on institutional theories, we explore the
comparative roles of the Estonian and Albanian
governments in shaping paths of entrepreneurial
development in these two post communist economies.
Using a combination of documentary and
survey data we show that government can be both
an enabling and constraining influence through
the establishment of regulatory environments,
the increased legitimacy of their policies and also
through the role that is placed on entrepreneurship
in societies where entrepreneurship has had a short
history.