Bosnia and Herzegovina is a global poster-child of political, social, and even religious post-conflict divisions. They have been entrenched by the ethnically-based power-sharing peace agreement which ended the 1992-1995 war. Similarly, the country’s economy is ethnically divided at a macro level. However, a radically different picture emerges at the grassroots. In some areas where different ethnic groups live in proximate albeit segregated communities, inter-ethnic economic interactions have been a norm since the conflict ended in 1995. Moreover, the economic shock caused by the Covid-19 pandemic in 2020 has further intensified inter-ethnic collaboration. How can this puzzle of inter-ethnic economic interactions in the context of the country’s deep ethnic divisions be explained? We addressed this question from the perspective of pro-peace entrepreneurship operating in entrepreneurial ecosystems.
How business recovery doesn’t work
Peacebuilding theory and practice considers business recovery after conflicts to be fundamental for sustainable peace because it supports economic and social cohesion. The understanding is that inter-group interactions in generating economic value can improve relations among formerly antagonised groups, and restore social fabric damaged by war. Entrepreneurship as an activity to discover and exploit new business opportunities and new sources of value is the backbone of business revitalisation.
Therefore, to stimulate entrepreneurship, the priority is afforded to the elimination of barriers (institutional, regulatory, financial) either created or reinforced by war. In this vein, (re)activation of economic interactions among formerly antagonised groups is envisaged as a self-initiating process innate to business recovery. Understood as rational profit making agents, entrepreneurs can in theory thus ignore war-related inter-group divisions in their decision-making.
However, these mainstream explanations of positive effects of entrepreneurship overlook the enormity of the challenge of recovering and growing legal and productive economy so that it delivers peace dividends through inter-group economic collaboration. In fact, Bosnia and Herzegovina also demonstrates that as rational actors, economic actors have continued to exploit inter-ethnic interactions in the informal and illegal economy, undermining the country’s legal economy over the last three decades. To explain the peace-positive effects of entrepreneurship, a new theory is required. We need to look inside the black box of peace-positive entrepreneurship.
A narrow economic perspective on entrepreneurship has not been able to account for a variation in inter-group economic collaboration in the post-war economic recovery, thus providing only a partial explanation of the entrepreneurship peace-promoting potential. We argue and show through a path dependent analysis that inter-group collaboration can play a critical role in the (re)emergence of entrepreneurship in the aftermath of ethnic identity-driven conflicts, and in its development over time.
The social construction of an entrepreneurial ecosystem in Bosnia and Herzegovina
Approaching entrepreneurship from a community perspective, entrepreneurial ecosystems are conceived as a dynamic product of the interactions between social, societal, and geographic contexts that an entrepreneur engages with. From this perspective, cross-group interactions can be a critical resource that enables an entrepreneur to identify opportunities for business and to sustain those over time. In post-conflict situations there is heightened reliance on place and space assets, including local knowledge, pre-war experiences, physical proximity, and interactions between actors and institutions, to identify and act upon opportunities to (re)start and grow business.
The extent of an entrepreneur’s commitment to locality, her/his identity, attitudes, leadership, and perceptions, are key factors that explain how inter-group interactions are leveraged in the construction of an entrepreneurial ecosystem. All these dimensions display significant variation in entrepreneurial behaviour at the subnational level.
Entrepreneurs engage with the specificities of the local context and respond to it accordingly, as we show in two micro-economies in Bosnia and Herzegovina, Prijedor and Tešanj. In both cases, inter-ethnic interactions were key in the emergence and resilience of entrepreneurship that underpinned the recovery of local economies. This is despite the entrepreneurs’ responding differently considering the local conditions, defined by the experience of war, the local geography, and the local economies. For example, the returning refugee entrepreneurs belonging to the opposed ethnic group faced more restrictions than the entrepreneurs from the majority group who remained in the locality during the war. Conversely, in some instances, an entrepreneur’s expertise and leadership trumped ethnic identity considerations. Yet others felt indebted to the local inter-ethnic workforce from before the war to include all groups in business revitalisation after the war. This was primarily the pattern among the entrepreneurs active in the productive, foremost domestically-owned or managed-sector, who were able to leverage their local embeddedness and accumulated knowledge of local community and its resources to (re-)establish and develop market presence after the war.
Conclusion
We need a better understanding of how business recovers after conflict so that it advances inter-group collaboration and peacebuilding, with relevant policy implications. Economic liberalisation and other business environment-friendly economic reform policies may create business opportunities for a rational economic actor. But if, how, and which local business agents will act upon them depends on a host of factors that are in turn contingent on the entrepreneur as well as the location.
Facilitating peace-promoting entrepreneurship, and inter-ethnic collaboration along with it, requires policies that are suited to local contexts and based on recognition of the path-dependent nature of entrepreneurs’ responses and adaptation to war-affected situations.
This is a summary of the article “Tested by the COVID-19 economic shock: peace-positive entrepreneurship and intergroup collaboration in post-conflict business recovery.”
Vesna Bojicic-Dzelilovic
Dr. Vesna Bojicic-Dzelilovic is Senior Research Fellow at LSE IDEAS, and an Associate Fellow of the LSEE Research on South Eastern Europe at the Hellenic Observatory, both at the London School of Economics and Political Science (LSE). She is Co-director of UN Business and Human Security Initiative at LSE, a research and implementation programme which investigates private sector’s contribution to peace and development in the context of Agenda 2030. She specialises in the political economy of development and conflict, with a particular interest in the business, peace and development nexus, and the role of international aid in transitioning from armed conflict. Her geographic focus and field work is South East Europe and she has also studied from a comparative perspective Afghanistan, Syria and Colombia. Dr Bojicic-Dzelilovic has published in a range of academic journals including Review of International Political Economy, Journal of International Relations and Development, International Feminist Journal of Politics, co-edited six academic book volumes and advised World Bank, European Union, UNDP and national governments. Her latest publication (co-authored) “Assessing Peace and Social Impacts through Local Human Security Business Partnerships” is forthcoming in Business Horizons Journal. She holds PhD in Economics and MA in Development Economics.
Denisa Kostovicova
Denisa Kostovicova is Professor of Global Politics at the European Institute and the Lead of the LSEE Research on South Eastern Europe at the Hellenic Observatory, both at the London School of Economics and Political Science (LSE). She is a scholar of conflict and peace processes with a particular interest in post-conflict reconstruction and transitional justice. Professor Kostovicova is the author of Reconciliation by Stealth: How People Talk about War Crimes (Cornell University Press, 2023) and Kosovo: The Politics of Identity and Space (Routledge, 2005). She is co-editor of 8 volumes on reconciliation and transitional justice, post-conflict reconstruction and state-building, and transnationalism. Professor Kostovicova’s research has been funded by a number of prestigious grants, including those by the Leverhulme Trust, MacArthur Foundation and Arts and Humanities Research Council (AHRC), among others. Her work has been published in leading academic journals including American Political Science Review, International Studies Quarterly, Review of International Studies, Security Dialogue, and others. Professor Kostovicova currently directs a major research programme funded by the European Research Council, titled ‘Justice Interactions and Peace-building (JUSTINT).’ She has authored a number of policy papers on issues concerning Western Balkans’ European integration, post-conflict recovery and regional security. Her academic research and policy contributions have informed policy making at the EU, UN, and in the UK.
Fikret Čaušević
Fikret Čaušević is Professor of Economics and Finance at the School of Economics and Business, University of Sarajevo. From 1996 to 2007, Čaušević was a senior research fellow and deputy director at the Sarajevo Institute of Economics. During that period, he was closely associated with the United Nations Development Programme (2000-2003), the Urban Institute from Washington and the USAID (2004-2006), and with the Bosnian business sector (throughout that period). From 2002 to 2010, he was the South East Europe Faculty Development Visiting Fellow at the London School of Economics and Political Science. In the 2011/12 academic year, he was the Alpha Bank Visiting Fellow at St Antony's College, University of Oxford. Since 2018 Čaušević has been a corresponding member of the Academy of Sciences and Arts of Bosnia and Herzegovina. Over the last ten years, he has published the following research monographs: The Global Crisis of 2008 and Keynes's General Theory (Springer, 2014); Globalization, Southeastern Europe, and the World Economy (Routledge, 2015), A Study into Financial Globalization, Economic Growth, and (In)Equality (Palgrave Macmillan, 2017), Financial Globalization, Economic Power, and (In)Efficiency (Springer International Publishing: Palgrave Macmillan, 2020), and Deglobalization, Financial Inequality, and the Green Economy (Routledge, 2023).
