Drago Čengić
Institute of social sciences 'Ivo Pilar'
Zagreb, Croatia
E-mail address: [email protected]
New economic sociology and legitimation of entrepreneurship: the case of Croatia
(Paper for the conference 'New Economic Sociology and Sociology: Where Do They Meet?
Where Do They Diverge?', Warsaw, 22-23 May 2017, Poland)
Summary
This paper is based on two basic assumptions: a) that 'classical' economic sociology
somehow neglected the problem of entrepreneurs' legitimacy in new democracies of Eastern
Europe, and b) that Croatia can be viewed as a case - study for dealing with this important
theoretical and empirical issue.
A closer look at the world-known handbooks on economic sociology show us that the
issue of the social legimitation of new managerial and entrepreneurial elite was not the issue of
their research and theoretical interest. It is not surprise due to the fact that this issue is deeply
linked with new Eastern Europe democracies and their modes of the development of capitalist
institutions after the collapse of communism/socialism at the end of 1980's.
Yet, we think that this problem is not only socially relevant for Central and Eastern
European countries but also for the new economic sociology and for the perception of the
emerging sociological problems and their treatment within new economic sociology.
With regard to the Croatian situation, our main thesis suggests that the initial
transitional legitimacy of Croatian entrepreneurship was primarily determined by the specific
model, method and consequences of privatization of former social/state owned enterprises. The
thesis is supported by empirical findings that show how entrepreneurs’ legitimacy, following
some general rules of social perception, is basically rooted on some deeper socio-cultural
values.
Although intrinsically interdependent, in the public opinion the social (ethical) and the
competence aspects of entrepreneurship are relatively separated: social aspects are more
important and more visible, while the competence aspects become relevant only when their
social consequences become severe and obvious. Looking from the broader perspective, the
problems of social legitimation of entrepreneurship in the long-run determine the pace and
nature of economic and social development, as well as the functioning of the basic economic
institutions within particular countries.
Keywords: New economic sociology, entrepreneurship, legitimacy, ethics, competence, social
perception, Croatia
1
*** New economic sociology and legitimation of entrepreneurship: the
case of Croatia
(Working paper)
1. Introduction: European citizens and (new) economic elites
In 2003 European Commission published a famous document: ‘Green Paper on
Entrepreneurship’ (EC, 2003). The starting idea of the document was linked with the new
entrepreneurial challenge Europe was facing at that time: that is, that “Europe needs to foster
entrepreneurial drive more effectively. It needs more new and thriving firms willing to reap the
benefits of market opening and to embark on creative or innovative ventures for commercial
exploitation on a larger scale“ EC, 2003, 4). Entrepreneurs and small and medium enterprises
have been identified as new driving forces of desirable economic growth, as well as an
important factor of global Europe's competitiveness. In facts, there were two basic questions
hidden behind this new (bureaucratic) initiative: 1) why the Europeans do not participate more
in new entrepreneurial ventures (as enterprise co/owners), and 2) why there is so little
European enterprises among the growth enterprises operating on international scale? Are these
questions still relevant?
The available data collected by Flash Eurobarometer surveys in 2009 and 2012 put
some light on possible answers to the previous question. According to the 2009 research report
(EC, 2010), main findings suggest several important trends. With regard to the important
dilemma “to be self-employed or an employee” the EU citizens were almost evenly divided in
their preference for being self-employed or having employee status: 45% would prefer the
former and 49% the latter (results hide large variations between individual Member States: the
preference for being self-employed varied from 26% in Slovakia to 66% in Cyprus). In 18 EU
Member States, respondents who preferred employee status outnumbered those who would opt
for self-employment. Generally speaking, in the EU, men, younger interviewees, those with
higher levels of education or those still in education, and respondents with an entrepreneurial
family background were more likely than their counterparts to prefer to be self-employed.
With regard to society’s image of entrepreneurs (how entrepreneurs are regarded by
society), the picture is somehow different when the EU countries are compared with the USA
(EC, 2010, 5-31). Almost 9 in 10 EU citizens agreed that entrepreneurs were job creators and a
large majority also thought that entrepreneurs created new products and services and were
therefore of benefit to society in general (78%). Respondents across all countries included in
2
the survey were in agreement that entrepreneurs were both job creators and that they created
new products and services and were therefore of benefit to everyone. The USA stood out with
60% and 56%, respectively, of interviewees who strongly agreed with both statements.
However, when looking from a temporal perspective, this survey identified the new and
important trend: comparing the 2007 and 2009 results, respondents in almost all countries
were now more likely to agree that entrepreneurs only thought about their wallet or that they
exploited other people’s work. It was especially expressed in Slovakia and Estonia, new EUmember countries since 2004.1
The main findings from the 2012 report give the following picture (EC, 2012). With
regard the work-status preferences (self-employment vs. employee status), a majority (58%) of
EU respondents would prefer to work as an employee; 37% would rather be self-employed.
Meaning: “Self-employment has become a less attractive prospect than it was in 2009: then,
45% said they would rather be self-employed. In 18 out of 27 countries, a majority of
respondents say that they would prefer to be an employee” (EC, 2012, 7). It is interesting to
note that self-employment is generally more popular among non-EU respondents: in six of the
13 non-EU countries, a relative majority of respondents favour self-employment over working
as an employee.2
With regard to the perceptions of entrepreneurship, this survey indicated some attitude
changes among European citizens. First, there is evidenced the same attitude like few years
before: that a large majority of EU respondents agree that entrepreneurs are job creators (87%);
and that entrepreneurs create new products and services that benefit all of us (79%). Second,
more than a half of the interviewees agree that entrepreneurs take advantage of other people’s
work (57%, +8 points compared with 2009); and that entrepreneurs only think about their own
pockets (52%, -2 points compared with 2009). What is also important, the Report concludes on
that finding as follows: “The question of whether entrepreneurs take advantage of other
people’s work produces the widest country variations: 91% of people in Poland agree that this
is the case, as opposed to just 20% in Denmark. In 15 EU countries, more people think this
now than did so in 2009, with Latvia (80%, +27 points) and the Netherlands (75%, +22 points)
seeing the biggest increases” (EC, 2012, 12).
With regard to the perceptions of different employment types, the newest survey
identified a visible trend of distrust towards corporate managers. Namely, although the EU
respondents have a broadly favourable view of professionals (57% see them favourably) and
entrepreneurs (53%), they expressed a mixed view when it comes to top managers (25%). It is
interesting that in Romania 50% view them favourably; but 42% of respondents in both
3
Germany and the Netherlands have an unfavourable view. More respondents see managers
unfavourably (30%) than those who view them favourably. A majority of respondents in 20 of
the 27 EU countries view professionals favourably: results range from 74% in Estonia to 39%
in Slovakia.3
Although we need a more ambitious analysis of the collected data for some final
conclusions, it seems that one trend is very clear: the image of main economic actors of modern
economic development (entrepreneurs and corporate managers) is among European citizens
deeply disrupted. That grey image is only a part of a larger public dissatisfaction with new
economic elites in the EU, and especially among new European democracies (Čengić, 2016).
Croatian citizens are among those who are the most critical towards entrepreneurs and
managers who arouse during ‘transitional years’ (1990-2013) in Croatia. The simple
comparison of particular data for the EU-27 countries and for Croatia (Table 1) suggests two
trends. First, Croatia’s citizens to a lesser extent than citizens in other EU-countries think
entrepreneurs are job creators and create new products that benefit to all people. Second,
Croatia’s public to a significantly higher extent than citizens in other EU-countries think
entrepreneurs only take advantage of other people’s work and think only about their own
pocket.
Table 1. Perception of entrepreneurs: EU-27 vs. Croatia (2012)
Statements...
EU-27 (%)
Croatia (%)
(Agree)
(Agree)
87
76
that benefit all of us ...
79
70
3. Entrepreneurs take advantage of other people’s work ...
57
70
4. Entrepreneurs think only about their own pockets...
52
70
1. Entrepreneurs are job creators...
2. Entrepreneurs create new products and services
Source: EC, 2012.
Generally speaking, Croatian respondents, in the relation to the average values
expressed by citizens in other EU-27 countries, value to a lesser degree the positive aspects of
entrepreneurs' behaviour, and to a higher degree the negative aspects of entrepreneurs'
behaviour.4 The expressed attitudes of Croatian citizens towards entrepreneurs indicate a
deeper dissatisfaction with new economic elite in Croatia. That dissatisfaction with new
entrepreneurs and managers is present in Croatia within last 25 years, and represent a visible
sign of structural crisis of legitimacy of new economic actors in the country. The question is:
which social forces are producing such legitimation crisis and how it can be explained?
4
2. The purpose of the paper
The purpose of this paper is to define some hypotheses about the problems of
entrepreneurship legitimation in some of the post-socialist European countries, at least those
which experienced during the last century ‘socialist (half)modernization’ instead of an organic
development of capitalism and its institutions. As such, this paper is based on two basic
assumptions: a) that 'classical' economic sociology somehow neglected the problem of
entrepreneurs' legitimacy in new democracies of Eastern Europe, and b) that Croatia can be
viewed as a case - country for dealing with this important theoretical and empirical issue within
new social, economic and institutional circumstances.
A closer look at the world-known handbooks on economic sociology and on
entrepreneurship discovers that the issue of the social legimitation of new managerial and
entrepreneurial elite was not the issue of their deeper research and theoretical interest. Namely,
this particular issue is deeply linked with new Eastern Europe democracies and their modes of
the development of capitalist institutions after the collapse of communism/socialism at the end
of 1980's. However, the efforts to identify and to elaborate such a problem once again is not
only socially relevant for Central and Eastern European countries but also for the perception of
the emerging sociological problems and their treatment within new economic sociology.
With regard to the Croatian situation, our main thesis suggests that the initial
transitional legitimacy of Croatian entrepreneurship was primarily determined by the specific
model, method and consequences of privatization of former social/state owned enterprises. The
thesis is supported by empirical findings that show how entrepreneurs’ legitimacy, following
some general rules of social perception, is basically rooted on some deeper socio-cultural
values. In explaining the cultural roots of the negative perception of new entrepreneurs and
managers, we’ll review at the end some new research concerning the value orientations in
Croatia, which cover the longer time period – before and after the fall of communism in 1989.
At the end, we claim that behind the public perception of new entrepreneurs and managers
there is one powerfull force: the concepts of social justice shared by the people in very
contingent situations.
In the next sections we will present the following isssues: entrepreneurship and
legitimation: from Etzioni to (new) economic sociology; entrepreneurship as new institution:
Croatian privatization as the birth-place of the tycoons; the beginning theses on delegitimation
of entrepreneurs: egalitarian syndrome theory; perception of entrepreneurs: some empirical
data; discussion and conclusion.
5
3. Entrepreneurship and legitimation: from Etzioni to (new) economic sociology
It was A. Etzioni who wrote in the late 80-ties, when the coming collapse of the
communism was still unexpected, the plausible thesis: “Legitimation is a major factor in
determining the level of entrepreneurship that is found within one society as compared to
others, and in different periods within the same society. The extent to which entrepreneurship is
legitimate, the demand for it is higher; the supply of entrepreneurship is higher; and more
resources are allocated to the entrepreneurial function” (Etzioni, 1987,175). According to
him, the main societal function of entrepreneurship is to provide adaptive reality testing, that is
“to change existing obsolescent societal patterns (of relations, organization, modes of
production) to render them more compatible with the changed environment”.
Etzioni’s work is deeply rooted on American experiences with new generation of
entrepreneurs, who appeared in USA after 1973/74 oil shocks, some of them at the same time
making breakthrougs to a new, computerized economy of the 90-ties.
He did not feel
mandatory to define what is entrepreneurship assuming that entrepreneurship must be studied
as a societal function, not as individual attributes. However, it is quite different situation with
legitimation. After he defined legitimation, he observed with full attention issues like the level
of legitimation, the sources of legitimation, the effects of legitimation, and the psychic sideeffects of legitimation within entrepreneurial processes (for new ideas about legitimation, see:
Berger, Luckmann, 1967; Barker, 1990; Hybels, 1995; Suchman, 1995; Haettich, 1996; Berger,
Ridgeway, Fisek, Norman, 1998; Beetham, 1991; Johnson, Dowd, Ridgeway, 2006; Kibler,
Kautonen , 2014).
Etzioni’s understanding of legitimation is based on some popular authors of his time
very known in political science (and sociology) as were S. Lipset and K. Deutsch (Lipset,
1963): “The roots of the term 'legitimation' lie in considering an act to be in accordance with
the law. However, the usages of the term in political science, sociology, and even in the
popular press have expanded its meaning to refer to a wide set of values and mores that
provide moral approval of specific activities or institutions whether or not legal sanction is
involved” (Etzioni, 1987, 182). What seems important also for us today, Etzioni emphasized
that legitimation is a continuos, not a dichotomous variable: that means it runs ‘the full gamut
from highly supportive to highly oppositional’. Also, based on some Weber’s thinking about
legitimation and power (Weber, 1947), he reminded
that ‘legitimacy tends to wear out’
through time…(for new evidence, supporting Etzioni’s theses, see: Kibler, Kautonen, 2014).
6
The legitimation as such affects all aspects of entrepreneurship and various societal
hierarchical sub-systems: “All other things being equal, the higher it is the more the
educational system (including the family, on-the-job programs in corporations, not just schools
and colleges) will dedicate itself to educate and train entrepreneurs; the more the polity will
reward entrepreneurs; and the more entrepreneurial behavior will be the source of psychic
rewards, generated by the respect the activity generates” (Etzioni, 1987, 183).
And what are the sources of legitimation? Being aware of the various sociological
literature (including Weber’s work) which investigated the relations between the rise of
entrepreneurship and religion in the West, Etzioni said that “the immediate sources of
legitimation are the values of the society and the relevant sub-societies, applied to endorse an
activity or institution at issue. Reference is made to the society and sub-societies because often
there are significant variations on sub-societal levels. For instance, on average, Asian
American orientations toward entrepreneurship seem to differ from that of Black Americans, or
that of New Englanders from that of many in the Deep South. The deeper question is: what
shapes the values that mold legitimation? Social sciences have not been able to come up with a
parsimonious answer to this question” (Etzioni, 1987, 183).
Etzioni’s question can be formulated also in this way: what shape the values which can
mold legitimation of entrepreneurship in particular post-socialist countries? Some other, more
comprehensive values or some tectonic processes (be it historical, religious, political or
economical) which shape the structure and dynamic of overall social situation in particular
societies? What is, then, the primary causal factor of entrepreneurship legitimation? Max
Weber, says Etzioni, came to thesis that ‘the spirit of capitalism’ played a major independent
role in in the Western countries, by launching a new societal-economic system, that is
capitalism. What about the Eastern-European countries where socialism/capitalism destroyed
the ‘natural evolution’ of capitalist institutions early at the beginning of 20’s century and after
the World war II?
For the beginning, their development after 1989 offers many examples of the „dark side
of entrepreneurship“. It is the same problem R. G. McGrath and S. Desai emphasized in the
concluding paper of the voluminous „Handbook of Entrepreneurship Research“ (edited by Z.
J. Acs and D. B. Audretsch, 2013). They raised from our perspective an important question:
„What can entrepreneurship offer to a better understanding of the dark sides of
entrepreneurial process and its continued legitimacy?“ (McGrath, Desai, 2013). That question
warns us on the problem of legitimation of entrepreneurship in a post-socialist context; namely,
it is deeply linked with the social consequences of the business practice of entrepreneurs.
7
Consequently: if the legitimation of entrepreneurship is important not only for the
entrepreneurs themselves but also for the society as such, the current entrepreneurial projects
must produce not only some economic value in a given conditions but also some 'social value':
How that „social value“ will be defined, that depends on the value structure of the dominant
social strata within a given society and the actions taken by the main political and economic
actors.
McGrath and Desai also said that 'dark side of entrepreneurship' are not only linked
with the some 'pathological aspects of entrepreneurial personalities', and with the greed and
ruthlessnes of some businessmen (as was visibly during the corporate scandals of the 20012002 period). They highlighted the conceptual level of that problem by citing Baumol's (1990)
differentiation between productive, unproductive, or destructive entrepreneurship: „If
interpreted simply as a phenomenon driven by the desire for private gain such as wealth,
power, or prestige entrepreneurship can have many effects other than commonly assumed
positive externalities. Entrepreneurial talent is not automatically dedicated to socially
desirable ends and can result in activities 'which need not have the highest social returns'. It
requires institutions to accomplish this. Baumol remind us that entrepreneurship, as we know
it, cannot exist without institutional legitimacy, and that form entrepreneurial activities take is
fundamentall shaped by institutional rules“ (McGrath, Desai, 2013, 652). The message is clear,
and valid not only for the countries developing 'post-communist economic systems':
institutional development is increasingly important not only at the level of the public policy, but
also within the firms themselves.
As we already said, now classical and the world-known handbooks on economic
sociology do not elaborate the problem of the social legimitation of new managerial and
entrepreneurial elites as an important and a separate issue. The same is with similar type of
literature which deals with entrepreneurship mostly from economic point of view (compare:
Szelenyi, Becket, King, 1994; Dobbin, 2004; King, Szelenyi, 2005; Nee, Swedberg, 2005;
Ruef, Lounsbury, 2007; Stark, 2001). In the first edition of Swedberg's and Smelser's The
Handbook of Economic Sociology (published 1994) A. Martinelli published a paper
'Entrepreneurship and Management (Martinelli, 1994, 476-503). Martinelli dedicated in his
paper a small section to the relationship between entrepreneurship and culture. Among some
aproaches which elaborated the role of culture in the economic rise of entrepreneurship, he
singled out 'cultural legitimation model' developed by some Harvard's schoolars (Landes,
Sawyer, Cohran; also, Lipset) in the early 60's (Martinelli, 1994, 484). What is interesting here
is the idea of 'cultural legitimation model', which put new light on the relationship between
8
entrepreneurs and their social environment. Etzioni's work on entrepreneurship and
legitimation investigated the same relationship, yet on the experience of entrepreneurship
development in the USA in the 1950-1988 period.
In the newer edition of
Swedberg's and Smelser's
The Handbook of Economic
Sociology (published 2005) H. E. Aldrich elaborated the issue on entrepreneurship (Aldrich,
2005, 451-477). Aldrich included the issue on legitimation of entrepreneurship in his paper as
the important issue yet from a narrow/sectoral perspective: as the question of the „sociopolitical legitimacy“ present within the population research approach to enterprises. He wrote:
„In their communities, new organizational forms that are firmly embedded in local networks of
trust begin with a reservoir of moral legitimacy. For example, in the early twentieth century,
the emerging population of credit unions in the United States benefited from network ties
among early members that diffused information to potential new members…Gaining moral
legitimacy for a new population involves altering or fitting into existing norms and values,
something
individual
organizations
lack
the
resources
to
accomplish…Thus,
interorganizational action has the greatest impact on socipolitical issues early in the new
industry growth. Collective action through trade associations, industry councils, and other
groups allows a population to speak with one voice“ (Aldrich, 2005, 468-9).
When reviewing here some very cited handbooks on entrepreneurship, let us remind
also on The Oxford Handbook of Entrepreneurship edited by M. Casson, B. Yeung, A. Basu,
and N. Wadeson (2008). In this handbook S. Estrin, K. E. Meyer, and M. Bytchkova published
the work on entrepreneurship in transition economies. This paper was made on the recent
experiences with the development of entrepreneurship in new democracies of Eastern Europe
(at the beginning of new century). With regard to the question which factors afftect
entreprenerial development in transition countries, they concluded:
„So which institutions or policies affect entrepreneurial development in transition? No
single policy or institution can account for the rising SME contribution to employment and
value added. The most crucial ingredients include economic growth and rule of law as these
send a message on the success of reforms and quality of entrepreneurship. Other factors, such
as political continuity or discontinuity, rapid and gradual change and state officials who are
perceived to be supportive or hostile towards new enterprises can all be context for the
successful development of a small firm sector. However, overall success – a critical mass of
successful reforms seems to be the answer- which may explain the growing divergence between
Central Europe and the former Soviet Union. Future research may help resolve these issues by
working with more rigorous measures of institutions, beyond entrepreneurs’ own perceptions,
9
and by systematic comparative studies in multiple countries. Thus, we need more rigorous
study of the characteristics of entrepreneurs and of the determinants of growth using a wider
variety of potentially relevant explanatory factors“ (Estrin, Meyer, Bytchkova, 2008).
What to say at the end of this short review of the known handbooks on economic
sociology and sociology of entrepreneurship? First of all, that the autors of the reviewed
papers are the 'witnesses of certain time period', when the main concerns were the affirmation
of new discipline (economic sociology) and the identification of new development drivers
occured in Western countries at the end of the eighties (such as were entrepreneurship and
management). As second, it is generally accepted that culture(s) in Western countries
(especially in the USA)
produce set of values which serve as legitimation sources of
entrepreneurship. Third, entrepreneurship is regarded as an important development tool for new
transition countries in Europe, and as one of the main factors in the shaping of new economic
individualism and social independence. Almost no one could expect in the middle of the 90-ties
that the renewal of capitalism in the Eastern Europe will produce the powerful forces of delegitimation of entrepreneurship and new economic actors representing it.
4. Entrepreneurship as a new institution: Croatian privatization as the birth-place of the
tycoons
Entrepreneurship was as a new institution and desirable economic practice in Croatia
‘introduced’ after the collapse of former Yugoslavia (in 1990/1991), as a part of larger
political and socio-economic changes leading to return to (Western) capitalism. In each new
political party and movement, formed at the end of the 80-ties under the influence of old
‘nomenklatura’ cadres and former technocrats, university intellectuals, former regime oponents
and returnees from abroad, parliamentary democracy, civic rights, private ownership and
economic freedom were high ranked among written social and political goals. That means that
from the beginning of the 90-ties entrepreneurship was politically, institutionally and
economically introduced by new political elite as an integral part of new democratic and
economic order. It was in a way a natural evolution of the ideas of new economic liberalism,
which were present in Croatia and Slovenia even before Yougoslavia’s violent disintegration
(Županov, 2002).
As in other post-socialist countries, there were two main ways to create new economic
elite: a) from the below, by establishing new enterprises (due to self-employment and
opportunity reasons), and b) from above, by privatization, using different methods of the
conversion of the former state/social ownership (SOE) into the private ownership (Table 2). It
10
was clear from the very beginning (although politically not addressed from new political elite!)
that privatization in post-socialist countries was a political project with long-term and deep
social, economic, political and ownership implications – on the level of the privatization model
itself, as well as on the level of the privatization techniques applied within concrete conditions
(Čengić, 1995).
Table 2. Croatian economy at the beginning of ownership transformation (in 1990)
Ownership type
Number of enterprises
Number of employees
N
%
N
%
3.637
33,5
1.105.837
97,6
98
2,7
123.097
11,1
2. Private enterprises
6.785
62,5
19.602
1,7
3. Cooperatives
284
2,6
5.290
0,5
4. Enterprises in mixed ownership
Source: Čengić, 1995, 72
153
1,4
2.001
0,2
1. Socially owned enterprises
* State owned
Croatian model of privatization started from the idea that former social enterprises are –
state property (see: Čučković, 1999). That is, from the sociological point of view, under the
political control of those political parties ruling over the state at that time. Thus, the basic
principle of the privatization policy was the selling of the so defined enterprises’ property. In
1991/1992 the former “workers’ enterprises” was allowed to choose the preferred technique of
privatization on their own (for example, using management-buy-out or management-employeebuy-out ways of privatization). However, such types of “autonomous transformation” of former
SOEs into ‘joint stock companies’ were ended after few years. The whole process of
privatization was centralized very soon, and controlled by the state (see also: Stojčić, 2012).
Such design of privatization rules (apllied with some minor changes until 2010) enabled the
ruling political actors to determine the pace and character of privatization, and control of the
politically convenient business people as possible buyers of the former SOEs. That particular
political and socio-economic context produced also new type of entrepreneurs – so called
tycoons.
Table 3. Structure of active legal entities, by ownership types, 31 December 2015.
Total
State
ownership
N
%
Private
ownership
N
%
Co-operative
ownership
N
%
Mixed
ownership
N
%
185.297
1.245 0,7
152.213 82,1
2.178 1,2
1.376 0,7
Source: Croatian Bureau of Statistics, First Release,
February,17,
http://www.dzs.hr/Hrv_Eng/publication/2015/11-01-01_04_2015.htm
No ownership
N
%
28.285 15,3
2016; No. 11.1.1/4.
At:
11
They took over larger SOEs, very often using management buy-outs as the main method
of privatization. In those processes several important actors were included: state (party)
officials in the role of privatization ‘gate keepers’, the incumbent managers as future (majority)
owners, domestic banks (securing loans for management buy-outs), and the enterprises
themselves: their assets were used as collaterals for the planned management buy-outs. These
privatization projects ended with new ownership structure within entereprises, yet with
enterprises without growing potential (Table 3). The management and economic crisis which
occurred later on (depending on external economic cycles) indicated the overall economic and
technological backwardness of many of the newly privatized companies. New owners usually
reacted to such crises with different rationalization measures, and they mostly included gradual
decreasing of the labour force. Many workers lost their jobs, especially in old industries, and
found themselves ‘over the night’ among the growing number of the ‘transition losers’.
Looking from the typology of capitalism offered by King and Szelenyi (King, Szelenyi,
2005),Croatian version of capitalism has more elements of patron-client ownership relations,
yet with changing patrimonial elements. Namely, there is growing number of private firms
oriented to foreign markets which need no more political patrons for their economic growth.
Second, the open political party control over enterprises is mostly oriented to the state
owned/public companies. However, there are still many cases of patron-client relations within
national market, and two of them are typical. The first type of such relations is linked with
dominant political figure (be it on local or national level), who makes business-political deals
(and offers market protection) with the network of dependent enterprises in particular area or
economic sector. The second type of patron-client relation is the case of dominant economic
actor/enterprise, who became ‘to big to fail’, while its economic power is gradually
transforming itself to the political one (the newest case of large company Agrokor). In situation
like this a company’s economic and market strength (within national/regional borders)
determine not only the market position of its business partners but very strongly influence the
behaviour of the state officials, party leaders and media towards the owner(s) of such a
company.
5. The beginning theses on delegitimation of entrepreneurs: ‘egalitarian syndrome theory’
First round of research about social consequences of privatization in Croatia was made
at the end of the 90-ties (Čengić, Rogić, 1999; Čučković, 1999; Štulhofer, 1999; Šakić, 1999).
When it comes to the public perception of the new economic actors made by privatization
policies, the conclusion was clear: Croatian public evaluated that new entrepreneurs and
12
managers are morally degraded persons, and in business sense incompetent. Even after the
project of ‘voucher privatization’ (a part of shares of Croatian telecom company and state
owned oil company were offered to citizens by doscount prices), that basic attitude towards
new economic actors did not change (Štulhofer, 1988; Županov, 2001; Čengić, 2005).
How to explain such a negative attitude of Croatian citizens towards newly formed
economic elite (Sekulić, 2000; Čengić, 2016)? Some sociologists (like Štulhofer, 1999) claimed
that the possible answer is hidden among contextual variables, that is - among social
consequences the privatization caused into society ( numerous lay offs of worker, decreasing
industrial production, loss of markets, shutting down of privatized enterprisees, etc). The others
tried to explain that attitude with the long-life cultural values, which were transferred from
generation to generation (Županov, 1995; 2002).
With regard to hypothesis about deep socio-cultural factors as determinants of negative
perception of entrepreneurs, Županov’s Egalitarian Syndrome Theory (EST) is today still - the
most influential (Županov, 1970). His approach is based on the larger picture about the
traditional values formed in pre-industrial society, which slow-down or even totally suppress
the ideas and practice of modernization (egalitarianism vs. industrialism). The logic of
explanation is like this one: if social layering is an inevitably part of ‘transitional
transformation’, the silent or open resistance to that process could be viewed as an inherited
(socio-cultural) determinant of the de/legitimation of entrepreneurial practice. “Županov
developed the EST at the end of the 1960s and then for the next thirty years systematically used
it in his analyses of first Yugoslav and then Croatian society.The theory is based on the
proposition that Yugoslav society at the end of the 20th century and Croatian society at the
beginning of the new millennium inherited a particular socio-cultural pattern of pre-modern
peasant societies that prevented effective social and economic development. Županov called
this pattern the egalitarian syndrome and conceptualised it as a ‘cluster of cognitive
perspectives, ethical principles, social norms and collective viewpoints’” (Burić, Štulhofer,
2016).5
In his later works Županov elaborated his earlier ideas under the influence of the
retrospective analysis of the new ‘transition deluge’ (Županov, 1995). Now he speaks about the
‘socio-cultural matrix’ which traditionally is based on the pre-industrial values. According such
matrix the individuals’ unjustified enrichment is a part of the ‘zero-sum-game’: if the robber
gets rich, the one who is robbed will get poor. Looking form the historical perspective, in
Croatian traditional society based on peasantry and agrarian production (the second half of the
19-th and first half of the 20-th century), it was hardly possible to get rich by some ‘normal’
13
economic activity. First reach men appeared with merchants, money-lender offering money
with extremely high interest rates, and state officials. What they have in common in the eyes of
the ordinary people? They have been called robbers due to the practice of ‘unequivalent
exchange’ with the members of rural society.
The state was during socialism on the societal level a special guarantor of social
equality and social security, mostly providing long-life jobs in state/socially owned enterprises,
an illusion of workers’ participation in governing enterprises and promising classless society.
During socialist regime an interesting shift occurred within value system: beside the inherited
egalitarianism and authoritarianism of the rural society, here appeared new set of values - the
utilitarian
individualism. The co-existence of different value orientation produces an
ambivalent attitude towards the wealth: you could be an extreme individualist and a ‘bigoted
egalitarianist’ at the same time.
Županov explained that personal inconsistent position by these words: “Nobody can
have more than me – it’s not fair. Yet, the individualism says: ‘I want to have more than
others’. Still, I see that the other one thinks like me. He’ll try to stop me, blaming me that I
break the ‘egalitarian code’ (in the cases of accusation for ‘unjastified enrichment’ and ‘social
differeneces’); however, I’ll do the same against him. In case he grabs something I could not by
mayself, I will envy on him and hate him; and, at the same time, I will admire him ‘cause he did
it! If that person became a victim of some sort of political accusations, political investigations
and judicial persecution, I will look forward to his fall and praise the system which put him to
an ‘appropriate size’. Shortly, an ambivalent attitude towards wealth was developed: there is
morally painted envy, on one side, and a negative admiration for the reach men, on the other
side. The one who gests reach become a negative social hero. Quite contrary to the situation in
the USA, where the reach man is very often regarded as a ‘cultural hero’” (Županov, 1995,
152).
Privatization changed ‘the rules of game’ not only within enterprises but within broader
social relationships. New employers and enterprise owners invested a lot of energy in capital
and technologically-guided rationalization within enterprises, yet without social sensibility to
all those workers which after some time were fired. They were left to state (social care) and
labour market – without to much chances to get any job anymore. It was made a fertile ‘social
ground’ for the return to the values that change legitimation patterns.
14
6. Perception of entrepreneurs: some empirical data
How is the perception of entrepreneurs and managers, according to researches of
domestic sociologists in the longer time period (1998-2015), reflecting deeper social and
economic processes? Among the first empirical research oriented to detect the attitudes of
public to privatization and its social consequences was the one made by Štulhofer and
collaborators at the end of the 90-ties (Štulhofer, 1999). At that time Croatian public already
shared the widespread picture that transition has its winners and losers. The members of
political-governing structures was labelled as the main winners of the privatization, while
agricultural and industrial workers, experts, scientific and cultural workers were marked as
transitional losers (Čengić, Rogić, 1999).
Štulhofer’s first findings mostly confirmed such a public opinion. Its respondents, when
asked to judge the privatization effects in the 1996-1998 time period, mostly expressed the
view that a few families used the privatization for making new business empires (‘in a very
suspicious way’- 77% in 1996, and 86% in 1998). Only 15% of the surveyed citizens thought
that privatized enterprises were economically more successful than state owned enterprises; the
most active representing that attitude were those aged between 30 and 50 years. The majority of
the respondents were declared themselves as ‘moral owners’ of the former social/state
ownership (enterprises), what had an explicit consequence for their picture of new Croatian
entrepreneurs and their main social attributes (Table 4.). As can be seen, political ties,
exploitation of the others and dishonesty was identified as the main characteristics of new
enterprise owners, while their possible positive attributes were unnoticed.
Table 4. Typical characteristics of Croatian entrepreneurs, 1996-1998
Characteristics
Rank 1996
Rank 1998
Political ties
1
1
Exploitation of the others
2
2
Dishonesty
3
3
Industriousness
4
5
Personal intelligence
5
4
Developing the economy
6
6
Source: Štulhofer, 1999
New research about the same issue was made almost 15 years after – in 2014. The
social context was now somewhat different: post-war circumstances were forgotten, and after a
few years of economic growth (2002-2008) a huge economic crisis hit the country. Pilar’s
‘Barometer of Croatian society 2014’ (Rihtar, 2014), however, discovers that general negative
picture about entrepreneurs has not been changed. Privatization is still regarded as an abortive
15
project, and dissatisfaction with general economic situation, as well as with entrepreneurship is
still profound (Table 5).
Table 5. Perception of general and economic situation in Croatia, 2014
Aspects of social context
Scale span
M
Evaluation of general situation within society
1-4
1,64
Expected changes of the context within next 2-3 years
1-5
2,59
Judging the successfulness of privatization
1-4
1,80
Satisfaction with the economic situation in general
0-10
2,06
Satisfaction with entrepreneurship
0-10
2,60
Source: Rihtar, 2014
With the general situation in society was dissatisfied 85% of the surveyed citizens
(N=1000), and with economic situation 86% of the surveyed citizens. Only 17% of the
(population) sample evaluated privatization as a successful project; almost with the same
percent participated within the sample those thinking that Croatian entrepreneurship was
developing quite well. With regard to the typical characteristics of Croatian entrepreneurs
(‘main foundations of entrepreneurial success’), Croatian public expressed the very same
opinion like at the end of the 90-ties (Table 6).
Table 6. Typical characteristics of Croatian entrepreneurs, 2014
Characteristics
Scale span
M
Political ties
1-3
2,54
Exploitation of the workers
1-3
2,52
Competence, good business strategies
1-3
1,82
Honesty
1-3
1,46
Industriousness
1-3
1,74
Source: Rihtar, 2014
The majority of the surveyed citizens expressed the opinions according to which the
main levers of entrepreneurial success are political ties/clientelism (55% ‘extremely agree’ with
that attitude) and exploitation of workers (56% ‘extremely agree’ with that attitude). Only small
part of the population sample thought that entrepreneurs are successful due to their competence
(15% ‘extremely agree’ with that attitude) and their industriousness (8% ‘extremely agree’ with
that attitude). Resuming the overall picture of Croatian entrepreneurs according to this newer
data, we can say that there is a clear continuity in the overall perception of Croatian
entrepreneurs among Croatian citizens. Entrepreneurs do not behave within business sector in
16
a meritocratic manner, still using clientelism and exploitation of workers as the main tools of
their business success.
There is, however, an important difference about the nature of these data comparing
them with the researches in the 90-ties (Štulhofer, 1999). Namely, the ongoing economic crisis
(2009-2015) also shaped such a negative attitude of the Croatian public to Croatian
entrepreneurs. It is also interesting that Croatian public insists on two important attributes when
evaluating ‘public affairs’ in the last almost two decades: these are ethics (morality, honesty)
and competence. The same measures ‘of the state of the art’ are very often marked as the key
dimensions of social perception and evaluation in social psychology (Wojciszke, 1994; 1998).
Some research about political preferences in Croatia showed also that the evaluated ethic and
competence are universal and necessary (although not sufficient) bases of election preferences,
independent of political context, supply and demand (Milas, 1992; Lamza Posavec, Milas,
2000; Lamza Posaves and associates, 2001; Rihtar, Lamza Posavec, 2003).6
If we evaluate entrepreneurial actions again, now from the social psychology
perspective, we can say that entrepreneurship is by its nature ethical or prosocial activity; it
aims to produce some social surplus or wellbeing (new employment, better standard of living,
etc…), although that type of production is dependent on many variables (see: Anderson, Smith,
2007). However, if entrepreneurial projects want to be of such nature, they necessary should be
economically successful: god (ethically correct) intentions must be accompanied by managing
competences; otherwise, without competence, they build a road to hell.
What is then position
of ethical norms in shaping the negative image of Croatian entrepreneurs? It seems that they are
more important for the negative impression about domestic entrepreneurs than professional
competence. Our data (with the help by regression analysis) confirm that assumption (Table 7).
Table 7. Key elements of entrepreneurs’ success, 2014
Characteristics
Beta
P
Political ties
0,020
0,631
Exploitation of the workers
0,193
0,000
Competence, good business strategies
-0,080
0,045
Honesty
-0,029
0,539
Industriousness
-0,039
Source: Rihtar, 2014
As we can see, the general negative impression about entrepreneurs is mostly
determined by the public’s dissatisfaction with the ‘exploitation of workers’, and after that with
17
the lack of entrepreneurs’ business competence. The given results are compatible with our
previous expectations and with already mentioned laws of social perception.
One new moment is important here when we compare this findings with earlier
researches: present time. Namely, in 2014 the public identified the unemployment as one of the
main national problems. At the same time, deep economic crisis made the public opinion about
entrepreneurs more homogeneous: at the end of the 90-ies more critical towards new
entrepreneurs (tycoons) were those working, more educated and more informed about
privatization (Štulhofer, 1999). In the new research (Rihtar, 2014) hard variables (age, gender,
education, working status,…) were not differentiated the public at all: all of them were
extremely critical towards new economic elite, to a highest possible degree.
7. Discussion and conclusion
Croatian economy, like in many other European countries, is determined by the
economic activites made within small and medium enterprises (Table 8).7
Table 8: Enterprise structure with regard to size from 2010 to 2014
Enterprise / Years
2010
type
N
%
Small and medium
enterprise sector
96.383 99,5
Small enterprises
95.004
Medium enterprises
1.379
Large enterprises
375
0.5
Total
96.758 100
Source: Singer, Alpeza (eds.), 2016.
2011
N
%
90.831 99,6
89.539
1.292
359
0.4
91.190 100
2012
N
%
96.906 99,6
95.597
1.309
348
0.4
97.254 100
2013
N
%
100.841 99,7
99.573
1.268
350
0.3
101.191 100
2014
N
%
104.116 99,7
102.895
1.221
354
0.3
104,470 100
According to the newest GEM Report for Croatia 2017 (Singer, Šarlija, Pfeifer,
Oberman Peterka, 2017), which follow mostly economic indicators about the quality of
entrepreneurship within particular countries, most of the Croatian SMEs' –owners become
entrepreneurs due to necessity reasons, not because of entrepreneurial opportunity.
Multidimensional effects of 2009-2015 economic crisis decreased perception of new
entrepreneurial opportunities, that is 'the entrepreneurial capacity' of the country: while in
Croatia 24,6% of the interviewed see some kind of business opportunity, the same category
within the EU rise up to 1/3 of adult citizens. With regard to the dynamics of entrepreneurial
activity (measured by TEA indexes), especially with regard to the motivational index, Croatia
is far below other European countries. For example, in 2014 and 2015 Croatia was the last
18
among EU countries according to motivational index. The average EU motivational index fo
2016 was 5,3; it means that in other European countries there is at average 5,3 times more those
entering the business due to entrepreneurial opportunity than in Croatia.8
Many of the owners of small and medium enterprises, no matter how they sussessful
might be, face the same problems linked with negative public opinions about entreprneurs
although they do not have to much links with the former privatization. Such public opinion
about entrepreneurs shape something which is called among business people – 'bad social
climate fro entrepreneurship'. That subject matter is always present in GEM Reports for Croatia
(since 2002!). The same is in this 2017 report; main statetment is obvious: „Social values do
not support entrepreneurial activities. The majority of the interviewed experts think that
successful entrepreneurs do not enjoy a high social status, and by this feature Croatia is ranked
very low in Europe. The same is when it comes to the media coverage of entreprenurship. We
should emphasize that 2/3 of the respondents (62,2% in 2016) has a positive attitude about
entrepreneurial career (that puts Croatia high above the EU-average), and 1/5 of the
interviewed expressed the intention to start some busines venture (again above the EUaverage). However, the public attitutes about entreprenurs' social status and media coverage of
entrepreneurship are far behind these intentions...“ (Singer, Šarlija, Pfeifer, Oberman Peterka,
2017, 65).
When different researches and relevant data show the similar results with regard to a
particular issue, that means that they indicate something that really exists as a social
phenomenon. The same is with the issue we call here the 'social legitimation of
entrepreneurship in Croatia'. Having in mind all what have been said before, we can draw a
several hypotheses.
First, Croatia is facing a serious socio-economic problem: problem of the delegitimation of new entrepreneurs and managers formed within transition process in last 25
years.
Second, the lack of the legitimation of new economic elite undermines the efforts of
individuals who want to establish their own enterprises, as a way to increase their economic
independence and social well-being.
Third, the lack of legitimation of new economic elite undermines the efforts of
institutions (from family to government and educational instititutions) to widespread and
accept the idea of entrepreneurship as an important tool of individual and collective
development.
19
Four, there are serious arguments which warn that the lack of the legitimation of new
economic elite is deeply rooted on the values of the pre-industrial society. If that is true, the
question is how such values still persist within the Croatian society in so long period?
Here again is important to re-consider Etzioni's question: what shape the values which
can mold legitimation of entrepreneurship in particular post-socialist countries? Some other,
more comprehensive values or some tectonic processes (be it historical, religious, political or
economical) which shape the structure and dynamic of overall social situation in particular
societies? Some of dominant paradigms for the detection of such deeper structures shaping
individuals’ values is the (postmodern) theory of modernization. There is an interesting
discussion going on in Croatia about the final theoretical and empirical scope of so called
linear and multidimensional theory of modernization (Katunarić, 2016; Sekulić, 2016).
In one of his papers a few years ago Sekulić used traditional theory of modernization to
review the dynamic of change in attitudes and values in Croatia during the 1985 to 2010 period.
This revew clearly cover the fractures following the dissolution of the socialist regime and
constitution of the new capitalist and democratic regime (Sekulić, 2012). There are two main
findings developed in Sekulić’s paper. First, with the disintegration of socialism, the
combination of re-traditionalization and modernization emerges. Those value dimensions
directly connected with identity dimensions are re-traditionalizing (increase in religiosity and
national exclusivism), and those further away from the identity core are modernizing (the
acceptance of gender equality).
On the other hand, the initially high support for liberal principles, the market and
democracy, after the experience with their application under the Croatian circumstances, is
declining. He concludes: “The opposition between traditionalism and modernism is diagnosed
as dominant. In the period of the highest support for liberal values, liberalism emerges as a
separate dimension; however, with the decline of support it is re-merging with traditionalism.
The key unexpected finding is that liberalism is closer to traditionalism than to modernism”
(Sekulić, 2011, 275).
With regard to the issue of the delegitimation of new economic elite, it is important to
say that Sekulić identified one atypical trend within business sector: the acceptance of the
values of economic freedom/liberalism (market and private ownership) and the traditional
values. When new enterprise owners practice the idea of economic freedom only with the
autocratic attitudes towards employed workers, that can strongly influence of the public
opinion about the whole entrepreneurial strata.
20
Županov’s theory of egalitarian syndrome is also based on the linear theory of
modernization. Burić and Štulhofer proved that recent data confirm the existence of different
dimensions of egalitarian syndrome within national population (Burić, Štulhofer, 2016). Their
findings show that rural vs. urban residence, education and occupation, but not participants’
age, were significant predictors of the support for egalitarian syndrome. They say: “Adding to
our previous study, we have offered the first systematic operationalization of Županov’s theory
and provided evidence suggesting that the egalitarian syndrome remains a phenomenon
relevant for the county’s socioeconomic development. The multivariate findings presented here
confirm Županov’s sociological imagination, as well as his empirically-informed theory
building skills. Here we are approaching Sztompka’s concept of civilizational incompetence,
which is defined as a set of socio-cultural barriers that slowed down the adaptation of the
citizens in the former socialist countries to new economic and social circumstances created by
the demise of communism. This kind of cultural wall, erected and internalized during the
communist era, contains rules, norms, values, habits and symbols, which are for the most part
dysfunctional in a post-communist setting” (Burić, Štulhofer, 2016, 378).
This paper send a relevant message: that the widespread prevalence of the egalitarian
syndrome may be a problem for the country’s socio-economic development. Yet, although one
of the main dimensions of egalitarian syndrome is ‘the anti-entrepreneurial obsession’, it is not
quite clear how such an anti-entrepreneurial obsession (composed of the enrichment phobia, the
state ownership complex and the anti-entrepreneurial sentiment) is transformed into negative
image of entrepreneurs and new managers. We suggest here another hypothesis: that the
concrete mediator between egalitarian syndrome and delegitimation of entrepreneurship in
Croatian circumstances could be a certain concept of social justice.
From the very beginning of the privatization, Croatian public has its own understanding
of social justice. When investigated the perception of privatization among representative
sample of the full aged population of Croatia (n=1001), Šakić also analyzed general
understanding of justice by the majority of Croatian citizens, and their expectations with regard
to the implementation of a just principle of distribution of enterprise propety. From the analysis
of Croatian citizens’ opinions and attitudes on privatization, it is clear that the Croatian citizens
expected a distribution which would be closest to “the principle based on equality” (means:
distribution or selling of all enterprise property to workers and citizens under fair terms), while
in reality distribution was mostly conducted according to 'the principle based on participation
and contribution' (Šakić, 1999, 175-213).
21
We believe that some types of social justice and equality, shared among different social
strata, are important 'mediators' between workers/citizens and their image of entrepreneurs. If
that is so, that has significant consequences not only for the economy but also for the political
system itself. There are several questions here: 1) what type of social justice is 'suitable' for
modern economic development; 2) who from the main social actors is producing the dominant
type of social justice and how it is relate to the social juctice widespread among working
population, and c) what type of social juctice is represented among new economic elite?
Notes
1. With regard to the attitudes towards entrepreneurs compared to other professional classes, the EU-survey from
2009 showed also that entrepreneurs were rated favourably by 49% of EU respondents; only people working in the
liberal professions (such as lawyers, architects etc.) received a higher rating (58%). The country differences are
quite obvious here: while 83% of Danes and 78% of Finns held a favourable opinion about entrepreneurs, this
proportion dropped to 26% in Hungary. At the same time, respondents in Iceland and the US (82% and 73%,
respectively) shared this favourable attitude towards entrepreneurs. “There were seven countries where
entrepreneurs were ranked above all other professional classes: Denmark, Iceland, Finland, the US, Ireland,
Norway and Portugal. Across almost all socio-demographic segments in the EU, entrepreneurs received the
second highest ratings – behind people working in the liberal professions” (EC, 2010, 33).
2. On the EU-level, in 23 EU Member States, “more respondents say they would prefer to work as an employee
now than said so in December 2009. This shift was most marked in Finland (73%, +19 points), Slovenia (66%,
+18 points), and Cyprus (46%, +17 points). Women are more likely than men to prefer to work as an employee
(by a margin of 63% to 53%), while men are more likely to favour self-employment (42% vs. 33%). Younger
respondents are also more inclined to express a preference for self-employment” (EC, 2012, 7).
3. With regard to the question of whether entrepreneurs take advantage of other people’s work, the data show that
opinion is quite divided from country to country. In 19 EU countries, a majority of respondents do indeed agree
that entrepreneurs take advantage of other people’s work, and in some cases the level of agreement is very high,
primarily in Poland (91%), Latvia (80%) and Slovakia (80%). Yet in the remaining eight EU countries, fewer than
half of the respondents agree with this statement, and agreement is especially low in Denmark (20%), Austria
(33%) and Ireland (36%). “More respondents in 15 EU countries think that entrepreneurs take advantage of the
work of others than thought this in 2009. In several Member States there have been substantial increases in the
number of people who feel this way, notably Latvia (80%, +27 points), the Netherlands (75%, +22 points), Poland
(91%, +21 points), Italy (73%, +20 points), Portugal (74%, +20 points), and Belgium (55%, +14 points). Yet in
11 EU countries the proportion of people who agree with this statement declined, most substantially in Slovenia
(63%, -10 points), Lithuania (70%, -9 points), and Greece (69%, -8 points)” (EC, 2012, 104).
The used socio-demographic data (‘dependent variables’) showed that older respondents are somewhat
more inclined to say that entrepreneurs take advantage of other people’s work: 60% of people aged over 55 say
this, compared with 51% of 15-24 year-olds. Also: individuals who left education at a young age are more inclined
to think that entrepreneurs only think about their own pockets: 60% of those who left school aged 15 or under
agree that this is the case, as opposed to 47% of those who finished their education aged 20 or over. “With regard
to the qualification competence, manual workers (61%) are the most likely to agree that entrepreneurs only think
about their own pockets; self-employed people (38%) are the least likely to think this. Manual workers (68%) are
also the most likely to think that entrepreneurs take advantage of other people’s work, with self-employed people
(46%) again the least likely to think this” (EC, 2012, 109).3
22
4. Compared to other countries' results, this is not the unique characteristic of Croatian public: “Again in 19 EU
countries, a majority of respondents agree that entrepreneurs think only about their own pockets, though the
margin between the highest and lowest levels of agreement is narrower on this point. Cyprus (70%) has the
highest level of agreement, followed by Greece (67%) and Lithuania (67%). But at the other end of the scale, only
26% of respondents in Denmark agree that entrepreneurs think only about their own pockets, as do 36% of those
in Ireland and 38% in Finland. The non-EU countries follow the same pattern as the EU results, ranging from the
75% of people in India and the 70% in Croatia who agree that entrepreneurs think only about their own pockets to
the 18% in Iceland and the 26% in Norway who agree with this” (EC, 2012, 106).
5. “This cluster consists of seven dimensions, or rather, seven different manifestations of egalitarian stances,
values or perspectives (Županov, 1970). He calls the first dimension of the egalitarian syndrome the perspective of
finite good. This is the cognitive component of the egalitarian syndrome for it directs national policy toward
an egalitarian distribution of social wealth. The second dimension is the redistributive ethic, which is derived from
the moral obligation characteristic of pre-industrial societies that enjoins the (re)distribution of wealth, for social
differences to be as small as possible. Dimension number three is the norm of egalitarian distribution. The norm
prohibits marked income differences by restricting high earnings. The fourth dimension of the egalitarian
syndrome is the anti-entrepreneurial obsession. It is expressed in the negative attitude to private entrepreneurship
and consists of three sub-dimensions: the enrichment phobia, the state ownership complex and the antientrepreneurial sentiment. The fifth dimension is anti-professionalism. It implies a negative attitude to
professional knowledge and autonomous professional standards. Županov calls the sixth dimension of the EST
intellectual levelling, and it consists of anti-entrepreneurship, anti-innovativeness and anti-creativity. The seventh
and final dimension is anti-intellectualism or a negative attitude to intellectual work as such (Burić, Štulhofer,
2016, 363).
6. The mentioned dimensions important for the shaping of perceptions we can differentiate according to hierarchy
and meaning. Honesty assumes prosocial or antisocial intentions or activity, and that is why it is on the top of the
hierarchy. Besides, that trait as someone’s characteristics is easier to judge than his ability or competence: moral
norms are universal ans thaught during socialization, in the youngest age. With regard to ability or competence, it
is known that that personal trait is ranked as second within the hierarchy of relevant traits. First, it is in a value
sense a neutral category which, due to visible social benefits or costs, indicates their potential intensity.
Second, it is hard to evaluate someone’s (professional) competence because that needs some level of
privity or specific knowledge. Also, professional norms are not universal, and moral norms are usualy more strict.
Within evaluation process about morality negative information have more diagnostic strength, contrary to the
situation when somone’s competence is evaluated. Also, impressions about ethics are much more influenced by
the affects than impressions about competences (Wojciszke, 1993). Adherence to some ethical norms is not
necessary rewarded, yet the breaking of some moral norms always causes some form of formal/informal sanctions.
Quite contrary to that, professional mistakes very often are regarded as non-intentional, and usually are sanctioned
by sooth measures.
7. In 2014 there was an increase in the total number of business entities in Croatia in relation to 2013, by 3.2%.
However, Croatian economy still has the same structure, in which 99.7% of business entities come from the small
and medium enterprise sector, while only 0.3% are large enterprises (Table 8). „As in the previous year, in 2014
there was an increase in the number of small enterprises (3.3%), a decline in the number of medium enterprises
(3.7%), and an increase in the number of large enterprises by 1.1%“ (Singer, Alpeza, 2016, 14).
The financial effects of long-term economic crisis are reflected in following data, also: with regard to the total
revenues in 2014, the share of small and medium enterprises in total revenues was 53%, which represents an
increase of 0.9 percentage points compared to the share of income that small and medium enterprises have
achieved in 2013 – due to the growth in total revenues generated by small enterprises. In 2014, the share of small
enterprises in total exports increased by 2.9 percentage points. In the same period, the share of medium enterprises
in export activities declined by 2.6 percentage points, while the share of large enterprises experienced a slight drop
of 0.3 percentage points. Small enterprises show a certain type of economic vitality in a higher extent than other
type of enterprises.
23
With regrad to the employment in the small and medium enterprise sector, in 2014 compared to 2013, there was
stagnation in the average number of employees in medium enterprises (an average of 119 employees), and
stagnation in the average number of employees in small enterprises (an average of 4 employees). „Small and
medium enterprise sector recorded continuous slight decline in the average number of employees in the period
from 2010 to 2014, with simultaneous increase in total income, which indicates rationalisation of operations, and
the trend of increasing the productivity and competitiveness of small and medium enterprises in Croatia“ (Singer,
Alpeza, 2016, 15).
8. Croatia was ranked in 2016 also very low when measured by the share of the so called ‘grown enterprises’
(operating more than 42 months): Croatia has 62% of ‘grown enterprises’ comparing to the EU-average. That
indicator usually warns on the low base of generating the new value. In the 2014-2016 period Croatia was ranked
very high (abowe the average value for European countries) according to the enterprises which were shut down in
that period. “These data open the question about the quality of business start-ups, about the competence needed for
their sustainable growth, as well as about the question of the negative influence of entrepreneurial ecosystem on
the start-ups” (Singer, Šarlija, Pfeifer, Oberman Peterka, 2017).
Literature and sources
Acs, Z.J., D.B. Audretsch (eds) (2013), Handbook of Entrepreneurship Research. An Interdisciplinary Survey and
Introduction. New York, Heidelberg, London: Springer.
Aldrich, H.E. (2005), Entrepreneurship. In: N. J. Smelser, R. Swedberg (eds) (2005), The Handbook of Economic
Sociology. Princeton: Princeton University Press, Russell Sage Foundation, pp. 451- 477.
Anderson, A. R., Smith, R. (2007), The Moral Space in Entrepreneurship: Ethical Imperatives and Moral
Legitimacy.
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