Entrepreneurship is About More than Just Money

On September 14 2015, Dr Alina Sorgner will give a talk at the annual meeting of the HSE Laboratory for Entrepreneurial Research on 'Does Entrepreneurship Pay? Empirical Analysis of Incomes of Self-employed, as Compared to Wages of Paid Employees'. Dr Sorgner is a Lecturer at the Chair of Business Dynamics, Innovation and Economic Change at Friedrich-Schiller-University Jena, Germany, and is involved in interdisciplinary research on entrepreneurship including a joint project with researchers at HSE St Petersburg. Her main research interest is the role of creativity, personality, and human capital for the development of entrepreneurial careers. On a macro level she studies the role of formal and informal institutions for fostering entrepreneurial culture in regions. Ahead of her visit to HSE Moscow, the young academic gave an interview to HSE English News  Service about variations in entrepreneurship in post-communist countries and about her cooperation with HSE.

— What are the main points of your research on entrepreneurship and wages?

— Empirical evidence suggests that entrepreneurs tend on average to earn less than paid employees, despite the fact that they assume high levels of risk, responsibility and often work harder than their paid employed counterparts. Still, many entrepreneurs would not give up their self-employment, even if they were offered a better paid job in dependent employment. From the economic perspective, this decision does not appear to be a rational one, which is the reason why economists are struggling over this 'entrepreneurial income puzzle'. Insights from psychology are partly helpful to understand this puzzle, as entrepreneurs seem to value high non-pecuniary gains from self-employment, such as independence, being one's own boss, flexibility, and creativity. These non-monetary benefits are probably particularly responsible for entrepreneurs being on average more satisfied with their jobs as paid employees. In my research, I am interested in the relationship between entrepreneurship and well-being, both on an individual and a macro level. (By the way, I've just returned from Berlin where we had a kick-off meeting of the recently launched project — Financial and Institutional Reforms for an Entrepreneurial Society (FIRES) — which is funded by the EU and dedicated to fostering entrepreneurship and increasing well-being in Europe)

— Why were you interested in the topic of entrepreneurship? Have you been an entrepreneur yourself?

— During my PhD studies in Germany I was involved in an interdisciplinary project that was dedicated to the development of East Germany after the breakdown of socialism. Entrepreneurship as an important driver of regional economic growth was a big issue, of course. I realised that even a quarter of a century after the fall of the Berlin Wall entrepreneurship in East Germany is still quite different from how it is in West German regions. This is at least partly due to the socialist legacy which is still extremely strong. Entrepreneurship is about learning by observing and learning by doing, but intergenerational role models of entrepreneurship are still absent in many East German families. By the way, this is true for all transitional economies. Concerning myself, I am aware that entrepreneurship is a hard job and one needs a certain personality profile in order to become a successful entrepreneur. I am not over-optimistic as many entrepreneurs and know that this occupation is not my cup of tea... Though, I am now trying, together with friends and colleagues from all over the world, to set up a non-profit organization, which will be devoted to very 'entrepreneurial' challenges, such as our relationship towards future technologies and the impact they are going to have on our lives. In this sense, yes, I am an entrepreneur! 

— What was the basis for your research? I mean which countries or country did you focus on in this project?

— I already mentioned that my research on entrepreneurship and well-being constitutes one part of the FIRES project which focuses on the EU. We started with German data but plan to expand our research in other EU countries.

— How did your cooperation with the HSE start?

— The Higher School of Economics is well known in Europe and researchers from the HSE attend the same conferences as I do. So my cooperation with the HSE started exactly the same way as many others, namely when I started talking to people attending those conferences about my research.

— Have you been cooperating with other HSE or Russian researchers before? If yes, in what projects?

— Right now we are working together with Evgeny Zazdravnykh on a fascinating project on the long-term persistence of regional entrepreneurial activity in what is now Kaliningrad region.He recently changed to HSE from St. Petersburg State University. The names of further researchers involved in the project are Michael Fritsch and Michael Wyrwich, both of them from the Friedrich Schiller University Jena, Germany. It was a big challenge to collect the historical data from Eastern Prussia and then to match them with the contemporary indicators of regional economic activity. Having captured this, we are really curious to find out what it is that makes the level of entrepreneurship there persist, despite destructions in WW2 and several massive institutional changes that occurred afterwards.

— How would you compare living and working in Germany with life and work in Russia? 

— Such a comparison is not easy. While important universities in Germany are typically based in the so called university towns (100 to 200 thousand residents) where the university is the core of almost everyone's life, the situation in Russia is the opposite. Here universities are located in big cities and, hence, researchers and students enjoy all the advantages of living in a megapolis including a rich offering of cultural events, broader networks, or simply the proximity to an airport!

Anna Chernyakhovskaya, specially for HSE News service