1042-2587 2008 by Baylor University

E T&P

A Tale of Two Politico-Economic Systems: Implications for Entrepreneurship in Central and Eastern Europe
R. Duane Ireland Laszlo Tihanyi Justin W. Webb

Following the collapse of socialism in the late 1980s, Central and Eastern European countries initiated attempts to adopt capitalist economic frameworks and promote entrepreneurship. However, persistent economic difficulties and high levels of unemployment have led to dissatisfaction with political parties favoring capitalism. We integrate identity, institutional, and social movement theories to describe the emergence of four competing social movements (capitalist democracy, socialist command, social democracy, and populist command) that are undertaken to pursue politico-economic reforms. We discuss the implications for developing an entrepreneurial culture in Central and Eastern Europe.

Introduction
Emerging economies are countries experiencing rapid economic development that is stimulated by transitioning institutional policies favoring and supporting private enterprise (Hoskisson, Eden, Lau, & Wright, 2000). The adoption of capitalist institutional frameworks in place of previous economic institutions founded in socialism characterizes the transition of countries in Central and Eastern Europe over the past two decades. The intended purposes of these changes have been to increase the inuence of the free market and infuse entrepreneurial risk taking into the decisions made within the context of emerging economies (Zahra, Ireland, Gutierrez, & Hitt, 2000). The emerging economies in Central and Eastern Europe present both opportunities and risks on a global scale (Baldwin, Francois, & Portes, 1997). If, as hoped, privatization and free-market forces eventually engender widespread entrepreneurial behavior, the pro-democracy and economic reforms will have been successful in displacing previous institutions. Indeed, the stabilization of Central and Eastern European economies could
Please send correspondence to: R. Duane Ireland, tel.: (979) 8623963; e-mail: direland@mays.tamu.edu.

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then be expected to promote further entrepreneurial investments from developed economies. Conversely, should institutional reforms fail to stimulate adequate levels of entrepreneurship, stagnant or falling incomes and impoverishment of a large slice of the population could foster widespread disillusionment with market economies and democracy (Baldwin et al., p. 127). As is evident from these concerns, entrepreneurship is not only an intended outcome of the transition from socialism to capitalism but also a key factor in insuring the transitions success. The incongruent transition of formal and informal institutions remains a key obstacle to promoting entrepreneurship in emerging economies. Formal institutions refer to the rules, regulations, laws, and supporting apparatuses that establish order in economic, legal, and political frameworks (North, 1990). Informal institutions include the norms, beliefs, values, and similar conventions that form the sociocultural relations within a society (North). While formal institutional policies and structures supporting capitalism have steadily emerged in Central and Eastern Europe, informal institutions remain divided between old and new economic systems. By deterring widespread adoption of entrepreneurial behavior, informal institutions persisting from the socialist system undermined the transition of formal institutions during the 1990s that were intended to promote entrepreneurship. Furthermore, economic turmoil, lack of social justice, growing inequality, and deteriorating welfare services have created dissatisfaction with the emerging capitalist economic system in many countries of Central and Eastern Europe. How formal and informal institutions evolve has signicant implications for developing an entrepreneurial culture in Central and Eastern Europe. By entrepreneurial culture, we refer to a national system of shared values in a particular society that embraces and supports entrepreneurship (Mueller & Thomas, 2000). Here, we integrate identity, institutional, and social movement theories to describe the ongoing transition of the political economies within these countries. Our underlying argument is that following the transition of formal institutions in Central and Eastern Europe, a division remains, with some individuals identifying with the new capitalist economic system and others identifying with the previous socialist framework. Entrepreneurship is expected to be constrained in countries with strong social movement activity that advocates the values and norms of the previous socialist system. Social movements to constrain entrepreneurship may also result from recent experiences in Central and Eastern Europe. For example, the visible success of entrepreneurs who have taken advantage of the opportunities available in the newly founded capitalist framework has led to a number of troublesome outcomes, including: (1) income inequality; (2) dissatisfaction with capitalism by less successful individuals; and (3) less successful individuals increasing identication with political parties favoring noncapitalist economic systems. In some countries where inequalities are readily apparent, widespread dissonance with capitalism has initiated a social movement for the reversal of formal institutional reforms and a limitation of the scope of the market system. Particularly disconcerting is that the separation between proponents of capitalism and socialism and the institutional vacuum in Central and Eastern Europe have also allowed the emergence of yet another group that dis-identies with both capitalism and socialism and favors more populist policy changes (Evans & Whiteeld, 1993). The recent reduced pace of transition and the emergence of populism in many countries are troublesome signs from the perspective of entrepreneurship in that such institutional changes decrease the opportunities available to potential entrepreneurs. Because entrepreneurship is widely viewed as an integral part of economic development, an environment of a country that impedes entrepreneurship may have negative consequences in the long term, including a reduction in value-creation potential, a lack of local innovation, and job losses (Schumpeter, 1950; Zahra et al., 2000).
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Our discussion of the politico-economic systems in Central and Eastern Europe yields several important theoretical contributions. First, we describe the transition from socialism as an open-ended process with an uncertain outcome. How this transition stabilizes depends on the nature and timing of both political and economic strides that are taken to encourage the acceptance of entrepreneurship in society. A second contribution is our theoretical argument that different core economic values are the bases of the tension between proponents of capitalism and those of socialism. We identify populist movements as taking advantage of this tension. The political support of populist movements is a product of successfully discrediting existing political parties and promoting different values (e.g., reducing crime or preserving the national identity). The folding of aspects of the political science domain back into entrepreneurship research is our third contribution. Politico-economic systems are a subject of great past importance in research, but less so now. Nevertheless, we argue that interactions between political and economic systems remain especially salient in emerging and transitioning economies such as those in Central and Eastern Europe. Understanding the economy is not possible without taking into account the political system and the ease with which changes may occur in it. As we argue herein, the instability and lack of experience with political freedom in such economies increase the ease with which political change may occur, leaving the development of an entrepreneurial culture uncertain. The article proceeds as follows. We begin with a discussion of entrepreneurships relationship to political economy. We then elaborate theory concerning the role of institutions in economies and how citizens identication with economic values (more specically, identication with political parties promoting specic economic values) can lead to social movements driving economic and political institutional reforms. From this point, we turn to a discussion of the institutional policies within socialism and capitalism. We contrast the policies and structures based on the differing economic values promoted in each framework and explain why attempts to establish capitalism in Central and Eastern Europe have yet to meet success. We propose how different social movements on the political stage advocating the different values of socialism and capitalism (and now also populism) may shape the environment for entrepreneurship. We conclude by offering implications of our work for entrepreneurship theory and practice involving government policy.

Theory Development Political Economy and Entrepreneurship

A political economy is a system through which policy decisions are analyzed on judgments of value and implemented to produce, distribute, and exchange this value (Robbins, 1981; Sidgwick, 1924). A political economy includes interdependent political and economic structures. On the political side, actors are charged with the task of forming policies that enable citizens to provide sufcient value for themselves as well as for funding of the states public services (Sidgwick; Smith, 2003). Political actors gain their position and power through the support of the citizenry. Remaining in power requires that political actors retain this support by establishing policies that provide value to the citizenry (Weingast, 1995). Value manifests not only in material wealth but also in citizens common rights (e.g., liberty and equality) and general public services (e.g., education and health care). The economy (i.e., the structure of institutions, rms, and entrepreneurial activities that facilitates the dispersion of scarce resources throughout a society) plays a central role in
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creating material wealth and allowing the state to provide other general public services. Entrepreneurship refers to processes through which more efcient means of producing, distributing, and exchanging resources are recognized and exploited (Ireland, Hitt, Camp, & Sexton, 2001). Because resources are scarce, the ability to disperse these resources more efciently allows a larger portion of society to reap their value. The attitudes of political actors toward entrepreneurship has signicant implications for how value (in all forms) is produced, distributed, and exchanged throughout a society. Some political actors prefer a larger role of the state in distributing scarce resources, as in socialist systems. Conversely, capitalist-oriented political actors favor the market in dispersing scarce resources. In reality, the stability of most existing politico-economic systems is based on reaching a balance of state and market roles in providing value for society.

Economies and Institutions

Institutions refer to the humanly devised constraints that shape human interaction (North, 1990, p. 3). While formal institutions are economic, legal, and political constraints that dene legitimacy within regulations, laws, and supporting apparatuses, informal institutions dene what is legitimate or socially desirable within the system of rules, norms, values, and beliefs (Suchman, 1995). Because institutions constrain to acceptable boundaries what opportunities may be pursued, they tend to establish how entrepreneurs may legitimately explore and exploit opportunities (Clemens & Cook, 1999). For example, because capitalism values free markets, many different types of opportunities are available for individual entrepreneurs and entrepreneurial rms competing in these economies. Conversely, within a socialist system valuing social justice, institutions minimize the legitimacy of independent forms of entrepreneurship, favoring the redistributive role of the state. Opportunities for entrepreneurship also differ owing to the changes in institutional boundaries over time. States erect and mold institutions to preserve the core values of their economic systems. The extent to which formal and informal institutions are aligned increases the stability of the overall economic system. Nevertheless, the alignment of formal and informal institutions requires the state to monitor the society, to eliminate opposition that surfaces in a consistent manner, and to reward behaviors and outcomes that are considered legitimate.

Identication and Social Movements

Identication refers to a cognitive, moral, or emotional attachment an individual has with a group based on similar, shared characteristics (Nahapiet & Ghoshal, 1998; Polletta & Jasper, 2001). More specically, identication is an attitudinally based attachment that individuals have with a certain group (Ashforth & Mael, 1989). Over time, identication may lead to an internalization of group values (Ashforth & Mael), but until this occurs, the attachment remains subject to change depending on contextual inuences. Individuals identify with groups with which they share a common regard for certain values, behaviors, or other general attributes, such as ethnicity or education (OReilly & Chatman, 1986). Individuals possess a constellation of identities (Elsbach, 1998). For example, one may identify with his or her rm, an educational institution, religious organization, or ethnic group. Individuals, as citizens of a state, also often identify with the values espoused by particular political parties (Campbell, Converse, Miller, & Stokes, 1960). In
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general, individuals organize their values within a hierarchical structure and rank their values according to their preferences (Schwartz & Bilsky, 1987). From a politicoeconomic standpoint, individuals values span a diverse scope from economic security to liberty, equality, social order, and nationalist considerations. Political parties play two vital roles: (1) unifying citizens sharing common interests, and (2) representing the collective interests in establishing policy (Miller, Erb, Reisinger, & Hesli, 2000). As with other broad organizations, political parties advocate diverse sets of values, such as those concerning the environment, personal freedom, the role of business in society, health care, and so on. Also embedded within the overall value set of a political party are values concerning how the economy should be constructed and managed to provide societal benets. Citizens may identify broadly with a political party, agreeing with many of its espoused values. Party identication may also be based more strongly on particular values (e.g., economic values) while being apathetic to others (e.g., health care or the environment). Research shows that individuals who are at least partly educated in a political context form their political decisions in a manner that is consistent with their value structure (Jacoby, 2006). One of the primary responsibilities facing political parties is to insure widespread economic security, although political parties may also be able to take advantage of current, hotly contested issues that affect citizens core values. Failure to ensure economic security or stability of other core values can lead to dis-identication of citizens with the ruling party and a subsequent reoriented identication with opposing parties (MacKuen, Erikson, & Stimson, 1989; Weisberg & Smith, 1991). Such attitudinal changes manifest in an array of actions, including redirected votes in subsequent elections, protests, or in extreme cases, revolt. These actions are intended to prompt reforms in the economic system by alerting political elites to the needs that are signicant to certain groups or to begin the process of installing new elites that promise to implement desired reforms. The actions of protest and revolt reect a change from passive party identication to a collective political action. Individuals will participate in collective political action if the expected outcomes of their behavior have a net positive value (Finkel & Opp, 1991, p. 342). Collective political actions targeting political structures are often organized into social movements where a social movement is a set of opinions and beliefs in a population which represents preferences for changing some elements of the social structure and/or reward distribution of a society (McCarthy & Zald, 1977, pp. 12171218). Social movement theory is concerned with the ways different actors shared interests translate into collective action (Davis, McAdam, Scott, & Zald, 2005; McAdam, 1996; Tarrow, 1994). In previous research, social movements were considered from different perspectives based on the sources of movement activity (Davis & McAdam, 2000; McAdam & Scott, 2005). Of the different perspectives, we use the political process model (e.g., Davis & Thompson, 1994; Soule & Olzak, 2004) and the framing process model (e.g., Benford & Snow, 2000) to develop our arguments on collective political action and the effect on entrepreneurship in Central and Eastern European countries. The political process perspective focuses on political opportunities and constraints existing in the political climate (McAdam & Scott, 2005). From a political process perspective, Finkel and Opp (1991) suggest that the extent to which benets may accrue to citizens participating in the social movement depends on the incentives available in the environment. These researchers found collective political action to be positively associated with both public-goods-related incentives (e.g., perceived benets of overcoming sources of policy dissatisfaction) and private incentives (e.g., gaining political knowledge). While political opportunities and constraints may mobilize individuals, actual collective action may also occur based on shared meanings and cultural understandings
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Figure 1 A Model Describing the Emergence of Politico-Economic Social Movements

Economic dissatisfaction

Party identification

Identity re-orientation

Social movement

(Davis & McAdam, 2000, p. 218). Benford and Snow (2000) suggest that individuals use frames and schemas to develop a shared understanding of problems and to suggest specic changes and solutions. For example, if citizen groups of Central and Eastern European countries perceive that their opportunities are constrained by an entrepreneurial culture, they are more likely to engage in a social movement against entrepreneurship relative to citizens with a shared and positive view of an entrepreneurial culture. In Figure 1, we model our theoretical arguments concerning the emergence of politico-economic social movements.

The Role of Entrepreneurship in Socialism and Capitalism

Depending on how economies are organized, entrepreneurs are allowed to play a signicant role or are conned to serving peripheral needs. The economic systems of socialism and capitalism organize rm behavior and the role of entrepreneurship in vastly different frameworks. The differences originate from unique philosophies regarding resource allocations as well as how best to provide society with products and services, such as food, shelter, health care, and education. In the following sections, we discuss both how resources are allocated through the institutional frameworks in socialist and capitalist economies and the implications of the frameworks for entrepreneurships development.

Socialism
Institutions supporting socialism were erected in the former Soviet Union starting in 1917 and countries of Central and Eastern Europe after World War II. The philosophy underlying the socialist economic systems emphasized social justice, equality, and welfare (Kornai, 1992). The socialist states initial actions were intended to reduce inequalities by nationalizing private property (e.g., conscating property from the wealthy and placing it under state ownership). Decision makers justied the changes as a fair distribution of property throughout society. Alongside these societal changes, one-party systems characterized concurrent political transitions in Central and Eastern Europe in the late 1940s. The one-party system was structured as a centralized bureaucracy with all major decisions being made by the party apparatus. The state utilized a two-pronged approach to align informal institutions with the above-noted formal institutional changes. The approach included selecting out opposition and socializing those individuals who were malleable (Kornai, 1992). Coercion was a
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common tool to repress opposition to the socialist party line, and it was used to constrain both active opposition and mere utterances of dissent. Coercion allowed the party to maintain power and preserve the ideological drive to distribute property and income equally across society. Socialization tactics included the state consistently imposing its values through rallies, marches, and other forms of propaganda (Kornai). The formal and informal institutions supporting the socialist economic system left little room for independent forms of entrepreneurship in Central and Eastern Europe. Rather business was characterized by mass organizations enjoying monopolies in their respective markets. Within the socialist system, the leading ofcers of the mass organizations were appointed by the party. In so doing, these organizations were established as pawns, ultimately directed by the needs of the party apparatus. Decisions regarding new product and service development, resource allocations, and the nature of production and consumption were all essentially controlled by the party apparatus (Kornai, 1992). Because the survival and growth of the mass organizations depended not on their creditworthiness or ability to cover costs, but on their ability to expand production and output, mass organizations lacked incentives to undertake entrepreneurial action independently (Stark & Nee, 1989). Entrepreneurship in Central and Eastern Europe was also hindered because the centralized decision-making structure limited the overall level of entrepreneurial alertness (dened as a superior insight to discover entrepreneurial opportunities [Kirzner, 1979]) in the socialist economies. The complexity of managing resources and identifying opportunities for entrepreneurship across such a diverse and large set of decisions was simply overwhelming for central planning in Central and Eastern Europe. As such, the entrepreneurial alertness of the centrally controlling party apparatus paled in comparison with the entrepreneurial alertness possible with all the potential entrepreneurs present in the society (Herbener, 1992; Kirzner, 1980). Because of this, the sheer quantity of entrepreneurial opportunities recognized and then exploited within the socialist economies was signicantly less than what was possible in capitalist economies. Despite the need for independent forms of entrepreneurship, the various forms of socialization and selection out of opposition consistently reiterated the values of socialism, creating a culture of discipline and conformity with the overarching ideology. Ageev and Kuzin (1990, p. 84) further detail the anti-entrepreneurship norms and beliefs engendered by socialism in Central and Eastern Europe: Prohibitionism, the undoubted priority of state interest that suppresses virtually all personal initiative, wage stability, leveling and distributionism, the low prestige of professionalism and innovationism, business success and risk, envy and the striving to count the money in our neighbors pocket, and the inability to separate the real desire to work and earn from speculation and pure gain, the reluctance to value the skilled work of others highly, suspiciousness of competition, the market, and commoditymonetary regulators, the lack of interest in the quality of labor, distorted business ethics, fear of failure, passivity and inertia, leisurely obedience and the limited spectrum of motivation, and nally, rigid dependence on political and ideological strategy and business conditionsall this rejects entrepreneurial values and models of behavior. In summary, following the initial transition to socialism, the states were effective in emphasizing the values of social justice, equality, and welfare. Formal institutions were established in a way that facilitated attaining these values and structured to constrain possible changes outside of the purview of the party apparatus. To solidify socialism, the states realigned the norms, beliefs, and values of society through consistent messages
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communicated with various forms of socialization and heavy-handed coercion. Moreover, these institutional reforms simultaneously created national cultures shunning entrepreneurship.

Capitalism
The socialist economies of Central and Eastern Europe collapsed in the late 1980s. Although the events leading to the demise of socialism are complex, the ineffectiveness of the socialist economic system to adequately distribute resources across society is a primary causal agent. Lagging technological development, production inefciencies and blockages, and product shortages are examples of ineffectiveness characterizing socialist economic systems. These sources of ineffectiveness intensied the underlying dissatisfaction with the lack of personal freedom (Kornai, 2000; Lavigne, 1995). Prior to the collapse of socialism in the late 1980s, some countries recognized their economys distress. In response, these countries passed moderate economic reforms that were intended to introduce certain aspects of a market system into their respective socialist economies. Ultimately, however, these reforms failed to stimulate the economic turnaround as hoped. In turn, these failures led the countries of Central and Eastern Europe to adopt capitalist frameworks beginning in 1989 as the foundation for the desired turnarounds. The transition to capitalism introduced economic systems based on a new set of values, including property rights, free markets, and wage labor (Audretsch & Thurik, 2000; Schweickart, 1993). The differences between the set of values underlying capitalism and those of socialism stem largely from how the two systems perceive justice in the distribution of products and services to society. As noted previously, proponents of socialism perceive justice in an economic framework that creates social equality (i.e., equality of outcomes). Conversely, capitalists hold more of an entitlement view of distribution, or equality of opportunity. In this view, individuals are entitled to holdings previously undiscovered or holdings transferred from other individuals as long as the means of acquisition are legitimate (Nozick, 1974). Kirzner (1989, p. 174) claries this view of justice: . . . in reality resources and products have always had to be discovered. They have never existed up until the moment of their entrepreneurial discovery. It is upon this contention that I have based my case for the nders-keepers ethic and its relevance for the justice of capitalist income assignments. In other words, value is not created until entrepreneurs discover and exploit an opportunity. As long as the entrepreneurial behaviors are legitimate, entrepreneurs are entitled to access the value created by their knowledge and actions. In contrast to the redistributive role of the state under socialism, capitalist economic systems are based on laissez faire, or a doctrine promoting minimal government intervention in economic affairs. An invisible hand guides rm behavior and entrepreneurship without the watchful eye of the state imposing its willand values (Smith, 2003). The enforcement of property rights by the state and appropriate wage structures insure that entrepreneurs and workers receive their just portion of value that their resources, actions, and knowledge create for society. From a capitalist perspective, the market system allows all individuals to compete by exploiting their unique stocks of knowledge and resources. The expertise of these individuals facilitates entrepreneurial alertness and the discovery of opportunities. Furthermore, the lack of overarching coercive control allows appropriate risk-taking behavior. In sum, capitalist economies rest on the core economic values of free markets, property rights, and wage labor. Free markets allow all individuals to pursue entrepreneurship. Property rights and wage labor insure that the value created through entrepreneurship is
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distributed fairly (according to an entitlement view) within society. Together, the economic values of capitalist economies, supported by well-established formal and informal institutions, indoctrinate national cultures supporting entrepreneurship.

Institutional Transformation
As we noted previously, Central and Eastern European countries began to transition from socialism to capitalism in 1989. In doing so, signicant changes took place on both political and economic fronts. Particular nuances of the transition (both its means and ends) varied across countries because of their different histories and economic conditions (Meyer & Peng, 2005; Stark, 1996). While some countries started out their transition with more traditional socialist regimes, others had already completed waves of reforms that, among other outcomes, cleared the stage for the emergence of entrepreneurial culture. Institutional changes also depended on local economic and political conditions and thus ranged from voucher privatization to the sale of state ownership to foreign investors (Hanley, King, & Tth, 2002; Tihanyi & Hegarty, 2007). Furthermore, historical differences, such as with respect to the industrial base established in certain countries prior to the socialist system, have led to varying transition success (Kozminski, Yip, & Dempster, 2000). Despite the important differences, the institutional transformation in many countries shared several broad similarities. Politically, the one-party systems that characterized the socialist regimes were replaced with democracies. From an economic standpoint, privatization was the key to opening the doors to capitalism across Central and Eastern Europe (Spicer, McDermott, & Kogut, 2000). Both the political and economic approaches faced initial scrutiny. We discuss the concerns of the political and economic reforms below. We note that initial political concerns were overcome. However, reforms of economic institutions are yet to engender widespread entrepreneurial cultures in Central and Eastern Europe, leading to economic hardships and high levels of unemployment in some countries. Citizens dissatisfaction that has followed appears to be causing a reorientation of political party identication, paving the political avenue for socialist and populist social movements.

Political Transformation
With the transition to capitalism, Central and Eastern European countries established democracies that were intended to promote equality of opportunity, not only in the economic context but also within the broader context of societal benets. The stability of the newly founded democracies rested on the ability of political parties to unify citizens and to act as a means of representing the needs of the masses as communicated to political elites (Miller et al., 2000). A number of scholars voiced skepticism about the ability of political parties to engender identication, without which political stability would be undermined. Reddaway (1994), for example, argued that the multiparty democratic system in Russia was already unraveling in the initial transformative stages and a military dictatorship would likely unify everyone under a national identity. Others have not been so extreme in their predictions, but have addressed concerns related to a lack of familiarity with and distrust of political parties following decades of socialist dictates (Klingemann & Wattenberg, 1992; Rose, 1995). Others argue that the development of party identication occurs only through many years of socialization (e.g., Greenstein, 1965).
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Despite the numerous concerns, evidence suggests that citizens of Central and Eastern European countries increasingly identify with political parties (Evans & Whiteeld, 1993; Miller & Klobucar, 2000). Furthermore, party identication extends beyond merely recognizing the presence of a favorable party. Miller et al. (2000) found that citizens who have aggregated in political parties share ideological and policy preferences, possess issue congruence with political elites in their respective parties, and are able to differentiate opposing political parties on a policy basis. Citizens understand policy differences across parties and base their political decisions on this understanding. Although party identication is an initial success in the transition from socialism to capitalism, political stability requires further progress. For example, time is still needed to insure the institutionalization of linkages between the masses and political elites (Miller & Klobucar, 2000). Also, political stability will only be attained when citizens perceive political parties as responsive and effective in addressing their needs (Miller & Klobucar). Recently, the incomplete transformation of economic institutions in Central and Eastern Europe (and the resulting economic hardships and unemployment) appear to be undermining political stability.

Economic Transformation
The economic transformation that accompanied the political shift from socialism to capitalism was characterized by reforms targeting multiple formal institutions. The reforms in general were aimed at developing a free, yet legitimate, market. Further reforms in most countries targeted legal and regulatory infrastructures, capital market institutions, and unemployment and retirement systems. Svejnar (2002, p. 5) detailed the formal institutional reforms: The macroeconomic strategy emphasized scal and monetary policies, wage controls and, in most cases, also a xed exchange rate. The micro strategy was to move quickly toward price liberalization, although a number of key prices, like those of energy, housing and basic consumption goods, often remained controlled along with wages and exchange rates . . . most countries opened up rapidly to international trade . . . Most countries also quickly reduced direct subsidies to trusts and stateowned enterprises and allowed them to restructure or even break up. They removed barriers to the creation of new rms and banks and carried out small-scale privatizations . . . A nal feature was the introduction of some elements of a social safety net. These changes caused a sizeable reallocation of labor away from the state-run rms, some of which went to the new private rms and some of which ended up in nonemployment. Simultaneous with the formal institutional reforms, governments undertook privatizations of their respective state-owned enterprises. Proponents of mass privatization advocated the need to instill capitalist economic frameworks before political opposition materialized (Spicer et al., 2000). The mass-privatization proponents also believed entrepreneurship would quickly ll the economic void left by dismantling the socialist system (Spicer et al.). Unfortunately for those favoring rapid, mass privatization, widespread entrepreneurship did not emerge in the decade following the transition. The lack of widespread entrepreneurship in Central and Eastern European countries following the transition to capitalism led to vast disparities in income and quality of living. As the socialist system was dismantled, many individuals lost their jobs and independent forms of entrepreneurship failed to ll the void. Although uctuating, unemployment
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gures rose into the double digits in many Central and Eastern European countries for years following the initial transition phase (Svejnar, 2002). Until recently, staunch opposition in what may be considered a notable political force had not surfaced. The economic hardships and high rates of unemployment, however, remain in many Central and Eastern European countries today. The failure of governments to mold formal and informal economic institutions that were conducive to entrepreneurial cultures appears to be a primary force underlying these economic difculties. We contend that two specic failures in the transformation of economic institutions have undermined the development of an entrepreneurial culture: (1) initial imperfections of formal institutions to monitor and enforce the economic values of capitalism (i.e., property rights, wage labor, and a free, but legitimate market), and (2) a lack of attention addressed to informal institutions concerning the economy. The mass privatization of state-owned enterprises occurred so rapidly following the demise of socialism that many Central and Eastern European countries were left with inadequate formal institutions to support free, legitimate markets. Although the formal institutional changes recounted by Svejnar (2002) soon followed, business in the Central and Eastern European countries operated in a formal institutional void during the initial years following mass privatization. Poorly developed state policies undermined legitimate forms of entrepreneurship (Kolvereid & Obloj, 1994). The void also enabled numerous forms of illegitimate behavior. Ambiguous (or a complete lack of ) formal institutions governing contracts facilitated opportunistic behaviors (Spicer et al., 2000), banks were slow in providing needed capital to entrepreneurs, and political elites from the socialist era were in some cases able to leverage their positions to gain favorable access to resources and other entrepreneurial opportunities (Walder, 2003). The lack of appropriate formal institutions to enforce legitimate behaviors limited the opportunities for independent entrepreneurs who failed to quickly recognize and exploit opportunities or were unable to take advantage of their status. The visible need for opportunism and status in gaining success discouraged others from even attempting entrepreneurship. By doing so, the formal institutional void slowed down the emergence of an entrepreneurial culture that the countries hoped would stimulate the economy. The fact that transforming informal institutions within economies has been a slow process in Central and Eastern European countries exacerbates the issues imperfect formal institutions create. Although citizens living in capitalist societies have long embraced the values promoting entrepreneurship, decades of socialist inuence have ingrained values that are strongly opposed to the surfacing and pursuit of entrepreneurship. In fact, decades before, Schumpeter (1950, p. 170) asserted the following: . . . we will keep in mind that socialism aims at higher goals than full bellies, exactly as Christianity means more than the somewhat hedonistic values of heaven and hell. First and foremost, socialism means a new cultural world. For the sake of it, one might conceivably be a fervent socialist even though believing that the socialist arrangement is likely to be inferior as to economic performance. Hence, no merely economic argument for or against can ever be decisive, however successful in itself. Schumpeters (1950) comments suggest that Central and Eastern European citizens may view socialism as an inferior engine of growth as compared with capitalism, yet remain strongly committed to socialisms values and beliefs. By the end of the socialist regimes, the socialization efforts undertaken to bring about rigid conformity, fear of failure, suspiciousness of competition (Ageev & Kuzin, 1990), and other beliefs (as driven by the need to attain the values of social justice, equality, and welfare) had created what were rmly ingrained behaviors in the citizens living in Central and Eastern Europe (Kornai, 1992).
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Hence, formal institutional transformations aimed at supporting capitalism were an incomplete solution to the economic deterioration created by decades under centrally planned economies in Central and Eastern Europe. A widespread entrepreneurial culture could only be achieved through efforts to simultaneously transform formal and informal institutions. Because informal institutions have been slow to adapt to the capitalist ideology, the scope of entrepreneurship in many Central and Eastern European countries has not yet compensated for the growing unemployment and economic hardships created by the restructuring (or privatization) of state-owned enterprises.

Collective Party Identities and Entrepreneurial Culture

Party identication increased in the decade following the transition from socialism to capitalism that began in 1989. How this party identication emerged varied across individuals. Citizens socialized completely within socialist institutions favored attachment to socialist-oriented parties in the new democratic system. In contrast, older generations that were descendants of the elites of previous capitalist-type political economies, those who dis-identied with socialism, and younger generations that were not fully socialized within the socialist regimes more likely embraced capitalist-oriented parties (Powers & Cox, 1997). Others became attached to political parties that attempted to balance socialist and capitalist economic values, such as those parties promoting certain social guarantees while adopting an orientation to free-market principles (Miller & Klobucar, 2000). Interestingly, while identication strengthened with individual political parties, a broad opinion of Central and Eastern European citizens was that the overall political system was awed. Furthermore, citizens did not hold a particular preference for any type of political system (e.g., democracy versus one-party command) (Miller & Klobucar). The high levels of unemployment and the economic hardships following the transition have increased dissatisfaction with governments in the region. In a study of citizens perceptions of economic and social conditions in Central and Eastern Europe, McDonough (1995) found that less than 10% of citizens believed they were better off in the new economy compared with conditions during the previous socialist regimes. Economic dissatisfaction remains a major political issue (Anderson, Cienski, Condon, & Wagstyl, 2006; Guzelova, 2001). Perhaps partly because of this, political and economic turmoil has surfaced recently in Central and Eastern European countries. Whether due to lack of ability, effort, internal cohesion, or overriding external factors, the Central and Eastern European governments ineffectiveness in dealing with the persisting economic challenges has created dissatisfaction with the political and economic institutions. In many ways, the economic challenges have served to persist and magnify the cultural trauma that characterized the initial transition from socialism to capitalism (Sztompka, 2004). As a response to the economic needs, social movement activities have increased. The initial political inroads made in establishing democratic governments composed of political parties with strong identication appear to be unraveling (Trouble in New Europe, 2006). In the following sections, we discuss how a number of Central and Eastern European countries (e.g., the Czech Republic, Hungary, Poland, and Slovenia, among others) are embroiled within a conict of clashing collective identities. In Figure 2, we highlight four social movements distinguished by their collective party identities (capitalist democracy, socialist command, social democracy, and populist command). Each social movement has surfaced on the basis of the overarching politico-economic values that are associated, to varying degrees, with either a capitalist economic system or a socialist economic system.
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Figure 2 Four Social Movements Emerging in Central and Eastern Europe

Socialist economic values

Socialist command

Social democracy

Capitalist economic values

Populist command

Capitalist democracy

Depending on which collective identity becomes dominant in the future, Central and Eastern European countries may continue their shift to capitalism, fall back to elements of socialist economic policies, develop a compromise of socialist and capitalist policies, or adopt a wholly new economic system based on populism. We set forth propositions discussing our expectations for the role of entrepreneurship in Central and Eastern European countries within the context of each potential outcome (i.e., the continued emergence of capitalist democracy, resurgence of socialist command, the gridlock of a social democratic framework, or rise of populist command).

A Continued Emergence of Capitalist Democracy

The economic hardships present within the socialist regimes of Central and Eastern Europe prior to 1989 sparked an initial social movement within these countries to end socialism. Leading the social movements of the respective countries, political elites transformed political and economic institutions to promote capitalism. The establishment of institutions supporting free markets, property rights, and wage labor was intended to promote widespread entrepreneurship, which in turn was expected to stimulate strong growth in new and revitalized economies. Some citizens identied with the new economic values and embraced entrepreneurship. However, imperfections in formal institutions and failure to transform informal institutions undermined the emergence of a widespread entrepreneurial culture. While the policies implemented by political elites were intended to end the economic adversity in Central and Eastern Europe through capitalism, the institutional problems prolonged the economic difculties. Consequently, attitudes toward the capitalist democratic movement and the entrepreneurial behaviors that are part of it changed as citizens have sought other ways to overcome their hardships.
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Nevertheless, a capitalist democratic movement, albeit with less momentum, remains in many Central and Eastern European countries as many citizens continue to identify with political parties advocating capitalist economic values. A number of reasons, related to both public and private incentives, may be offered for why a capitalist movement continues despite persistent economic difculties. For example, individuals who quickly embraced entrepreneurship following transition and personally reaped its benets recognize its potential to create value. For these individuals, reforming capitalist policies may mean losing the value gained through their entrepreneurial behaviors as states seek to redistribute wealth in terms of social equality (as opposed to laissez faire). Therefore, many citizens continue to promote the values of free-market economy principles that have led to their personal success. Continued identication with political parties favoring capitalist values also stems from how citizens attribute blame for the current economic adversity. To the extent that blame is attributed to lingering effects of the economic destruction imposed by previous socialist regimes, policy dissatisfaction may continue with socialist politico-economies. Citizens may continue to identify with parties promoting capitalist economic values that are expected to overcome the damage created by previous policies. Similarly, citizens may continue to identify with capitalist-oriented political parties because of comparably favorable prospective evaluations of the economy with capitalism (Chappell & Keech, 1985; MacKuen et al., 1992). If capitalism and the entrepreneurship it stimulates are thought to more likely lead to an economic turnaround, as opposed to what might be possible under socialism, Central and Eastern European citizens may continue to identify with political parties promoting capitalist economic values. A continued emergence of a capitalist movement has signicant implications for future entrepreneurship in Central and Eastern European countries. Capitalism is expected to create a free market and equality of opportunity for potential entrepreneurs, constrained only by formal institutions that regulate the boundaries of legitimate business activities. Moreover, with time, formal and informal institutions have the potential to develop in ways that will support capitalism and entrepreneurship. With this support, entrepreneurial behaviors, taken to recognize and then exploit opportunities, have the possibility of generating outcomes that citizens will perceive to be equitably dispersed (i.e., as dened by property rights and wage labor regulations). Therefore, we suggest the following: Proposition 1: An increased level of capitalist democratic movement will be positively related to institutional changes favoring an entrepreneurial culture in Central and Eastern European countries.

A Resurgence of Socialism
In some cases, Central and Eastern European countries attempted to constrain socialist parties, but legal changes in the early 1990s facilitated a resurgence of socialist-oriented political parties (Moraski & Loewenberg, 1999). Despite the economic hardships created under the previous socialist regimes, many citizens continued to identify with socialist political parties favoring the economic values of social justice, equality of lifestyle, and welfare rather than the values associated with capitalism (Miller & Klobucar, 2000). In the years following the transition, a resurgent socialist movement can be explained by a number of factors, driven primarily by the public-goods-related and private incentives perceived as attainable through such collective political action. While some citizens attribute economic difculties to lingering effects of socialism, others claim that society was betrayed by opposition leaders who later implemented the early reforms: Either the transition was
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hijacked by a small elite, or societys goals from the early 1980s were not (or only minimally) realized through the enacted reforms (Powers & Cox, 1997, p. 619). Whether because of feelings of betrayal or dismay with economic reforms, many citizens in Central and Eastern Europe are dissatised with capitalist policy outcomes. By participating in socialist counter-movements, citizens hope to return to previous economic systems in which they were provided at least some level of social guarantees (Duch, 1993). The inability of capitalist institutions to ensure equality of opportunity and the vast disparity across society of outcomes achieved in terms of incomes and lifestyles that are associated with capitalism appear to have also inuenced citizens to reorient their identication with socialist movements. Following the transition to capitalism, numerous political elites (Walder, 2003) and opportunistic entrepreneurs (Spicer et al., 2000) were advantaged in exploiting opportunities by their social positions and deviant behaviors that went unpunished, respectively. Furthermore, many entrepreneurs experiencing wealth for the rst time publicly enjoyed lifestyles far above what was possible for the average citizen in many Central and Eastern European countries. Magnifying the general suspiciousness of neighbors norm that existed from socialist regimes, many citizens that were not as successful became dissatised with the visibly apparent inequalities that surfaced with capitalism. An increasing social movement aiming to return socialism has negative implications for entrepreneurship in Central and Eastern Europe. Returning to socialist regimes would likely entail political and economic reforms that would constrain entrepreneurial behaviors. Socialist political parties could be expected to remove political opposition and take control of economic affairs. If this were to occur, entrepreneurship would return to being a state-driven protocol with opportunities conned to the alertness of those in command. If this were to happen, the widespread entrepreneurial culture sought by capitalist reforms would be prevented from surfacing. Thus, we suggest that: Proposition 2: An increased level of socialist command movement will be negatively related to institutional changes promoting an entrepreneurial culture in Central and Eastern European countries.

A Social Democratic Gridlock

Although political parties predominantly emphasizing capitalism and socialism existed in Central and Eastern Europe, perhaps most political parties espoused a mix of capitalist and socialist economic values, which we refer to as social democratic parties. As pointed out by McDonough (1995, p. 652) early in the transition to capitalism, . . . the euphoria of the early days of democratization may lose their edge as nostalgia for the social guarantees of communism blurs with social democratic measures designed to soften the shocks of marketization. To the extent that some social guarantees can be provided while simultaneously erecting capitalist-oriented institutions, the social democratic state may be able to appease both those that identify with socialist economic values and those that identify with capitalist economic values. The experiences of social democracies around the world suggest that this mutual accommodation has the potential to support the emergence of some entrepreneurial behaviors by citizens. Furthermore, social democratic parties represent a more incremental change of identication for citizens favoring capitalism or socialism, as opposed to reorienting ones identity from purely capitalist to socialist-oriented political parties. Therefore, a socialdemocratic movement may gain momentum as citizens become increasingly condent with capitalist-oriented political parties and remain disillusioned with socialism.
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Social democracys ideology represents an economic compromise of the capitalist free market and socialist distribution of wealth. Within social democracies, entrepreneurs are usually afforded latitude in exploiting opportunities. However, the need to distribute social guarantees across society requires that the state absorb a portion of the value entrepreneurs create. By doing so, the state reduces the overall number of valuable opportunities available to entrepreneurs and for which entrepreneurs are willing to take risks. When the state provides extensive levels and types of social guarantees (e.g., income, jobs, education, medical assistance, etc.), the scope of valuable opportunities available to entrepreneurs may narrow signicantly. This suggests the following: Proposition 3a: An increased level of social democratic movement will have a curvilinear (L-shaped) relationship with institutional changes favoring an entrepreneurial culture in Central and Eastern European countries, such that as the level of social democratic movement increases, institutional changes promoting an entrepreneurial culture will decrease before stabilizing. As noted previously, the emergence of social democratic movements can be attributed to economic dissatisfaction. The social democratic movements demand that governments provide some level of social benets to their citizens. The existing level of economic development in Central and Eastern European countries may be able to support social benets to a given extent. However, countries characterized by poor economic development are not able to support social benets, and perceptions of injustice, inequality, and poverty are likely to increase. In such cases, social democratic movements are likely to seek an economic compromise more strongly favoring socialism. In turn, economic institutions supporting an entrepreneurial culture would be dismantled and transformed as the state carries a heavier burden to distribute wealth. Therefore, we suggest: Proposition 3b: Economic development in Central and Eastern Europe moderates the relationship between a movement toward a social democracy and an entrepreneurial culture: as economic development increases, the level at which institutional changes promoting an entrepreneurial culture stabilize increases.

A Populist Movement
Populism is a fourth social movement surfacing in some Central and Eastern European countries. Populism is a politico-economic system based on values that differ signicantly from both capitalism and socialism. The populist movement has gained support by discrediting existing political parties and promoting other values, such as the need to reduce crime or to preserve the national identity by limiting immigration (Giddens, 2003). Riker (1982) describes populism as a awed politico-economic system. This perspective argues that the majority is right and must be respected. Liberty manifests when the majoritys will is served by the decisions and actions of political elites. However, populism leads to coercion aimed at oppressing values and tastes of minorities that conict with majority rules (Riker). There are two other long-term, politico-economic issues in populist regimes. First, the majority is served in a true sense only when there are two social preferences. When more than two social preferences exist, a minority can actually gain the majority because other groups are split across numerous preferences (Riker). A second issue that plagues populist regimes is that political elites can modify electoral systems in their favor by asserting that such changes are the majoritys will (Riker). More
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specically, populists argue that the people are one and will be best served by a single, ideologically unied leadership (Knopff, 1998). Populist regimes secured their positions of power in Argentina and Mexico for decades through manipulation of electoral institutions (Gibson, 1997). While preserving positions of power for the elites, the institutional changes that populists implement create inertial politico-economies that resemble the one-party command systems of socialist regimes. Furthermore, changes in the composition of the majority often fail to overcome the solidied positions of the political elites. Populist movements appear to be gaining momentum in Central and Eastern Europe (March & Mudde, 2005; Perry, 2006). The growth of populism may reect a reorientation of party identities by Central and Eastern European citizens who are dissatised with economic hardships and blame both previous socialist economic destruction and the failure of capitalist policies to resurrect the economies (Held, 1996). The populists have been effective in highlighting the aws of capitalist and socialist political parties while advancing their own identity to appeal to the masses. Emphasizing the lack of responsiveness of capitalist and socialist political parties, the political elites leading the populist movements are able to take advantage of economic adversity by promising certain guarantees that are of interest to the majority of a nations citizenry. The differences between the political ideologies are less clear in Central and Eastern European countries than in the democracies of developed countries (Evans & Whiteeld, 1993). Most local populist movements have been dominated by ideologies that include values of strong national identity (e.g., populist nationalism), traditionalism, and opposition to immigration (Skolkay, 2000). However, in most countries of the region, these values have been mixed with ideas of universal employment, free education, and renationalization of private property. In the new Central and Eastern European member countries of the European Union, populist movements have also emerged from the unfullled expectations of Union membership or Euroskepticism (Mudde, 2003). Populists exploit citizens who are willing to trade their vote (i.e., a manifestation of their party identication) to gain short-term guarantees while ignoring potential long-term ramications (Canovan, 1981). While criticizing capitalist and socialist policies, the populists simultaneously establish their own identity. Central and Eastern European countries provide a fertile setting for populist movements. As noted, populism is based on preserving the majoritys will. When two options are present, the option with the majority support wins. However, when more than two options are present, the majority may be spread across numerous tertiary preferences, allowing a minority secondary option to gain control (Riker, 1982). The political systems of Central and Eastern European countries are often characterized by many (sometimes over 20), discrete political parties. This fragmentation increases the number of options available to voting citizens and allows populists to gain control without having a true majority. From a capitalist and entrepreneurial standpoint, the rise of populism in Central and Eastern Europe has already manifested in troublesome changes. For example, the recently elected prime minister of Slovakia, Robert Fico, has pushed for a reversal or modications of numerous capitalist reforms, such as special taxes on banks and utilities and de-privatization of the Bratislava airport (Trouble in New Europe, 2006). Similar sentiments are emerging by populist movements in several countries in the region, including in Ukraine, Hungary, and Romania. A persistent rise in populism has negative implications for developing a widespread entrepreneurial culture in Central and Eastern European countries. Following the rise of populist political elites to power, institutions are transformed to secure this positional power, usually achieved through coercion. The oppressive nature of populist regimes
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resembles that of socialist totalitarianism, driving out creativity and risk taking that may challenge state command. Therefore, the entrepreneurial behaviors that stimulate economic development become limited in populist regimes (Gibson, 1997). Thus, we suggest the following: Proposition 4: An increased level of populist command movement will be negatively related to institutional changes promoting an entrepreneurial culture in Central and Eastern European Countries.

Discussion and Conclusions

We have used identity, institutional, and social movement theories to frame arguments about entrepreneurships future in Central and Eastern European economies that are experiencing transitions to different economic systems. Our underlying argument is that the institutional transformation from socialism to capitalism resulted in the emergence of meaningful differences in party identication and that these differences play an important role in shaping entrepreneurship by means of increased social movement activity. Beyond its direct implication for entrepreneurship theory (e.g., comparative study of entrepreneurship), the future scope of entrepreneurial activity will likely have a profound effect on the macroeconomic development of countries in Central and Eastern Europe. The benets of entrepreneurship may include increased employment levels, innovation, and spillover effects (Zahra et al., 2000). Herein, we provide an overview of the environment for entrepreneurship in the transition economies of Central and Eastern Europe and propose that social movement activity by groups with different political identities will inuence the rules that support or constrain entrepreneurship. Specically, we suggest that while a social movement advocating capitalism facilitates the emergence of an entrepreneurial culture in Central and Eastern Europe, movements of socialism and populism may have negative effects on entrepreneurship. We further argue that social democratic movements lead to moderated decline in a societys entrepreneurial culture. Studying the societal environment of entrepreneurship in Central and Eastern European countries extends entrepreneurship theory. While most prior studies focused on entrepreneurship in developed countries (especially the United States), there are notable developments for the eld in different regions, including emerging economies. The transition economies of Central and Eastern Europe have unique characteristics that warrant researchers attention. Indeed, we believe that the institutional shift from socialism to capitalism offers a laboratory setting to examine entrepreneurship in a turbulent environment that is characterized by complex political and economic changes. How different societal groups affect or are affected by emerging entrepreneurial rms in transition economies may yield insights that in turn could inform efforts to increase our understanding of other regions and country environments. Because social movements are powerful forces in many emerging economies, the validity of future entrepreneurship research in those settings may improve by uncovering the inuences of societal forces. In addition to considering the variations across social movements, future research should provide a better understanding of the specic underlying mechanisms of social movements in different countries. Obvious contexts for future research include the experiences of different transitioning countries, such as Russia and China. In conducting this research, scholars can achieve a multinational triangulation for identifying the common politico-economic factors that inuence social movements and their outcomes (Peng &
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Heath, 1996). However, there are also a number of reasons why the observed variations across transitioning countries may grow if researchers consider the bases of social movement activity in Russia or China. Despite the important advancements, recent political developments in Russia still indicate a relatively vulnerable position of entrepreneurship in the country. In contrast, while the Chinese society appears to rapidly embrace the idea of entrepreneurship, it does so with relatively limited political freedom. An increased socialist movement may reverse the course of entrepreneurship in the future in this country. Alternatively, changes in Chinas political structure, coupled with economic hardships, may also lead to the rise of populism and the limitation of entrepreneurial culture in the future. Surveys of the ruling elite as well as diverse groups of citizens could help researchers understand the changing attitudes toward entrepreneurship in different countries. The study of social movements focusing on entrepreneurship may also inform research on a broader scale. While emerging economies provide a natural setting to examine entrepreneurships emergence, the changing landscape of social movements have important inuences on the development and future of entrepreneurial culture in developed countries as well. The acceptance of entrepreneurship may change over time through differences in the views of ruling political elites. Beyond the changes in rules and laws, entrepreneurial behavior may be encouraged or constrained by representation, taxation, education, religion, and government incentives. Furthermore, social movements in societies may increase or limit the scope of entrepreneurship by advocating norms and acceptable behavior through media and different art forms. Future empirical research could explore the nature and specic inuence of social movement activity concerned with entrepreneurship. Additionally, contributions can result from studies of changes in entrepreneurial culture over time in response to social movements. Through previous work, the macroeconomic benets of entrepreneurship in developed economies are well known. In contrast, the inuence of entrepreneurial rms in transition economies, an inuence that is enhanced by a general lack of capital, innovations, and the high level of unemployment left by the bankruptcies of formerly state-owned enterprises, is an understudied phenomenon. We thus attempted to argue that attitudes and social movement activity related to entrepreneurship would inuence the direction of macroeconomic development in transition economies. The diversity we suggest exists may partly explain the increasing consensus about the open-ended country transformations in Central and Eastern European countries and the variation in the levels of institutional transition from socialism to capitalism across countries. Social movements are autonomous processes and participants views about entrepreneurship are grounded in their frames and schemas about the world. Socialist and populist political parties in particular tend to advocate a narrow view of entrepreneurship, limiting how entrepreneurship may manifest. Yet policy makers at different levels may shape these views by improved communication and education about the societal benets and problems of entrepreneurship. Because many Central and Eastern European countries have already joined the European Union (or seek to do so), policy makers may be interested in designing policies to facilitate the spread of entrepreneurial cultures in the region. Failing to sustain entrepreneurship may result in an increase of populism and foster sentimental feelings about socialism in Central and Eastern Europe. Furthermore, a lack of support for entrepreneurship within the new European Union member countries may lead to a rise of populism in other member countries. Persistent economic problems in Central and Eastern Europe may also increase the migration of entrepreneurial talent to Western European countries. Such migration would likely widen the economic gap between new and old members of
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the European Union and would result in an overall dissatisfaction with the transition process by local citizens. As is the case for all societies, countries of Central and Eastern Europe are characterized by a diversity of collective identities and numerous social movement activities. Social movements are particularly diverse in this region owing to the six decades of strict governmental control of activities. Our framework focused on only four main political movements that are directly relevant for the future of entrepreneurship. However, there are several other important movements in Central and Eastern European countries at the different levels of the society that may inuence the role entrepreneurship will play in the region. Social movement organizations based on the growing population of entrepreneurs may also become signicant forces over time in Central and Eastern Europe. Their active political involvement is expected to constrain populist and socialist movement activities as well as to shape pro-business institutions. To frame our preliminary arguments, we assumed homogeneity among Central and Eastern European countries. Although the political movements and their views about entrepreneurship may play a role across the region, they likely appear in different combinations within different countries. For example, populism will likely be stronger in countries with traditions in this political movement, poor economic conditions, and potential for conicts with other nations, cultures, or religions. Future comparative empirical studies should yield a precise study of entrepreneurship in individual countries or groups of similar countries.

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R. Duane Ireland holds the Foreman R. and Ruby S. Bennett Chair in Business and is a professor of management at the Mays Business School, Texas A&M University. Laszlo Tihanyi is an associate professor and Mays Research Fellow at the Mays Business School, Texas A&M University. Justin W. Webb is a doctoral student in the Department of Management at the Mays Business School, Texas A&M University.

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