The years of growth that followed the Second World War were marked by phenomena of industrial concentration and the evolution of managerial capitalism. Economies were directed by a “technostructure” (Galbraith, 1968) and, in particular, by managers being salaried workers (Chandler, 1977). Entrepreneurs, as founders/owners/managers of firms, seemed to belong to an age that had gone, the heroic period to which J. A. Schumpeter often refers. The big company imposed itself, and together with it mass production and mass salaried employment. W. J. Baumol (1968) wrote in a famous paper that the entrepreneur had disappeared form the economic literature.

But how did the paradigm of the entrepreneur re-emerge in the 1980s? The entrepreneur, as a concept, has reappeared as an economic entity because of the positive factors that contribute to create a propitious environment for the creation of enterprises. We hold the idea according to which the economic, social and political environment facilitates the development of specific economic behaviour, as for example entrepreneurial behaviour (Boutillier and Uzunidis, 1995, 1999, 2006; Julien, 2005). According to the OECD (2005), the emergence of entrepreneurship is related to the rank it holds in the scale of values and to the intensity of incentives and support it receives. However, the beginning of the 1980s was marked by a whole set of major transformations that together constitute a sort of rupture from the previous period: (1) public policies targeted at deregulation and/or privatization; (2) development of financial markets; (3) emergence of new information- and communication technologies and biotechnologies; (4) decline of public financial support for social activities; (5) growth of mass unemployment and implementation of public policies devoted to its reduction through incentives for business creation.

It is in this new context that the entrepreneurial function re-emerged. These changes accelerated starting from the 1990s, in particular after the fall of the Berlin Wall and the collapse of the major socialist economies. These events announced the end of that chapter of history (Fukuyama, 1993). Capitalism has become the only form of social organization, combining the power of the market in economic regulation and that of democracy in political regulation.

The emergence of the paradigm of the entrepreneur takes place in a new technological and scientific revolution (information technology, microelectronics, biotechnology, etc.). If one refers to Schumpeter’s theory about entrepreneurship, this situation lays a fertile ground for innovation and for business creation (Langlois, 1987; Perroux, 1968; Heerjte, 2006), a process that fuels the ascending phase of an economic cycle. Following J.-B. Say at the beginning of the nineteenth century, we may also assert that the entrepreneur plays the full role of intermediary between the scientist who produces knowledge and the worker who applies it to industry.

In this context, the entrepreneur is no longer heroic [1], but rather socialized (Boutillier, Laperche, Uzunidis, 2006). The socialized entrepreneur finds his home in an economic organization characterized by a high level of division of labour inside industrial activities, inside service activities, but also at the interface between services, industry and agriculture (Durkhem, 2007). He is stuck between two logics: that of the big enterprise that structures and outsources all (or a major or even a minor part) of its functional and productive activities; and that of public or no-profit institutions striving to promote the creation of new businesses, on the one hand to fight against unemployment and, on the other, to foster the development of innovations seen in the Schumpeterian meaning of the term (product, process, organization). The concept of the socialized entrepreneur must be distinguished from that of the collective entrepreneur, or even from the entrepreneurial corporation (Hagedoorn, 1996) that characterizes the managerial enterprise. We note that the socialized entrepreneur is not an entrepreneur in a socialist economy. In fact, the socialized entrepreneur may be defined in the first place by his macroeconomic function (job creation, innovation, outsourcing of the productive and service activities of big companies).

Since the beginning of the 1980s, developed and industrialized economies have pursued public policies to promote new business activities, to create jobs and technological innovation. This new entrepreneur is a socialized entrepreneur because he develops his activity in a particular economic environment which is structured by big firms (the network firms) and the directives of public policy (trend of public expenditure in different sectors, for example education, health, transport, energy, etc.). The socialized entrepreneur, in general, is not an innovator, but he tries to justify his role, in other words his means of economic and social existence. We define the entrepreneur by his resource potential, e.g. a set of resources (knowledge, financial resources and social capital. The socialized entrepreneur values his resource potential in an economic and social environment: the “POBE” (“P” for “public policy”, “O” for “economic organization”, “B” for “big business” and “E” for “entrepreneurial resource potential” (Part 1).

At the beginning of the 1990s, the Soviet Union started to become a capitalist economy. Free markets and free business activity are the bases of this economic organization. In this new context, new business legislation has progressively been created. This social evolution is very slow and chaotic. Thus, the main question is: who is the socialized entrepreneur in Russia today? His main objective is to develop an enterprise for intellectual achievement (Schumpeterian argument of the innovative entrepreneur) or for financial security (main argument of the socialized entrepreneur who creates his enterprise to construct his own means of existence). As J. K. Galbraith (Galbraith, 1968) said in the 1960s about the convergence between capitalist and socialist economic organization, we observe the same phenomena today. Russia looks like more and more like the United States. But, in the 1960s, the discussion was based on the process of concentration of capital (domination of big private firms in the United States and big public firms in the Soviet Union). Today the discussion is based on entrepreneurial dynamics (“The entrepreneurial society” of D. Audretscht) (Audretscht, 2007). Much of today’s Russian youth is fascinated by the idea of the free market economy and by the success of some entrepreneurs who have become billionaires, among them Mikhail Khodorkosky or Mikhail Friedman (Kets de Vries, Sheshania, Korotov, Florent-Treacy, 2004). But, the entrepreneurial reality in Russia is more complex (Djankov, Miguel, Qian, Roland, Zhuravskaya, 2005) (Part 2).

For Schumpeter (1935), the entrepreneur is the economic agent achieving new combinations of production factors. He is the economic agent who promotes a new dynamic and introduces technological progress into the economy. In fact, entrepreneur is in Schumpeter analysis’s a metaphor to explain the dynamic “growth-decline” which characterizes the capitalist economy. Finally, we can only understand Schumpeter’s theory on the entrepreneur (and, simultaneously on innovation) by placing it in the history of innovation theory (Freeman, 1982; Hagedoorn, 1996; Schumpeter, 1983; Langlois, 1987).

In his ultimate book entitled Capitalism, Socialism and Democracy, published in 1942, Schumpeter was largely pessimistic about the future of capitalism. He took up the analysis of Marx and to the question “will capitalism survive?” he answered “no”. It was not because he foresaw a political revolution, the victory of the proletariat over the wealthy, but because the development of capitalism led, according to him, to the disappearance of competition. While Schumpeter gave greater place to the economic aspects of the issue (economies of scale and extension of the firm’s size), we cannot ignore, on the other side, the social and political context in which he wrote (Russian revolution, world wars, Hitler in Germany, Mussolini in Italy, etc.) (Swedberg, 1991). Companies were becoming bigger and bigger. In addition, there were powerful organizations, bureaucratic enterprises. Schumpeter insisted on the following idea: the entrepreneur is being replaced by an organization. Entrepreneurs are no longer responsible for innovative activities, which are now performed by teams composed of expert members who have no direct link with the market or the consumer. In such conditions business, the creation of enterprises ceases to an adventure, an instrument of self-achievement. In a world dominated by big companies, the market seems frozen. Only the domains pertaining to culture, sport, education, arts, etc. will constitute in the future an engine of self-achievement.

The vanishing of the Schumpeter entrepreneur is another metaphor used to analyse the development of managerial capitalism, the evolution of big enterprises. To begin with, the entrepreneur has created the organization; from then on the organization takes his place in the economic process. At the beginning of the twentieth century, this idea was shared by a considerable number of researchers, economist and sociologists (Veblen, Hilferding, Berle and Means, Burnham, etc.). For example, M. Weber (1989, 2003) explained that civil society was being militarized. Enterprises operated like armies; their organization was streamlined. H. Fayol gave a definition of the actual principles of contemporary management. F. Taylor dealt with the scientific organization of labour and noted workers’ reactions; Henry Ford introduced the conveyor-belt system. The dividing line between production, work and design activities became clearer. “White collars” managed the very few big companies controlling the American market (Wright Mills, 1966, 1969). Big enterprises had become pyramids concentrating all the manufacturing operations in one building having the size of a small town: new materials entered through one door and the finished car exited through the door at the opposite end (Sennett, 2006, pp. 33-34). Integration went much further. For example, Ford also owned steel and coal mines (Berger, 2005, p. 88). In spite of the vanishing of the heroic entrepreneur, the economic growth that followed the end of the war was extremely rapid and without precedent in human history. Was Schumpeter wrong? (Heertje, 2006)

The paradigm of the big enterprise was reinforced after the Second World War while the state became a primordial economic actor both as regards supply (support policy, building of infrastructures, education, research development, etc.) and demand (social policy, assistance to job seekers, families, pensioners, etc.). This increasing role of the state was clearly the counterpart of the ever-growing investments needed by industry, but it also continued a trend which started during the Second World War and closely linked to the industrial and technological effort of that time (armaments, scientific programmes, supplies, etc.). It is also the counterpart of the cold war context that followed the signature of the Yalta agreement concretizing a new division of the world between two relatively well defined parties that were – capitalist world and socialist world – corresponding a priori to the two different economic logics: market versus state. However, J. K. Galbraith considered that the common points between the two economic systems largely prevailed over their differences (Galbraith, 1968); the role of the state was fairly important in the United States (military-industrial system) and big American enterprises exert strong influence over the world economy by their activities (disappearance of competition to the benefit of monopolistic markets).

Managerial capitalism was not born after the Second World War. Its origin is much older, though, as demonstrated by the works of the economist T. Veblen (1971) and R. Hilferding (1970) in the United States and Europe. The development of the stock exchange and of the financial markets by the end of the nineteenth century strongly boosted industrial capitalism because new industries (railways, iron and steel, chemicals, etc.) needed increasing investments that could not possibly be financed by one individual only. But it is undoubtedly the study performed by Berle and Means, published in 1932, which placed this question firmly in the academic realm, contributing to the questioning of the paradigm of pure and perfect competition. Almost simultaneously, E. Chamberlain (Chamberlain, 1993) (discriminatory monopoly) and J. Robinson (Robinson, 1933) (imperfect competition) made actively contributions to the elaboration of the paradigm of the big enterprise. But, from the 1920s onwards, the works of A. Marshall had already contributed to the erosion of the Walrasian paradigm (externality, partial equilibrium, short/long term, etc.). At the beginning of the 1940s, J. A. Schumpeter (1935, 1979) went back on what he had written in his youth. He explained that the entrepreneur of the heroic times would disappear and leave the place to big enterprises. Innovation had become the business of a team of experts who had ceased to be directly related to the market.

In the 1960s, J. K. Galbraith (1968) pursued Schumpeter’s analysis of managerial capitalism and demonstrated that the economy of capitalist industrialized countries did not fit with the paradigm of pure and perfect competition. Six distinctive elements emerged:

The crisis of the welfare state: G. Gilder (1985) argued that the welfare state generates poverty because it encourages too many people to rely on social services instead of looking for a job (since the 1970s, the Public Choice School and the Theory of Bureaucracy have strongly criticized Keynesianism). According to Gilder, only the entrepreneur is capable of fighting against poverty and unemployment.

Increase in mass unemployment and growing insecurity of salaried employees (development of part-time employment and multi-employment, etc.): is the “end of work” (Rifkin, 1995)? Or of the “salaried society of the 1950-1960s” (Castel, 1995)? Or the beginning of the “entrepreneurial society”? (Audretsch, 2007)

New public policies: The main issue is that of helping unemployed workers to create their enterprises (their means of existence, their job), thanks to emergence of an institutional environment (reduction of taxation, of administrative barriers, flexibility of labour market, etc.). The World Bank (2006, 2008) defines a synthetic indicator to evaluate the performance of the State in this field. That composite indicator includes the following factors: creation of enterprises, granting of licence, recruitment of wage-earners, credit supply, protection of investors, payment of taxes, international trade, execution of contracts and closing down enterprises. A world classification has been established based on the performance of the state at that level. For Keynesian economists in the 1960-1970s, the fundamental role of the state was to sustain demand and create markets. In fact, the main objective of J. M. Keynes was social peace and political stability. In the 1980s, the economists of endogenous growth theories (Aghion, Harris, Howitt, Vickers, 2001) explained that the state has a major role to play in order to sustain the supply and support enterprises to innovate. In turn, innovation generates wealth and employment. Through appropriate public policies, the state endeavours to facilitate transition from the situation of job worker to that of entrepreneur, or from wage-earner to entrepreneur; in short to introduce more flexibility into the labour market (Boutillier, 2006, 2007).

The big managerial enterprise with its pyramidal architecture (Sennet, 2006) is no longer adapted to the new situation and is compelled to change; the structure of the network enterprise is flexible and decentralized (to benefit from new information and communication technologies). Its assets are distributed between a relatively important number of major shareholders (Castells, 1998).

As regards the number of salaried workers/employees, the size of enterprises has also been reduced. In the United State and Great Britain for example, the majority of enterprises have less than 3000 employees; many of them have only a local character or are family businesses; some are craft enterprises similar to small building companies.

Since the beginning of the 1990s, entrepreneurship has become an academic discipline taught in universities. Awareness programmes targeted at the youth sector are also being elaborated (Audet, 2001; Gasse, Tremblay, 2002; Riverin, Jean, 2006).

Thus, we have a definition of new capitalism: it is a socio-economic organization based on private property and free markets. But it is a generic definition of capitalism. The fundamental differences between new capitalism and managerial capitalism are: (1) the decentralized organization of industrial production (network enterprise) thanks to technologies of information, communication and transportation, (2) development of financial markets (which generate capital funds for investment), (3) flexibility of labour markets, (4) new role of the State which is to built an institutional environment to create enterprises and jobs.

We define the entrepreneur as the founder, manager and owner of at least a part of the enterprise. In such conditions, he may also be an innovator (Say or Schumpeter analysis); however, unemployment may just as well be at the origin of his decision (Casson, 1991). Whatever his circumstances, he always remains the economic agent who bears the risk (Cantillon, 1755; Knight, 1921) since he is in every case the main financial backer of his enterprise, often together with his family. In on the other hand the entrepreneur may be defined as set of resources, as E. Penrose (Penrose, 1995) has defined the enterprise as a set of resources in a legislative environment. By using this concept, we relocate the entrepreneur and his enterprise into the general logic of the capitalist system. The potential of resources is split up in the following way:

The three components of the entrepreneur’s resource potential are determined by the place he holds in the social organization chart – in spite of the increasing socialization of the economy (Durkheim, 2007). These elements assume a fundamental role. The family gives a taste to start a business; at the same time, it is a source of financing. We observe this phenomenon in France, in United States, but also in Russia where the business regulation is very new. A lot of entrepreneurs have a member of their family in business activity. In the Russian case, we note also that a lot of entrepreneurs have a member of their family in the Communist Party. It means that the Communist Party is a means of developing social relations. With the support of the family, the functions exerted by the entrepreneur draw their logic from public policies targeted at alleviating the consequences of a crisis (employment of innovation policies) and from strategies aimed at the productive and financial reorganization of big enterprises (table 1).

Table 1
Resource potential of the entrepreneur

Therefore, this capacity of the entrepreneur results from the variety and richness of the resource potential he has himself constituted. In its turn, the composition of that resource potential depends on factors external to the enterprise and the entrepreneur. In particular, public policies of assistance for the creation of businesses (to stimulate innovation and/or to fight against unemployment) will largely determine the financial resources to which the entrepreneur will be authorized to have access in order to create his enterprise and ensure its survival. The economic and social organization has several dimensions and therefore several effects. The general level of development of knowledge and technology in society will have an impact both on the knowledge acquired and assembled by the entrepreneur (on the basis of his education and the competencies of the members of his team; activities related to economic and information awareness) and the technological level of his activity. The nature of the financial system (e.g. ease or difficulty of going public, bankers’ degree of “conservatism”, level of development of venture capital, etc.) influences both the capacity of an individual to become an entrepreneur and the capacity of an enterprise to more or less accelerate its development. As demonstrated earlier, the degree of concentration in the market, for example the presence of big enterprises, also plays a considerable role in the dynamic of creation of small enterprises and in their type of activity (in particular subcontracting). Finally, it is necessary to underline the policy led by enterprises with a view to innovate, either by their own means (R&D budget) or by implementing different types of partnership including joint ventures or the injection of venture capital. In conclusion, the presence and nature of the links between the “POBE” factors (Public Policy – Economic Organization – Big Business – Entrepreneur’s resource potential) lead us to relocate the entrepreneur in his economic, social, political, technological and scientific context. This organic square provides a way to analyze the creation of enterprises at the scale of a specific economy (figure 1).

The end of the socialist economy has had many consequences for the functioning of the Russian economy and society. A new social phenomenon has developed: the individual initiative. The process of privatization has been very fast and for most of the Russian people it was a radical and difficult change. In 2006, the state enterprises represented only 3.4% of Russian enterprises, and the private enterprises 80% (5.2% owned by municipal authorities, 5.3% by civil or religious associations and 5.6% owned by foreign enterprises and other kinds of capital). 62% of the work force are employed in private enterprises (Russian and foreign enterprises). The private sector produces 70% of the Gross National Income (GNI). This is the highest level among all the ex-socialist economies (except the Baltic Republics) (Thorez, 2007, pp. 92-93).

The big private enterprises are often integrated into industrial and financial groups constituted during the privatization processing. These groups control a large variety of enterprises in different sectors (industries and services), but especially energy industries (petroleum and gas) and transports. In the same time, the number of new business has increased, from 288 000 in 1992 to 2 million in 1995. Their number doubled between 1996 and 2005. The rhythm of creation has now slowed, but the number of new businesses creations remains important. In 1992, the average number of employees by enterprise was 246; in 2004, it was only 14! This means that the new enterprises are very small. A lot of Russians create an enterprise so as to have a job. The framework of the Russian economy is skewed between a group of very big enterprises, and another group with very small enterprises (Thorez, 2007eds, p. 93). SMEs represent only 10% of the Russian economy. They are most particularly located in services (restaurants, retail trade, transportation). They have relatively few employees; most of them are family-owned, especially in craft industries (plumbers, repairers of different items like cars or electrical appliances, also tourism, etc.). Overall, in 2006 the number of SMEs was 980 000 with 8 million employees. 25% of them are located in and around Moscow (1.2 million enterprises).

In 2005, the number of foreign enterprises (jointly or wholly foreign) was 16 000; they represent only 0, 5% of all the enterprises, but they produce 28% of the Gross National Income. They are concentrated in services (58%), which is a very profitable activity.

On the other hand, we note that a lot of new enterprises have been created in services. In 1996, the contribution by industry to Gross National Income was 30.7% and 27.2% in 2004. In 1996, the contribution of the tertiary sector was 53.5%, which had risen to 62.5% by 2004 (Thorez, 2007, p. 99).

A great many jobs have been lost in industrial enterprises. But during the same period the tertiary sector has created a lot of new jobs. New jobs appear in business activities (notably trade, insurance, banks). Young people are very attracted to these professions and pursue management studies accordingly. The number of students in scientific or technological schools is less and less important. More money can be earned in banks or financial services.

Officially, unemployment did not exist in the socialist economy. But, in the capitalist economy it is a reality. Poverty is very evident in Russia today. However a large part of unemployed people are not officially registered.

Table 2
Russian Enterprises: ownership of capital and employment in 2006

(1) “P” for “Public Policy”: In 1987 (Kets de Vries, Shekshinia, Korotov, Florent-Treacy, 2004) Mikhail Gorbatchev, then General Secretary of the Communist Party, dealt a mortal blow to the socialist system and its cornerstone, the centrally-planned economy, when the Soviet Parliament approved the so-called Law on Cooperative Movement, authorizing the creation of cooperatives. The cooperatives were to be private enterprises, owned by at least three people. That law unleashed the entrepreneurial energy of the Russian people, and led to a dramatic transformation in Russia during the 15 years that followed. The cooperatives also fostered the creation of industries new to Russia, such as investment banking and cellular telephony. By 2003, only 15 years after the law on Cooperative Movement went into effect, the private sector represented 70% of the Russian economy. The process of transition from a socialist to a capitalist economy is a long and difficult road. The Russians are building a whole new institutional environment. Private property and free markets are becoming the pillars of the Russian economy (Boutillier, Uzunidis, 2008).

Entrepreneurship is a new phenomenon in Russia, thus we cannot estimate precisely their number and their activities. Since the beginning of the 2000s, and after the financial crisis in 1998, business activity has grown rapidly and Russian entrepreneurs are facing new challenges. It must be noted that suspicion against entrepreneurs is very strong. In the recent past, entrepreneurs were often called “new robber barons” or, more simply “robbers”. Their success was chalked up either to the dubious support of the Russian Mafia or to less violent but equally pervasive government corruption. The term of “new Russian” was almost universally considered to be derogatory, denoting wealth built on the backs of exploited and befuddled Russian workers tricked out their inheritance during the time of mass privatization of State-owned enterprises in the early 1990s (Kets de Vries, Shekshinia, Korotov, Florent-Treacy, 2004; Skopova, 2002).

In the view of the OECD and the World Bank (Dutz, Fries, Vagliasindi, 2000), the business environment in Russia has not ameliorated. In 2008, the rank of Russia in classification of business environment is 106^th for 178 economies in the world. Specifically for starting a business, Russia ranks 50^th (in comparison the rank of China at 135^th). The main conclusion is that Russia must reform its economic structure and develop new regulation (taxation, private property, credit, etc). At the federal level, the main body responsible for supporting the entry of small entrepreneurs since late 1998 has been the Ministry of Anti-Monopoly and Support for Entrepreneurship (MAPSE). There has been some limited progress to eliminate policy-created barriers to entry, including a new federal law to reduce the licensing burden passed in September 1998 and enforcement actions by the Anti-monopoly Committee against anti-competitive practices by executive bodies at regional and local levels. In 1995, the new State Committee for Support for Entrepreneurship developed a programme for the State support of SMEs. The main pillar of the programme has been a risk capital fund for partial guarantees and/or interest subsidies for SME borrowers who can back loans with at least 30% of their own funding. Other SME support services include subsidies to new job creation by the Federal Employment Service; technology and regional funding schemes; subsidies for leasing services, and training, information and counseling services.

The major difficulty of the Russian entrepreneur remains the administrative barriers. Their inherent complexity also conceals a fruitful source of corruption (Kisline, 2007). In 1996 for example, around 120 legislative acts regulated the income taxation for small enterprises, and other 100 laws regulated value-added tax. An added burden for many Russian entrepreneurs is the instability of the legislation itself. Many entrepreneurs complain about the shortage of information, notably with regard to taxation. The level of governance of the taxation authority is very low. The employees of the tax authorities often do not have the information that entrepreneurs need. Furthermore in many cases, the sources of information are informal, obtained while talking with other entrepreneurs in the tax office. A large number of entrepreneurs note the negative attitude of the police, claiming that the State chooses to support the more profitable activities (gathering of taxation for example) to the detriment of the less profitable ones (police regulation for example).

(2) “O” for “Economic Organization” – Many of the big enterprises in Russia are highly vertically integrated. We will study this question later. On the other hand, we note that a major part of transactions are non-monetary transactions. Historically, such deals have played an important role in the socialist economy. But, at the beginning of the 2000s, they represented 24% of transactions in the Russian economy (Dufy, 2008, p. 234). Soft supports for enterprises are maintained through a complex network of arrears and non-monetary transactions, in which the federal and regional governments and key infrastructure utilities actively participate. Thus, the low level of monetary transactions, in comparison with other industrialized countries, is a barrier for development of entrepreneurship because the monetization of transactions has been the basis for the development of a free-market economy.

The banks appeared in 1989. They developed very quickly: in 1998, there were 2500 banks in Russia, but they fell to 1700 during the financial crisis of 1998. In 2006, there were 2150 banks (Thorez, 2007eds, p.92). In 1990s, the Russian banks slipped into crisis, and small entrepreneurs had serious difficulties in financing their activities. The credits of the World Bank were not sufficient to satisfy the financial demands of entrepreneurs. Thus, in this case, the informal network of social relations was compelled to substitute for institutions. Many enterprises have been financed by parents or relatives. After some years of activity, when their financial situation has become stabilized, entrepreneurs themselves become (informal) bankers, and they lend in turn to other entrepreneurs who want to develop their activities. These social (informal) relations are based on trust. A few years ago Russian banks began to develop credits for SMEs and other new entrepreneurs, but the annual interest rate is very high (between 19 and 34%) [2].

The development of knowledge is in part based on the rise in the numbers of students and scientists. But, at the same time, universities must contribute to develop a spirit of entrepreneurship. Since the 1990s, Russian universities have changed and they have developed diplomas in entrepreneurship (often in cooperation with countries of the European Union or with the United States) (Shattock, 2004). In this context, the relationship between enterprises and universities must be harnessed to promote technological innovations. Today, a crucial problem for Russian universities is low salaries (salaries can vary for example from $US 18 to $ US 115 per month according to data from the University of Saint-Petersburg, while the poverty level is $$US 65). People are often forced to work at two or three jobs in order to boost their income to survival levels, such as in private universities or in enterprises. There are other options as well. Already during the socialist economy, low salaries for academics led to a situation where employees could only survive thanks to the shadow economy. In Russian higher education, the shadow economy was worth, in 2000, $ US one billon (Shattock, 2004ed, pp. 63-64).

(3) “B” for “Big business – The economic organization must change to create new opportunities of investments. At the national level, the degree of concentration of industrial output in Russia suggests an absence of any structural competitive problem. For many industries, Russia and the United States have similar market concentration ratios. However, this aggregate-level analysis masks three underlying attributes of the socialist economy which have been sustained or intensified through government policies. We have distinguished two analytical levels to explain the barriers for the development of entrepreneurship in Russia. The Russian institutional environment is not yet favorable for entrepreneurship. The structures of the socialist economy are not quick to disappear.

Many of the big enterprises in Russia are highly vertically integrated or have exclusive buyer-seller relationships. However, excessive levels of vertical integration can lead to domination of key supply chains and can also create significant obstacles to entry of new firms in product markets. These new enterprises tend to be organized as single integrated establishments, often located in or near a single city. In contrast, large firms in industrialized economies tend to have many establishments located across domestic regions and foreign countries. Regional authorities in Russia often seek to influence and control economic activity within their regions by conveying special privileges to favoured firms through taxation and public administration.

Privatization policies have offered opportunities to transfer property from the public sector towards private capital. Thus the degree of concentration of the economy remains similar. The rise in the number of billionaires and millionaires in Russian is the main consequence of this transfer of property.

The main responses of this study are the following:

The resource potential of Russian entrepreneurs seems to be more diversified than that of non-entrepreneurs (due to factors such as education, social relations, etc.). But, they are not to a majority extent Schumpeterian entrepreneurs, because their main objective is financial security not intellectual achievement. Their objective is not to innovate but to build their means of existence. However, it is clear from the survey that a major proportion of them like what they do, and think that their activity serves a useful social purpose.

The resource potential of the Russian entrepreneur is based in particular on informal social relations. Family relations play an important role in financing. But they have also an important part to play in finding new markets and opportunities of investment (Kirzner, 1973). A large share of new small enterprises is located in urban areas (and especially in Moscow). They have developed their activities in craft industries or in proximity services. The development of these markets depends on informal social relations (family, friends, neighbours, etc.). On the other hand, we note that many entrepreneurs have a member of their family who was (or who is) in a business activity. The communist party also continues to play an important role, as a reference point and as a source of information.

The Russian state is trying to promote socialized entrepreneurship, but the Russian economy cannot look fully to the European economy for an example. The degree of concentration of the Russian economy is very high, and investment opportunities for new entrepreneurs are not numerous.