EMCC European Monitoring Centre on Change

Romania: ERM comparative analytical report on emerging forms of entrepreneurship

  • Observatory: EMCC
  • Topic:
  • Published on: 21 March 2011



About
Country:
Romania
Author:
PhD Luminita Chivu
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The changes undertaken two decades ago in the economy of Romania have brought along major institutional and legal transformations. Among them, and as a dominant feature, was the sometimes spontaneous emergence of various forms of entrepreneurship, often benefitting from the requisite legal, financial and fiscal support. The topic of this research is utterly new, and has hardly enjoyed the attention of official or corporate statistics, or drawn the interest of academic theorists or the media. This explains why the dedicated writings or even references to this subject-matter are scarce, although entrepreneurship has flourished particularly since Romania’s accession to the European Union, on 1 January 2007.

The questionnaire

Part I: Public/policy discussion

General policy discussions and policy approach

Do the public/policy discussions specifically deal with the different forms of business activities, since when and for how long?

The beginnings of business initiatives and of new forms of entrepreneurship, specific for a market economy, go back to February 1990, when the centralised, state-owned economy and the political system in which it was rooted were abolished.

The Decree-Law 54/February 1990, regarding the establishment of businesses based on free initiative, defined the various types of businesses, including sole proprietorships.

The purpose of the Decree was to optimise the use of local resources of raw materials and supplies, and provide for a better use of labour force.

The Decree permitted duly registered freelances to hold a permanent salaried job.

The licensing of an independent entrepreneur was subject to a test of the applicant’s professional knowledge taken before a specialised board of examination.

The Decree was superseded by Act 507/2002, regarding the establishment and development of business activities by individuals. A subsequent piece of legislation, Act 300/2004, provided that individuals engaged in independent business activities, and duly licensed family business associations may not employ labour under employment contract for the activities for which they are licensed.

The Act indicated the procedure for licensing, and entry to the National Trade Register (Registrul Naţional al Comerţului, RNC).

Government Emergency Ordinance 44/2008, regarding business activities conducted by licensed individual entrepreneurs, one-person enterprises, and family companies, was meant to eliminate some of the contradictions detected during the application of Act 300/2004, simplify licensing and registration procedures, and stimulating the business environment to create new jobs.

Definitions are given for: the 'one-person enterprise' as being 'an unincorporated entity established by an individual entrepreneur'; 'sole proprietorship' as 'any individual duly authorised to conduct any type of business permitted by law, and making use mainly of his/her own working capacity', which is very popular and commonly known as a 'PFA' (persoană fizică autorizată – in Romanian); and the 'family company' as 'an unincorporated business venture, established by an individual entrepreneur together with his/her family'.

All these three types of entrepreneurship must be entered into the National Trade Register, without, however, being treated as legal persons.

According to law, a sole proprietor: may not hire labour or third parties by contract; may work as both sole proprietor and salaried worker; pays social security contribution, and is therefore entitled to receive pension and other benefits (unemployment, health insurance) from the social security fund.

A sole proprietor may not combine this capacity with that of the owner of a one-person enterprise.

An individual who establishes a one-person enterprise may also work as a salaried worker; benefits from pension and other social security rights; is liable for his obligations with the assets so engaged, and with his entire estate in case of insolvency; may hire labour by employment contract.

A family company may consist of two or more members of a family, who, each: may also be sole proprietors or owners of one-person enterprises; may, simultaneously, be salaried workers; benefits from pension and other social security rights. The company’s business is managed by a representative appointed under the constitutional deed.

The Ordinance gave a period of grace of one year to all the sole proprietors and family companies established under the previous legislation to opt for one of the three forms of entrepreneurship.

After the year was over, it was found that only 25% of the entrepreneurs had regulated their status according to the new legislation. This made the authorities extend the term by one more year, otherwise some 230,000 entrepreneurs should have been deleted from the records of the RNC.

The entrepreneurs were hesitant due to apprehensions caused by the economic crisis, but also by the new rules for the calculation and payment of income tax.

Considering the definitions of the various forms of entrepreneurship in Romanian law, the PFA looks very much like the equivalent of a sole proprietorship or 'one-person enterprise'.

If the sole proprietor is also a salaried worker, a retiree, or a student, then he could be assimilated to a 'part-time entrepreneur'.

In our view, the members of a family company could be assimilated to 'parallel entrepreneurs'.

There are also forms of entrepreneurship that roughly match the other, new, forms of enterprises: serial entrepreneurs and business transfers and successions, which, however, are not explicitly defined by Romanian law.

Table 1: Presence of the different emerging forms of entrepreneurship in the public debate
 

Yes, continuously since xx year? (Please indicate year)

Yes, on and off in the last 10 years

(Please indicate yes where it applies)

Yes, has been on the public agenda, but since xx year it is no longer part of the agenda (Please indicate year)

No, it has never been part of the public agenda

(Please indicate X where it applies)

One-person enterprises/self-employed/ sole proprietorships

1990

     
Part-time entrepreneurs

1990

     
Parallel entrepreneurs  

1995

   
Serial entrepreneurs  

1995

   
Business transfers and successions  

1995

   

For each of the entrepreneurship/business activities covered by policy discussions, which policy domains are they covered in? Please indicate with an ’X‘ where relevant.

Table 2: Policy domains engaged in the policy discussion of the emerging forms of entrepreneurship
 

Labour policies

Educational policies

Economic/Industrial policies

Innovation policies

Regional policies

Other (please specify)

One-person enterprises/self-employed/ sole proprietorships

X

X

X

X

X

 
Part-time entrepreneurs

X

X

X

X

X

 
Parallel entrepreneurs    

X

X

X

 
Serial entrepreneurs    

X

X

X

 
Business transfers and successions    

X

X

X

 

In which media and forum do the public debate and policy discussions about the different types of entrepreneurship take place?

Please indicate whether they are implicitly (e.g. publications are covering entrepreneurs in general with implicit implications for the different forms of entrepreneurs/business activities) covered and/or explicitly mentioned (for instance parallel entrepreneurs are explicitly mentioned in publications) in these publications

Table 3: Media and forums discussing the emerging forms of entrepreneurship
 

Public media such as newspapers and magazines incl. electronic media

Policy documents and analysis

Proposed legislation and/or business support schemes

Others, please specify

One-person enterprises/self-employed/ sole proprietorships

explicit

explicit

explicit

 
Part-time entrepreneurs

implicit

implicit

implicit

 
Parallel entrepreneurs

implicit

implicit

implicit

 
Serial entrepreneurs

implicit

implicit

implicit

 
Business transfers and successions

implicit

implicit

implicit

 

Specific topics to describe the different types of entrepreneurship

What has motivated the public debate?

Please specify for each of the five forms of entrepreneurship:

Table 4: What has motivated the public debate of the emerging forms of entrepreneurship

Type of Entrepreneurship

Motivator

One-person enterprises/self-employed/ sole proprietorships

Labour force employment and avoiding unemployment; broadening the taxation base; anti-crisis programmes; diminishing underground economy

Part-time entrepreneurs

Improvement of the business environment; elimination of inconsistencies; flexibility of the labour market

Parallel entrepreneurs

Competition, collusion practices

Serial entrepreneurs

Business development, business ethics

Business transfers and successions

Conflicts between a person’s business interests and public office; business ethics; transfer costs

What has been the focus of the policy discussion?

To help you answer question 5, we list some examples of key issues that could be addressed in the policy discussion:

Please specify for each of the five forms of entrepreneurship:

Table 5: The policy focus in the public debate within each of the emerging forms of entrepreneurship

Type of Entrepreneurship

Policy focus

One-person enterprises/self-employed/ sole proprietorships

Incentives for unemployed persons starting their own business; simplification of registration procedures

Part-time entrepreneurs

Regulate their social protection rights; encourage initiatives among youths and women

Parallel entrepreneurs

Transparency of business deals

Serial entrepreneurs

Stimulate business development; transparency of business deals

Business transfers and successions

Diminish the rate of illegal business and tax evasion; transparency of business deals

Has the public discussion resulted in a concrete outcome/impact?

Yes:

Please specify for each of the five forms of entrepreneurship:

Table 6: Outcome or impact of the public debate of the emerging forms of entrepreneurship

Type of Entrepreneurship

Outcome/Impact

One-person enterprises/self-employed/ sole proprietorships

Yes. Administrative procedures have been simplified and new regulations have been issued

Part-time entrepreneurs

Yes. Employment rate increased, including among youths, women, etc

Parallel entrepreneurs

Yes. New attitudes have been noticed among business persons

Serial entrepreneurs

Yes. They enjoyed access to grants and projects benefitting from European funding

Business transfers and successions

Yes. New regulations have been drafted regarding integrity rules, the business code of ethics, and access to funds for business transfers

Overall assessment

Within the last couple of years, to which extent has the public and policy discussion been more focused on the following different types of entrepreneurship compared to the business policy/entrepreneurship debate in general?

Table 7: Increased focus at the emerging forms of entrepreneurship?
 

To a low degree To a high degree

 

1

2

3

4

5

One-person enterprises/self-employed/ sole proprietorships      

X

 
Part-time entrepreneurs      

X

 
Parallel entrepreneurs  

X

     
Serial entrepreneurs  

X

     
Business transfers and successions  

X

     

Please list the main sources of information in the search for the above

Sources of information - selective

1. Legislation – The Lege4 software catalogue of Romanian legislation; the Explanatory Notes for projects of reglementations published on the site of the Romanian Government;

2. 'New Enterprises and the Entrepreneurship Profile in Romania', a periodical issued by the National Institute of Statistics(Institutul Naţional de Statistică, INS), Bucharest, various editions;

3. 'Subsistence Entrepreneurship and Projections of Economic Development Opportunities in Rural Areas of Western Mountains', Mihai Pascaru, Călina Ana Buţiu, Ionela Gavrilă-Paven, The 1 December 1918 University of Alba Iulia, 2007;

4. 'Preliminary Survey of Potential Entrepreneurship in the Mureş, Harghita and Covasna Counties, from a Regional and National Perspective', Gheorghe Zaman, Valentina Vasile, Daniela Antonescu, Florina Popa, and 'Entrepreneurship Among Women', Angela On, both prepared for the SOP HRD research theme 'Successful Entrepreneurship and Competitive Businesses', 2009;

5. 'Entrepreneurial Performance in the Real Economy of Romania', Mihail Dimitriu, Sedcom Libris Publishing House, Iaşi, 2009;

6. '1 st Report on EntrepreneurialActivities in Romania', Esteban Lafuente, Otilia Driga, Centre for Entrepreneurship & Business Research, WP01/2007, http://www.kfacts.com/uploads/File/WP012007.pdf;

7. '2nd Report on EntrepreneurialActivities in Romania', Esteban Lafuente, Otilia Driga, Centre for Entrepreneurship & Business Research, WP01/2009, http://www.kfacts.com/uploads/File/WP200901.pdf;

8. 'Female Entrepreneurship in Romania. Personal Features, and the Power of Entrepreneurial Models', Esteban Lafuente, Otilia Driga, Centre for Entrepreneurship & Business Research (CEBR), WP02/2009, http://www.kfacts.com/uploads/File/WP200902.pdf;

Programmatic documents:

1. 'The National 2005 – 2012 Multiannual Programme for the Development of Entrepreneurial Culture among Female Managing Staff in Small and Medium Enterprises';

2. 'Programme of Assistance to Business Transfers';

3. 'The National 2002 – 2011 Multiannual Programme of Assistance to Crafts and Folk Arts';

4. 'Annual Report on the Small and Medium-Sized Sector', various editions, published by the Ministry for Small and Medium-Sized Enterprises, Commerce, and Business Environment (Ministerul Întreprinderilor Mici şi Mijlocii, Comerţului şi Mediului de Afaceri) at http://www.animmc.ro/;

5. http://www.animmc.ro/, the site of the Agency for the Implementation of Projects for Small and Medium Enterprises (Agenţia pentru Implementarea Proiectelor şi Programelor pentru Întreprinderi Mici şi Mijlocii, AIPPIMM);

6. www.fonduristructurale.ro.

Periodicals like:

1. Ziarul Financiar, http://www.zf.ro;

2. Capital, http://www.capital.ro/;

3. Financiarul, http://www.financiarul.ro.

Part II: Standardised structural data

Which standardised business statistics are available covering the different forms of entrepreneurship/business activities (explicitly or implicitly, i.e. also data that could be used to describe these forms of entrepreneurship without being published with this specific objective/heading)?

Table 8: Availability of business statistics about the emerging forms of entrepreneurship
 

Type of data available

Indicate access to data by an ‘X’ in the first column

First published

Indicate year

Time series of data

(Biannually, annually, quarterly, monthly, once only, other)

Data source for the data

One-person enterprises/ self-employed

For sole proprietors PFA), individual enterprises, and family companies

Number of enterprises

X

1990

monthly

Recordings in the National Trade Register. 'Statistical synthesis', www.onrc.ro

Enterprises by branch (please specify which NACE code digit level is available)

X

1990

monthly

Recordings in the National Trade Register. 'Statistical synthesis', www.onrc.ro

Availability of regional data (please specify)

X

1990

monthly

Recordings in the National Trade Register. 'Statistical synthesis', www.onrc.ro

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

X

1990

monthly

Recordings in the National Trade Register. 'Statistical synthesis', www.onrc.ro

Economic performance e.g.:

Turnover

       

Exports

       

Employment

       

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

X

1996

Annually

'New Enterprises and the Entrepreneurship Profile in Romania', a periodical issued by the National Institute of Statistics(Institutul Naţional de Statistică, INS), Bucharest, various editions;

Number of discontinued enterprises, incl. bankruptcies –

X

1996

Annually

'New Enterprises and the Entrepreneurship Profile in Romania', a periodical issued by the National Institute of Statistics(Institutul Naţional de Statistică, INS), Bucharest, various editions (indicating rate of entities dissoluted one year after formation);

Survival rate of enterprises

X

1996

Annually

'New Enterprises and the Entrepreneurship Profile in Romania', a periodical issued by the National Institute of Statistics(Institutul Naţional de Statistică, INS), Bucharest, various editions (indicating rate of entities dissoluted one year after formation);

Others, specify:

       
Part-time entrepreneurs/ Part-time freelances

Number of enterprises

X

1996

Quarterly

'Household Labour Force Survey', AMIGO, INS, number of persons

Enterprises by branch (please specify which NACE code digit level is available)

X

1996

Quarterly

'Household Labour Force Survey', AMIGO, INS, number of persons

Availability of regional data (please specify)

       

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

       

Economic performance e.g.:

Turnover

       

Exports

       

Employment

       

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

       

Number of discontinued enterprises, incl. bankruptcies –

       

Survival rate of enterprises

       

Others, specify:

       
Parallel entrepreneurs

Number of enterprises

       

Enterprises by branch (please specify which NACE code digit level is available)

       

Availability of regional data (please specify)

       

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

       

Economic performance e.g.:

Turnover

       

Exports

       

Employment

       

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

       

Number of discontinued enterprises, incl. bankruptcies –

       

survival rate of enterprises

       

Others, specify:

       
Serial entrepreneurs

Number of enterprises

       

Enterprises by branch (please specify which NACE code digit level is available)

       

Availability of regional data (please specify)

       

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

       

Economic performance e.g.:

Turnover

       

Exports

       

Employment

       

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

       

Number of discontinued enterprises, incl. bankruptcies –

       

survival rate of enterprises

       

Others, specify:

       
Business transfers and successions

Number of enterprises

       

Enterprises by branch (please specify which NACE code digit level is available)

       

Availability of regional data (please specify)

       

Type of ownership of enterprises (sole propriety, limited company, publically listed company, etc)

       

Economic performance e.g.:

Turnover

       

Exports

       

Employment

       

Others: ___________

       

Sustainability:

Number of new enterprises (start-ups) by year

       

Number of discontinued enterprises, incl. bankruptcies –

       

survival rate of enterprises

       

Others, specify:

       

Is it possible to crosstab or merge the demographic data identifying the individual persons running any of the five forms of entrepreneurships/business activities with the company data specified in question 9 in a common database for analytical purpose?

No:

Table 9: Availability of demographic statistics about the entrepreneur within the emerging forms of entrepreneurship
 

Type of data available

Indicated access to data by an ‘X’ in the first column

First published

Indicate year

Time series of data

(Biannually, annually, quarterly, monthly, once only, other)

Data source for the data

One-person enterprises/ self-employed

Number of enterprises held by each entrepreneur/owner

       

Gender

       

Ethnicity

       

Civic status (married, single, children)

       

Age

       

Geographical location

       

Educational background (last registered education)

       

Current/previous employment of entrepreneurs (business experience)

       

Sector familiarity of the entrepreneur – branch/NACE

       

Working hours of the entrepreneur

       

Income of the entrepreneur

       

Other types of data (Specify):

       
Part-time entrepreneurs

Number of enterprises held by each entrepreneur/owner

       

Gender

       

Ethnicity

       

Civic status (married, single, children)

       

Age

       

Geographical location

       

Educational background (last registered education)

       

Current/previous employment of entrepreneurs (business experience)

       

Sector familiarity of the entrepreneur – branch/NACE

       

Working hours of the entrepreneur

       

Income of the entrepreneur

       

Other types of data (Specify):

       
Parallel entrepreneurs

Number of enterprises held by each entrepreneur/owner

       

Gender

       

Ethnicity

       

Civic status (married, single, children)

       

Age

       

Geographical location

       

Educational background (last registered education)

       

Current/previous employment of entrepreneurs (business experience)

       

Sector familiarity of the entrepreneur – branch/NACE

       

Working hours of the entrepreneur

       

Income of the entrepreneur

       

Other types of data (Specify):

       
Serial entrepreneurs

Number of enterprises held by each entrepreneur/owner

       

Gender

       

Ethnicity

       

Civic status (married, single, children)

       

Age

       

Geographical location

       

Educational background (last registered education)

       

Current/previous employment of entrepreneurs (business experience)

       

Sector familiarity of the entrepreneur – branch/NACE

       

Working hours of the entrepreneur

       

Income of the entrepreneur

       

Other types of data (Specify):

       
Business transfers and successions

Number of enterprises held by each entrepreneur/owner

       

Gender

       

Ethnicity

       

Civic status (married, single, children)

       

Age

       

Geographical location

       

Educational background (last registered education)

       

Current/previous employment of entrepreneurs (business experience)

       

Sector familiarity of the entrepreneur – branch/NACE

       

Working hours of the entrepreneur

       

Income of the entrepreneur

       

Other types of data (Specify):

       

Is the data freely accessible or does it require registration, payment and/or a special effort to access the data? Please explain the accessibility for each of the forms of entrepreneurs/business activities and datasets referred to above.

Information of this type is not available free of charge. It is subject to application, and to payment of fee, for all types of entrepreneurs.

Table 10: List of statistical sources about the emerging forms of entrepreneurship

List data source/dataset

Explain the accessibility

The National Trade Register (Oficiul Naţional al Registrului Comerţului, ONRC), since 1990

- data updated monthly regarding number of new entries as sole proprietors, individual enterprises, and family companies, by counties; number of new entries by economic sectors, with two digits of NACE

Free of charge, on line, at www.onrc.ro

- aggregated info on other particulars of entrepreneurs (gender, age, education, professional history, etc.)

Against fee

- entrepreneurs conducting multiple business

Against fee

2. National Tax Administration Agency (Agenţia Naţională de Administrare Fiscală, ANAF)

- data on revenues made by entrepreneurs, by types of business, sources and types of income, with 4 digit NACE classification, by gender, age group, geographical location, etc., since 1990

Against fee

- data on parallel entrepreneurs

Against fee

National Institute of Statistics, INS (annually, since 1996)

'New Enterprises and the Entrepreneurship Profile in Romania', survey  
- number of new enterprises, rate of new entries since 2001 up to date, for all Romania and by development regions

Against fee

- information aggregated by various other particulars of the entrepreneur

Against fee

'Romania Statistical Yearbook', INS  
- data on total number of private entrepreneurs, sole proprietors (PFA), and family companies, by types of economic activities (annually, since 1996)

Against fee

'Household Labour Force Survey', quarterly, since 1996  
- number of self-employed, by gender, age group, and area of residence

Against fee

Part III: Research

Please describe studies and research available nationally for each of the forms of entrepreneurs/business activities.

Table 11: List of studies and research about the emerging forms of entrepreneurship
 

List the references (author’s name, title of publication etc, year of publication, organisation)

A short summary of the contents (e.g. topic covered, methodology applied)

One-person enterprises/self-employed/ sole proprietorships

Part-time entrepreneurs

Esteban Lafuente, Otilia Driga, '1 st Report on EntrepreneurialActivities in Romania', WP01/2007, Centre for Entrepreneurship & Business Research, http://www.kfacts.com/uploads/File/WP012007.pdf;

Esteban Lafuente, Otilia Driga, '2nd Report on EntrepreneurialActivities in Romania', WP01/2009, Centre for Entrepreneurship & Business Research, http://www.kfacts.com/uploads/File/WP200901.pdf

This document examines the relationship between demographic and socio-cultural factors and entrepreneurial activities in Romania. To attain this goal the authors undertake a descriptive analysis using a robust Romanian data set provided by the Centre for Entrepreneurship & Business Research (CEBR) from 2006 and 2008. Using in parallel academic research, the main finding of the paper indicates that the presence of entrepreneurs in the individual’s family (Role-Models) is a determinant factor explaining the differences between individuals who are involved in pre start-up entrepreneurial activities as compared to those who are not. In addition, the results support that individuals take into consideration social aspects as factors that motivate the decision to be involved in entrepreneurial activities.

One-person enterprises/self-employed/ sole proprietorships

Part-time entrepreneurs

Esteban Lafuente, Otilia Driga, 'Female Entrepreneurship in Romania. Personal Features, and the Power of Entrepreneurial Models', WP02/2009, Centre for Entrepreneurship & Business Research (CEBR), http://www.kfacts.com/uploads/File/WP200902.pdf

The data used for this report come from the CEBR’s data stock on entrepreneurship for 2008. The study is based on information from interviews with a representative batch of respondents from Romania, with regard to their entrepreneurial plans or activities, as applicable. The initial data stock is built from the answers to the questionnaire distributed to 852 respondents. After processing, the relevant data were reduced to 626 respondents, 378 (60%) of them being males, and 248 (40%) females. The sample group covered the geographical distribution criteria provided by the EU Nomenclature of Territorial Units for Statistics, NUTS. The study examines entrepreneurship based on criteria like: individual features of respondents; socio-cultural factors; and business specifics.

One-person enterprises/self-employed/ sole proprietorships

Part-time entrepreneurs

Xxx -'New Enterprises and the Entrepreneurship Profile in Romania', survey, various editions, National Institute of Statistics (Institutul Naţional de Statistică, INS), Bucharest

Sums up the conclusions of annual inquiries into how new enterprises are established, and entrepreneurship rofile. It deals with both individual entrepreneurs (sole proprietors, one-person enterprises, family enterprises), and with incorporated businesses.

It provides data on: the entities’ legal status, size, location, scope of business, sources of capital, problems related to supply and demand, the personal features of the founder, the share of active entities, etc.

One-person enterprises/self-employed / sole proprietorships

Part-time entrepreneurs

Gheorghe Zaman, Valentina Vasile, Daniela Antonescu, Florina Popa, 'Preliminary Survey of Potential Entrepreneurship in the Mureş, Harghita and Covasna Counties, from a Regional and National Perspective', SOP HRD research theme 'Successful Entrepreneurship and Competitive Businesses', 2009

Prepared for the SOP HRD research theme 'Successful Entrepreneurship and Competitive Businesses'. In Part I, the study tackle theory and methodology matters (definition, substance, characteristics), measuring indicators, and factors that can influence entrepreneurship, etc.

In Part II, it contains an analysis of the economic potential of the three counties, the specifics of their business environment, the performance and competitiveness of the local businesses in the context of the current crisis.

Part-time entrepreneurs    
Parallel entrepreneurs    
Serial entrepreneurs    
Business transfers and successions    

PhD Luminita Chivu, Institute of National Economy, Romanian Academy

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