Entrepreneurship and regional development in Europe: a comparative, socio-anthropological case study in Germany and Spain

45 Richard Pfeilstetter: Entrepreneurship and regional development in Europe: A comparative, socio-anthropological case study in Germany and Spain ANTHROPOLOGICAL NOTEBOOKS 19 (1): 45–57. ISSN 1408-032X © Slovene Anthropological Society 2013 Entrepreneurship and regional development in Europe: A comparative, socio-anthropological case study in Germany and Spain Richard Pfeilstetter university of Seville, [email protected] Abstract This paper summarises the design, data and results of our research on the emergence and consolidation of forms of institutionalisation based on innovative entrepreneurial action in rural European territorial contexts. The investigation was conducted between the years 2006 and 2010. We present data obtained in two territorial references, the regions of Los Pedroches in Andalusia, Spain and Mühldorf in Bavaria, Germany. The paper explores the contributions of social anthropology to prevailing economic entrepreneurship theory by focusing on intangible, cultural variables that influence the implementation of local entrepreneurial initiatives. Presenting data from a case study of two European rural areas of different levels of economic development, the text argues that entrepreneurial research needs to incorporate qualitative data on the sociocultural preconditions of emerging innovative institutions. The research emphasises the need for a broader concept of entrepreneurial behaviour that is able to overcome the reductionist idea of firm creation, and presents a theoretical model for actor-based territorial development studies founded on the combined social theories of Niklas Luhmann and Pierre Bourdieu. KEYWORDS: entrepreneurship; anthropology of development; regional development Introduction The context from which our research emerged is the growing preoccupation of administration, academics, and politics with regard to the ways of measuring intangible or noneconomic variables in development processes. The growing criticism of the reduction of Gross Domestic Product as the only indicator of wealth has produced new ways of thinking about development, which has led to new concepts such as sustainable development or social capital. Meanwhile, nobody doubts the importance of incorporating sociocultural data for measuring grades of development and design of development strategies, but there is no consensus over the importance of sociocultural data or how to quantify and incorporate it. The popularity of social capital as a concept, as well as its wide variety of 46 Anthropological Notebooks, XIX/1, 2013 definitions and applications, illustrates this problem well (Pfeilstetter 2008). Our research offers an example for how to measure relevant socio-cultural data for development by employing anthropological fieldwork methodology. The consideration of social and cultural variables in development research gives increased importance to a perspective focused on actors. Recently, the entrepreneur has become one of the most popular key players responsible for socio-economic change in small territories. Other disciplines such as economics, sociology and psychology have already accumulated experience with entrepreneurship as a field of research (Shane & Venkataraman 2000); however, in social anthropology the term essentially only appears in combination with classical groups of interest or marginalised collectives like specific ethnic groups, gender studies, etc. (Pfeilstetter 2011). In contradistinction to this tendency, our research sustains a general concept of entrepreneurship and entrepreneurial behaviour, interested not only in the economic or psychological implications of the term. Another justification of our research lies in the emergence of development studies within Europe with a regional, comparative perspective. The European Union organises its rural development programs, the different successive LEADER programs, for example, focused on economically weak and strong regions within the national and continental contexts. This relatively new institutional scenario gives greater importance to research perspectives from below and beyond the nation-state. In this sense, our research overcomes the predominant focus on quantifiable taxes of development within and between political-administrative territories. In contrast, it is a comparative case study of local conditions and results of entrepreneurship between middle European and peripheral south European regions. Moreover, the current financial crisis in Europe elevates the importance of north-south comparison in development theory and practice. The theories of Bourdieu and Luhmann applied on actorbased regional development studies Our research dealt with three central concepts: the entrepreneur as a privileged agent for development, the region as a spatial reference capable of qualitative field work, and the idea of development itself as a particular type of social change. Next is a short but necessary reductionist overview on current discussions in social sciences related to these three topics. Special emphasis is given to how social anthropology and a theoretical model based simultaneously on Niklas Luhmann’s and Pierre Bourdieu’s social theory can supply new ways of thinking about entrepreneurship and regional development. The epistemological, basic research that justifies the convenience and congruence of such a theoretical model was the exclusive objective of a previous paper (Pfeilstetter 2012). Economically and psychological conceptualisations of the entrepreneur Entrepreneurship in specialised literature is mostly reduced to the creation of firms by individuals embedded in a politically liberal capitalist market environment (Austin, Stevenson &Wei-Skillern 2006). Not only had common sense led to this reductionist notion but 47 Richard Pfeilstetter: Entrepreneurship and regional development in Europe: A comparative, socio-anthropological case study in Germany and Spain also the predominance of economics and business administration as academic disciplines in entrepreneurship studies. Likewise, entrepreneurial behaviour is mainly described in specialised literature as being economically motivated, or the result of a special kind of personality, explored and reiterated by psychologically founded academic research. From a socio-anthropological point of view, human motivation in general and entrepreneurial behaviour in particular cannot be explained only by rational economic calculation or by psychological variables. Individual action has to be understood by attending to an analysis of the social and cultural environment, which works as a guideline for social behaviour. Therefore, the actor itself is a product and producer of this socio-cultural structure. Essentially, this is what one of the most influent sociologist of the last century, Pierre Bourdieu (1972), means with his habitus concept. The idea of territory as administrative space or community In contrast, studies on entrepreneurship mainly choose a spatial dimension that correlates with administrative categories for their investigation. Towns and cities, counties, states, and nations serve as geographic references in which entrepreneurial behaviour is located and registered. The advantages of what may be called the ‘nation-state administrative view’ on territory are the existence of statistical data, consequently the possibility of comparison between regions, and finally the possibility of avoiding difficult and always reproachable decisions on territories defined by distinct variables rather than legal national divisions of space (Allen, Masse & Cochrane 1998). The problem with this kind of space-conceptualisation is that it takes non-scientific, political categories for granted and applies them as objective categories. In contrast, we can find a community-based regional focus of entrepreneurship studies in specialised literature. Their concept of space relies on the idea of local societies, which constitute a microcosm of kinship, friendship, pertinence to a cultural community based on corporal and spatial proximity in neighbourhoods, quarters, districts, towns, villages, etc. The problem with this notion of space, predominant in many anthropological research settings, is the reification of community in order to obtain a coherent target for academic inquiries. This symbiosis between local society and space is impossible to sustain because empirical data always demonstrates multiple, socially constructed boundaries of ethnic groups (Barth 1969). Empiricism and academicism in development research Development, commonly understood as planned social change, is not only difficult to define but even more so to measure. The world’s largest institutions related to development politics, such as the World Bank or the United Nations, have pluralised their indicators, which had historically only taken into GDP account. The UN Human Development Index and the UN Agenda 21 are examples for this paradigmatic change: Commonly used indicators such as the gross national product (GNP) and measurements of individual resource or pollution flows do not provide adequate indications of sustainability. Methods for assessing interactions between different sectoral environmental, demographic, social and developmental 48 Anthropological Notebooks, XIX/1, 2013 parameters are not sufficiently developed or applied. Indicators of sustainable development need to be developed to provide solid bases for decision making at all levels and to contribute to a self-regulating sustainability of integrated environment and development systems (Agenda 21, paragraph 40.4). However, the new consensuses on the requirement of social, cultural and psychological variables to complete the material indicators for wealth have yet to establish any agreement on how to calculate grades of development today. Administrations and institutions related to development have established indicators and indexes on, for example, social capital or environmental issues and introduced them into their empirical, macro-structural, mathematical models on global or country based grades of development. The report by the United Nations Economic Commission for Europe on ‘Measuring sustainable development’ (2009) is a good example of such an approach. Academic experts on this, we may call them soft indicators of development, and generally criticise these holistic models in allusion to the complexity of social, cultural and environmental variables. While institutionalised development politics is in need of expertise and data to enable making decisions, even if there are still doubts about their validity, social scientists in the academic world can maintain a complete distance to development programs by merely criticising and evaluating the intervention done by others. Both actors, as we can see, have their specific way of conceptualising development in ways that have a great deal to do with their professional position. A theoretical model based on Luhmann and Bourdieu Facing this conceptual landscape, we decided to choose a macro-theoretical framework able to incorporate all of the three main theoretical issues underlying our research. Therefore, we decided to develop a theoretical model based on the social theories of Pierre Bourdieu and Niklas Luhmann. The first articulations of such a model had already been conducted in previous work (Nassehi & Nollmann 2004). Further developed and applied to our research topics, this larger theoretical framework promised to overcome several problems in actor-centred regional development studies. We conceptualised the idea of space or territory according to Bourdieu and Luhmann’s theories of social fields and systems. Under this perspective, territoriality is no longer solely a question of administrative, juridical limits nor a synonym for a community. Social fields and systems understand and think of space as a social construct constituted by self-referential communication and social positions within this space competing for specific forms of capital, e.g. money, power, fame, etc. Moreover, the agency in the form of the entrepreneur is conceptualised in a more abstract term: Habitus as a personality formed by and oriented towards social structure. This is, put otherwise, socialisation as a continual process of interaction between agency, and structure. This is a theoretical foundation for a distinct approach on entrepreneurship. Ultimately, we think of development not as a cumulus of data on material and non-material indicators at a macro-structural level. Rather, we conceptualise development according to the idea of conflict articulated by Bourdieu: social change is a conflict (as a sociological category) between central and 49 Richard Pfeilstetter: Entrepreneurship and regional development in Europe: A comparative, socio-anthropological case study in Germany and Spain peripheral positions within a social field. Therefore, innovative entrepreneurial behaviour leads to the development of a region as a result of actors (individuals and groups with certain socialised habitus) that create dissent among local social and cultural settled ways of thinking, speaking and acting. We can say that communication in Luhmann’s sense is fundamental to society and subsequently the tool for social change. Figure 1: Combined theoretical model from Bourdieu and Luhmann applied on agency based regional development studies In Figure 1, we visualised the theoretical model underlying our research. We recognise three constitutive, related dimensions of our research and different grades of theoretical abstraction within these dimensions. Our research design decided to opt for the most general categories in order to overcome some of the theoretical difficulties with classifications used ordinarily in actor-based regional development studies. Qualitative and comparative research design in two rural European regions Using this model, our research defines three main research objectives: 1) social and cultural practices underlying emergence and institutionalisation of local innovative initiatives; 2) the socio-cultural conditions under which these processes take place; 3) grades of impact on the local social and cultural structure accompanying the consolidation of new organisations. For an empirical reference, we decided to analyse rural regions in Europe that had been targeted by European development programs. These regions are particularly salient for development research because of their underdevelopment in relation to their immediate national and regional environment. At the same time, a direct comparison between these regions enables us to compare an economically strong, developed rural region with a weak rural region, both of which are located within a common socio-political- juridical and economical context, in this case the European Union and the euro area. We have opted to focus on southern Bavaria, the strongest area within Germany, the strongest 50 Anthropological Notebooks, XIX/1, 2013 European economy and a central European region, and compare it with one of the weakest developed regions in Europe, i.e. southern Spain, particularly northern Andalucía. The regions of Los Pedroches and Mühldorf were selected as the scenarios for our research because they fulfilled all of these criteria. At the same time, there was the practical possibility for prolonged residence, indispensable for anthropological fieldwork, in both regions (see map one and two). Figure 2: Political maps of Spain (left) and Germany (right). In dark the respective regions of Los Pedroches and Mühldorf Our empirical research was conducted in four intervals between May 2007 and December 2010 both in Germany and Spain. We applied three principle research methodologies: as a first step, we conducted quantitative research of secondary data in both territories to obtain an approximate knowledge of the specific territorialised conditions of social structure, local culture, economy, politics, population, geography, history etc. General non-directive interviews where organised with key actors of both regions in the fields of religion, economy, politics, and civil society, to name a few. Next, in order to understand the motivations for entrepreneurial action that lead to the consolidation of innovative institutions, we performed an intensive case study of twenty-four initiatives, twelve from each region. As third and fourth steps, we analysed the consolidation of the initiatives in relation to their own territorial context and then compared to the territorial counterpart that we have paired. Both steps drew upon the theoretical comparative analysis from data obtained in the previous stages of our research. In Figure 3, we visually summarise our research design. It illustrates the relation between methodology, empirical references and the different types of data we produced. In conjunction with Figure 1, we can consider the theoretical foundation of our research design. 51 Richard Pfeilstetter: Entrepreneurship and regional development in Europe: A comparative, socio-anthropological case study in Germany and Spain Figure 3: Research design and methodological model Empirical data on entrepreneurship and development in Spain and Germany By analysing secondary data on general structural conditions in both territories, we identified fields of differences and similarities between the two regions. Consequently, we could then compare the entrepreneurial behaviours to obtain generalisable knowledge about rural development in Europe throughout emerging innovative organisations. Rural regions in Europe can be understood as a socio-geographic variable between the community and the state. The Spanish-German example shows that the administrative structure of the member states is not always comparable due to different geographic scales and different competencies assigned to these regions. The Nomenclature of Territorial Units for Statistics (NUTS) utilised by the European Union makes note of this inability: For practical reasons to do with data availability and the implementation of regional policies, the NUTS nomenclature is based primarily on the institutional divisions currently in force in the Member States (normative criteria)…. NUTS excludes specific territorial units and local units in favour of regional units of a general nature (European Commission 2010) The Spanish mancomunidad is hardly articulated as an administrative structure; yet, in the specific case of Los Pedroches it has both strong socio-cultural as well as ecological significance. The German Landkreis is a historically consolidated political and administrative level. However, in the case of Mühldorf, we believe Upper Bavaria represents a more relevant socio-cultural sphere for the population. This is mainly because Mühldorf does not represent a valid criterion for ecological or historical classification of space. This incongruence between the two cases leads to distinct possibilities and restrictions for entrepreneurship within these socio-geographical environments. Generally, we could say that strong, low-scale administrative articulation on a regional level, as in the 52 Anthropological Notebooks, XIX/1, 2013 German case, as well as cultural and ecologically grown regional identification, as in Los Pedroches, is an essential resource for the emerging institutionalisation of new ideas for the entrepreneur. When we compare the political conditions between both territories, it is necessary to note that entrepreneurial activity in Mühldorf as in Los Pedroches must deal with local and regional governments that have been invariant for decades. Political power is reproduced within the same parties and people over long periods of time, which explains the need for good networking among entrepreneurs, who need institutional support for the creation of new institutions. Ideological orientations of “left” and “right”, progressive or conservative in local governments, in fact, have little importance on local politics. Taking into account the macro-socio-geographical conditions of rural entrepreneurship in Europe, our comparative case study shows the difference between core and peripheral positions. These spatial positions largely determine the demographic and economic development in rural areas. Meanwhile, the local self-perception of the populations in both regions is that of the “countryside”, suggesting that they are less developed in relation to the different urban scales of reference. Mühldorf, situated in the centre of Europe and within the economically strong, developed south of Germany relies on positive demographic development, plain employment tax policies, and mainly distributes its work force in industry and services. In contrast, Los Pedroches is part of the peripheral south of Europe, is located in historically underdeveloped Andalusia, and has had to support a rural exodus in its recent history. A quarter of the active population is unemployed, and agriculture and livestock are the principle economic resources of the region. Both are European rural scenarios, yet they produce different expectations, possibilities, and ways of understanding innovation. By analysing the self-perception of both regions that is promoted by the administration, represented by major institutions and cultivated by the population, we found that in the German case the identification as “rural” comes in direct opposition to the urban surrounding. Mühldorf recognises the advantages of its countryside lifestyle and its geographic proximity to urban surroundings. Thus, Mühldorf understands its capacity for development largely in the relation between urban and rural structure. In the Spanish case, proximity to urban centres does not exist, and rurality in this way is a fact, not a development strategy. In Los Pedroches, local ecological and cultural elements are used as a resource for tourism and commercialising food products and constitute the main driving force for local identification and institutionalised promotion of the region. Taking a look at the institutions dedicated to the promotion of entrepreneurship in its communities, the German case shows us the existence of a system of political, administrative and associative self-organisation. Three principal actors exist to offer logistical support for entrepreneurs: elected regional government, national administration at the regional level, and professional organisations. In the Spanish case by contrast, we see a less strengthened professional network, the absence of a regional government, and a strong municipal articulation of local politics. Next, we will consider these distinct entrepreneurial environments in order to present the data related to our case study of concrete initiatives and their processes of consolidation. The results show differing innovative impacts on the social and economic 53 Richard Pfeilstetter: Entrepreneurship and regional development in Europe: A comparative, socio-anthropological case study in Germany and Spain structures of each location. However, we would first like to present some general observations on the actors of institutionalised innovation in both territories. Our case study showed that most of the entrepreneurs had accumulated work experience before they took the decision to create a new institution. This contrasts with the common assumption that the typical entrepreneur is a young individual. Most of the emerging institutions that we analysed were managed by individuals with a family and either living or working experience in more than just one place. Therefore, they commonly returned to their places of origin or are new residents of the region, which can be attributed to various, mainly personal but sometimes also economic, reasons. Entrepreneurs in our case study have a high level of formal education, are actively involved in local and regional public life (in culture, sports, politics, etc.), and represent a lifestyle more common to modern urban life than to the idea of local settled traditional rural attitude. The entrepreneurs we got to know both in Andalusia and Bavaria had high communicative and empathic capacities. For this reason, they are able to interact with different social systems, whether academic, politic, administrative or economic. In the end, we could distinguish two main types of living circumstances that are favourable for entrepreneurship. First, we encountered the new institution in the form of family project that is formed and sustained by a group of people who are related through economic ties and often associated with one or two households, for example a family business. This includes new businesses initiated by children of families with an already settled business. The second setting that we established is the female entrepreneur who, once finished with maternity leave and its subsequent interruption of the professional career, searches for a self-satisfying occupation that is compatible with family life or offers a means of self-realisation. In each of our cases in both Germany and Spain, entrepreneurship within the familiar context represents a general strategy for confronting subsistence. Individuals and families traditionally related to firm creation do not tend to perceive themselves as entrepreneurs. Thus, the creation of a new institution is not an explicit decision, rather more of a “normal” way of life. This data confirmed the idea of entrepreneurship is a specific socialised and non-reflexive habitus. Our theoretical model for examining the various forms of entrepreneurship is upheld when we consider the economic and sociocultural stimulation for entrepreneurship that exists in each region. Entrepreneurship creates new products and services for the region. Likewise, it is an indispensable tool for control and improvement of public politics. Additionally, entrepreneurship stimulates public life by articulating and channelling different preoccupations of local civil society. Some of the initiatives of greater cultural, social and economic impact from a development point of view are unique and non-lucrative initiatives, however. For instance, the cases of the blogger-entrepreneur and the civic platform for improving public transportation infrastructure in Los Pedroches shows that at times these forms of entrepreneurial activity do not conform to traditional theories and definitions of entrepreneurship. The impact that entrepreneurship has on the local socio-economic structure depends on the general complexity of the territory. In the Spanish case, we could see that a less complex structure of firms and associations, as well as low population density, leads