A retrospective analysis of shadow entrepreneurship in Soviet Russia and the USSR shows the uniqueness of the institutional foundations of this phenomenon. The presence of insurmountable institutional barriers to legal entrepreneurial activity in the USSR forced entrepreneurs to assess the “costs of illegality” in order to make decisions about the possibility of operating in the shadow sector. As a result, several forms of shadow business have developed in the USSR: small private shadow business, organized shadow business structures, and shadow business that pose a threat to public security. An analysis of the current situation shows that shadow business in the USSR was possible due to the spread of corrupt practices. It is noted that during the period of perestroika, the institutional framework for overcoming shadow entrepreneurship was not created. It is concluded that entrepreneurial policy should be aimed at reducing the “costs of legality”
