Diana Traikova, M.Sc.1, Jana Fritzsch, Ph.D.2, Gertrud Buchenrieder Sr., Prof., Dr.3, and Judith Möllers, Ph.D.2. (1) Department External Environment for Agriculture and Policy Analysis, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), Theodor-Lieser-Str. 2, Halle (Saale), 06120, Germany, (2) External Environment for Agriculture and Policy Analysis, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), Theodor-Lieser-Str. 2, Halle (Saale), 06120, Germany, (3) Agricultural policy, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), Theodor Lieser Straße 2 06120, Halle, 06120, Germany
The aging population, small-scale agriculture, poor infrastructure and migration of the young are well-known challenges, which also plague many rural regions in Bulgaria and Romania. The question hence, arises: how to deal with them when there is a lack of job opportunities? Some relief in that respect could come from a small rural group: the entrepreneurs in the non-agricultural sector. According to the literature the share of rural business founders varies between 5 and 10 percent. This figure may appear quite low, however, it is still important since running a business allows individuals to take control over their economic situation, to better serve the market and, eventually, create additional jobs. At times of structural adjustment, potential entrepreneurs look like a promising field for policy intervention, but relevant empirical research from Eastern Europe, which could justify it, is scarce. This study is an effort to shed the light on the decision-making process of starting a non-agricultural business in rural Bulgaria and Romania. It utilizes the Theory of Reasoned Action by Icek Ajzen and pays special attention to informal social networks. These are expected to be relevant, since post-transition countries still struggle to overcome institutional inefficiencies. The common belief of ill-functioning formal institutions and weak law enforcement lead to extensive use of informal contacts. In our special case, while considering to eventually start-up their non-agricultural enterprises, farmers take into account a potential support they might obtain from their peers. It is argued that individuals with bigger network size and those who expect a support from the important to them people are more prone to become entrepreneurs. Multivariate statistical methods will be used for testing these hypotheses. The analysis relies on primary data collected from 540 farming households in 2008. The expected results may support policy makers in identifying what hinders most entrepreneurial initiative in post-communist rural regions, thus giving hints for counteraction.