INTERNATIONAL DONOR AGENCIES
Throughout the research process it became apparent that the main impetus for entrepreneurial development in the region is coming from donor agen- cies who act as intermediaries in the region, promoting and legitimizing entrepreneurship. These are not entrepreneurs in the traditional sense of alert individuals, teams or families that have identified business opportuni- ties from the inertia or disequilibria of particular (transforming) markets.
Instead, the role that intermediaries or brokers play is in the Kirznerian sense of bringing people together to enable economic transformation. In this we address the third research question, which is examining the local action strategies adopted by institutional entrepreneurs as they gain support for and legitimization of entrepreneurship projects. In order to further analyse this role we have selected two organizations for closer analy- sis here. These two organizations have been purposefully selected because, although they have similar aims and aspirations for entrepreneurial devel- opment in the region, they give different accounts to the success and barri- ers found there. One is a public body responsible for the generation of education and training and support programmes for enterprise at a regional and national level. This organization is given a fictitious name, the European Agency (EA), to protect our interviewee. The second is a private organization from Germany that provides technical assistance to small business development in the region (GTZ).
EA is responsible for enterprise development initiatives in the Balkans, including non-financial and financial support for SME development;
FDI; export related programmes; vocational education and training; new
main thrust of enterprise development (which encompasses all programmes above) is through the EU Charter for SMEs, as a result of which there is a focus on larger issues (access to capital, finance and enterprise support).
However the agency tends to use the term ‘enterprise’ rather than ‘entre- preneurship’, because in our interviewee’s words, ‘entrepreneurship is more limited than enterprise’. In building regional enterprise support centres, their approach is to promote a ‘stakeholder model of regional development’
(involving local government and developing local training programmes of centres through research and development programmes and partnership building activities. EA’s aim is to work with local and national government, involving various agencies and building institutional capacity.
GTZ is a German holding company responsible for technical coopera- tion. It provides technical knowledge in 120 countries throughout the world and holds bilateral relations with each country in the Balkans. The organi- zation is an implementation agency for programs of the German govern- ment. However they are also privately funded. GTZ’s focus is on start-ups, which according to our interviewee is due to three key reasons: for regional economic development; promoting entrepreneurial spirit in a country; and promoting cooperation (between local and national agencies). For example, in Macedonia, GTZ have worked with the national agency for entrepre- neurship promotion (government agency) and they have been involved in the creation of six regional centres that have also been supported by the British know-how fund.
GTZ target three client target market groups: the unemployed, business support and the media. The business support market is fairly standard in that they offer training programmes on business planning, export and so forth. Targeting support for the unemployed is deemed to be important for encouraging a culture change with regard to entrepreneurship. The GTZ interviewee comments:
Because of the bad negative image of entrepreneurship in Macedonia, we needed to change this. There is a lot of negative energy in media. ‘Collective apathy to start a business’ especially in Eastern Macedonia, [we] need to encourage young people to become self employed. Not just to blame everything on the govern- ment. There is a lack of entrepreneurial spirit. People here are risk averse. They would rather be employed for 200 euros rather than take the risk of running their own business. Working for [an] established company gives you better status.
When asked about where the main impetus for entrepreneurship is coming from, the EA interviewee stated that:
Entrepreneurial activities are beginning to occur although this is still largely unstructured and uncoordinated at a local level. [In his view] . . . enterprise in
the region has been forced by the EU charter and the Thessalonica agenda. This is the main driver or lever. But now, the countries are slowly coming around to the need for enterprise development/SME and entrepreneurship. The donors are driving this agenda. It is a donor-led intervention. . . . much of the focus [now]
is on the Minster of economics and labour; curricula; business advice for would- be and existing entrepreneurship. But in reality, it is a donor-led intervention (although taking into account government strategy). We are pushing an agenda but meeting obstacles and constraints.
According to the EA interviewee, donor-led intervention is not fully effective because of old institutionalized practices, such as the allocation of financial recourse and human resources, a lack of political will and a lack of inter- and intra-ministerial and government agency cooperation. In practice, this translates to the dominance of central planning economic, top down decision making from Belgrade, no local initiatives and the feeling of ‘having no control over one’s own destiny’ – all of which relate to the traditional relationship that individuals have with the state in the former communist countries. When questioned further about which insti- tutions they were transforming, the response was: ‘economic planning, gov- ernment, and culture’. He explains further:
The registration issue has been sorted, it is easier now to register a business. And there is a culture of business; and a lot of people want to do something, but there are constraints surrounding credit. The government is not keen because there is a lack of understanding of the importance of enterprise. Also the governments are weak. Administrative arrangements are weak. There is regional good will.
But it is all talk and there is an ‘implementation vacuum’. There is a lack of people, lack of skill at the government level. And very weak civil administration system, people there are not relevant. There is not a culture of risk taking and failure. It still holds with the people that the central government needs to take care of us. Not trying to do things for themselves. Also, private business is seen as ‘negative, dirty and corrupt’.
One of the strategies EA have undertaken to change the public percep- tion of entrepreneurship was taking out a logo on a bus ‘biznis mali– sta mu fali?’ (translated, this means ‘a small business is just a small large business, so how about it?’). At GTZ institutional change is engendered by the devel- opment of training programmes directly with journalists from the media.
They do this by promoting successful business stories for use in the press that act as benchmarks or role models for young people. In Macedonia the word ‘entrepreneur’ has negative connotations.
In the words of our informant ‘it is a bad word; in the past it is associ- ated with the construction industry – someone who is manipulating things.
It was also associated with semi legal activities’. Implementing training programmes directly for journalists, it is envisaged, will bring about
tions of what entrepreneurship is concerned with.
Other institutionalized practices that GTZ were targeting to transform were the activities of the public sector Chambers of Commerce. Before transition it was commented that these chambers did not want to cooper- ate with the donor agencies or new business support agencies. This was explained as a ‘lack of confidence’ and ‘conflicts between business and gov- ernment’. But some success has been achieved whereby they are now willing to establish partnership agreements with business support agencies. Similar success has been achieved with the Ministry of Economy (the national policy makers for promoting entrepreneurship). When asked how this success was achieved, the GTZ interviewee reported that:
It is difficult to change their mentality but through positive practice it has now changed. We have used other methods – not telling them what to do. Not direct influence but involving them in practices (i.e. trade fair for export, in the past they only wanted to go there to get a trip to Europe but now they are thinking more strategically). We try to encourage them to learn from example. It is not ideal yet but things are changing.
When commenting on the institutional practices that were more difficult to change, the GTZ interviewee referred to universities as ‘being more difficult’, especially where there is a ‘closed inner circle of good people, pro- fessorial elites who also have associations with political parties; they also tend to be the older generation who make things difficult for the younger generation’. A ‘degree of arrogance’ was cited as an explanation. Some of these people are entrepreneurs themselves with many links with private companies but it was felt that these are ‘difficult institutions to change or involve’. Other institutions that were reported to be difficult to change are monopolized banks where it is difficult for foreign investors to invest. Also certain interest groups and particular privatized companies were signalled out as difficult to work with. These companies tend to be the ones that were previously state owned, becoming privatized early in the transformation process and favouring those individuals that were well placed with resources and information to benefit from privatization. Our informant commented that ‘although they are private on paper . . . in practice they operate as before and it is difficult to change their attitude’. However it was also noted that, in his view, these firms are now losing their competitive edge and the disembedding of these institutionalized practices (citing Beckert, 1999) would occur through market forces (rendering these firms uncompetitive).
Addressing the role of institutional entrepreneurs in enhancing a regional identity for the Western Balkans, the GTZ interviewee com- mented that:
The SEE region is very artificial. There is no regional identity. There is only 1 per cent trade between Albania and Macedonia. The region was imposed by exter- nal factors. We are not proud of the Balkans label – it has connotations of bad and negative image because of existing cultures. E. Balkans escaped this and W.
Balkans cannot now catch up with the rest of Europe. It is difficult to develop a regional identity when each country does not have their own identity. There is such a lack of self confidence in each country and so we cannot work together to cooperate until they have built their own identity and overcome nationalistic movements which are still strong.
Similarly, in relation to the extent to which their activities are helping to create a sense of regional identity, the EA interviewee stated that:
The region does not function as a region except as a regional free trade agree- ment. The Western Balkans region is purely an administrative region following the EU definition. And this is because of politics. The Western Balkans cannot and will not in the foreseeable future (because of war, ethnic divisions, poli- tics/instability in the region and the special status of Kosovo) function as a region.
DISCUSSION
An infrastructure of entrepreneurship is beginning to emerge in the Western Balkans, with the key actors engaging in this infrastructure development being agencies of the European Union, international donor organizations, national ministries of economy, chambers of trade and com- merce, regional centres for small business development, universities, and private and public research institutes that use local labour but which are funded or supported from outside the Balkans region. As a result, it is argued that the Western Balkans is an ‘open’ organizational field. This is because of the wide possibilities for local actors to come into contact or association with ideas, practices, resources and institutional referents from other settings. In addition, there are national education and vocational training programmes for fostering entrepreneurial attitudes and culture.
These are important for promoting the adoption of new institutional prac- tices associated with entrepreneurship. But, also, we would argue that entrepreneurial discourses are being drawn upon to influence institutional change in the region.
This change includes the development of an international support base, the development of a local base of trainers and skills development of people working in international organizations who will, over time as donor organizations move out of the area, build on the skills to develop their own businesses or go into consultancy and so on. Other areas include the
ship programmes from the large towns more widely into the region, chang- ing the culture of entrepreneurship and developing support for cooperative ways of working. As such, entrepreneurship is closely associated with (and promoted by) discourses of regional development, economic prosperity, individual well-being and inter-organizational cooperation and coordina- tion. However, as shown in the earlier fieldwork, some of the support is still rather uncoordinated and many efforts to develop coordination are driven
‘top down’.
It is possible to identify the variety of ways in which institutional entre- preneurs promote the adoption of new institutional practices associated with entrepreneurship. Donor organizations have a significant role to play in legitimizing entrepreneurship (as can be seen in the work with the media institutions and the unemployed). Also they are active in creating connections between ‘sites’ kept separate by existing institutions as Yang (2004) referred to (that is, the attention to promoting inter-organizational coordination and cooperation between chambers of commerce and other agencies). However the region is still very much in transition with many barriers and blockages preventing entrepreneurship from being institutionalized. The main areas of institutional disembedding that are still ongoing are with universities, some specialized interest groups and the older privatized companies. There is also, in spite of the efforts to promote cooperation and coordination, only limited success in pro- moting a sense of regional identity for the Western Balkans – a role which is identified by Fligstein and McAdam (1995) as important for institu- tional entrepreneurs. As such, a regional identity is still very underdevel- oped and unlikely to emerge until national identities are more firmly rooted.
Within this study we have related to a set of sociological ideas which enable the study of linkages between organizations, agencies, institutions and the various actors that constitute (and contribute) to the patterning or shaping of these relations. A theoretical framing for the study has been derived by linking institutional theory and entrepreneurship. However, in contrast to traditional ways of conceptualizing institutional entrepreneur- ship, we offer a different perspective. And we propose this theoretical understanding by linking directly to the empirical regional field of the Western Balkans. Entrepreneurship is broadly occurring within the region as a result of the resource mobilization of government bodies, donor agen- cies, small businesses and various research institutes. We claim that entre- preneurial practices are occurring in the three countries studied through the collective activities of small businesses, policy makers, research communi- ties and donor agencies. However the institutionalization of these practices
is slow to take effect because the coordinations between the various group- ings are still fairly fragmented and have yet to converge. This is perhaps what might be expected in the early stages of entrepreneurship infrastruc- ture development (Van de Ven, 1993). However we also illustrate how the major entrepreneurial impetus within the region is coming from the inter- national donor agencies who are activating particular local intervention strategies to bring about entrepreneurship at a faster pace. Much of this local intervention work is directed at changing existing institutions relating to government and universities and the cultural perceptions of the local population who generally perceive entrepreneurship in a negative way. In general, therefore, we find that entrepreneurial activities play a significant role in the institutional change and ‘social becoming’ (Sztompka, 1993, p. 17) of emergent regions.
Based on our analysis, however, we offer an adapted theoretical under- standing of the relationship between entrepreneurship and institutional change. The conceptualization of institutional entrepreneurship offered here highlights the enactment and patterning of inter-organizational rela- tions that enable transformation of existing or emergence of new economic institutions. This is distinctive because it draws attention to the cumulative effects of particular patterns of organizational activity that over time con- tribute to entrepreneurship in a regional economy.
CONCLUSION
Following our review of entrepreneurial activity in the emergent regions of the Western Balkans, we argue that institutional entrepreneurship is the overarching profile of institutional change in an emerging region. This is because institutional entrepreneurship is constituted through a variety of convening and partaking inter-organizational relationships that converge over time. This relates partly to the fact that, in emerging regions, the trans- formation challenges are too complex for any single grouping of organiza- tions to deal with. As a result, different groupings of actors practice entrepreneurship and contribute to institutional change in different ways.
Small business owners tend to act autonomously and ‘partake’ in institu- tional change by creating a business to generate a livelihood or income for the family or household. Institutional change and regional development occurs slowly and incrementally through their countless and semi- autonomous exchange and resource mobilization activities. Intermediaries, chambers of commerce and international donor organizations also engage in ‘convening’ activities, jump-starting processes to overcome particular problems. But all of these constitute institutional entrepreneurship – that
identify, recognize and enact novel product, service, industry or personal and institutional transformations. Institutional entrepreneurship, there- fore, refers to the inter-organizational processes through which resources are enacted by a network of local actors as they mobilize support for and acceptance of new institutional arrangements.