Sprouting entrepreneurial seeds in a turbulent environment
School of Hospitality and Tourism Management Lecturer Dr Vlatka Skokic explores how Croatia’s complex socio-economic environment has proved to be fertile soil for entrepreneurial activity.
It’s the 1990s and you live in Croatia – a Mediterranean land of azure waters, ancient towns, delicious seafood and picture-perfect beaches. It’s also a land recently recovering from a civil war and is making the precarious transition from a socialist to a capitalist economy.
You happen to have an eye for business. You spot the lucrative potential Croatia has as a tourist destination and you notice there are a lack of hotels in the area. So what do you do, considering that the national attitude towards entrepreneurship is still hostile and blighted by suspicion, and the legal framework and regulations for setting up a business are riddled with inconsistencies? What are the motivations for someone to set themselves up as a business owner in such an unsettled environment, and what are they mediated by?
This is something Dr Vlatka Skokic of the School of Hospitality and Tourism Management and fellow researchers from Edinburgh Naper University and Hamlet Hill Consultancy set out to investigate in their recent paper ‘Hotel entrepreneurship in a turbulent environment’.
For their study they interviewed 37 hotel entrepreneurs in a popular tourist region in Croatia, and analysed how they responded to the complex changes in the socio-economic environment of a former socialist economy.
Skokic et al.’s findings showed that rather than constraining business ambitions and achievements, Croatia’s socio-economic environment was actually a positive catalyst for entrepreneurial activity. The country’s partially reformed economy offered lucrative unfilled niche markets, which the entrepreneurs spotted and responded to. The regulatory burdens and inconsistencies in the legal framework prompted many of the entrepreneurs to think creatively around the barriers and take risks, even going so far as working illegally and setting up informal financial arrangements with traders instead of dealing with banks that wouldn’t lend. And the participants simply saw the hostile attitude towards entrepreneurs as a challenge – to present a heroic picture of their role and overcome these institutional barriers.
For Skokic et al, Croatia provided the perfect ‘laboratory setting’ to examine entrepreneurship in a turbulent environment characterised by complex political and economic changes. They found that, despite its complexity and unpredictability, Croatia’s socio-economic environment seems to be a major catalyst for entrepreneurial activities to happen, and is not related to the autonomy of ‘being my own boss’ as it is in western countries, such as the UK and the US, but is related to actual freedom from the communist regime and the possibility of establishing one’s own enterprise.