The interaction of entrepreneurship and institutions
AbstractPrevious research, notably Baumol (1990), has highlighted the role of insti-tutions in channeling entrepreneurial supply into productive, unproductive or destructive activities. However, entrepreneurship is not only influenced by institutionsâentrepreneurs often help shape institutions themselves. The bilateral causal relation between entrepreneurs and institutions is examined in this paper. Entrepreneurs affect institutions in at least three ways. Entrepreneurship abiding by existing institutions is occasionally disruptive enough to challenge the foundations of prevailing institutions. Entrepreneurs sometimes have the opportunity to evade institutions, which tends to undermine the effectiveness of the institutions, or cause institutions to change for the better. Lastly, entrepreneurs can directly alter institutions through innovative political entrepreneurship. As business entrepreneurship, innovative political activity may be productive or unproductive, depending on the incentives facing entrepreneurs.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal Journal of Institutional Economics.
Volume (Year): 7 (2011)
Issue (Month): 01 (March)
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Other versions of this item:
- Henrekson, Magnus & Sanandaji, Tino, 2010. "The Interaction of Entrepreneurship and Institutions," Working Paper Series 830, Research Institute of Industrial Economics.
- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- P14 - Economic Systems - - Capitalist Systems - - - Property Rights
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- Michael Fritsch & Sebastian von Engelhardt, 2010. "Who Starts with Open Source? Institutional Choice of Start-Ups in the German ICT Sector," Jena Economic Research Papers 2010-049, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Henrekson, Magnus & Stenkula, Mikael, 2009. "Entrepreneurship and Public Policy," Working Paper Series 804, Research Institute of Industrial Economics.
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