Productive and Destructive Entrepreneurship in a Political Economy Framework
AbstractRecent research has highlighted the role of institutions in channeling entrepreneurs into activities with positive or negative effects on overall productivity. Embedding central elements from these theories into a political economy framework reveals the bilateral causal relation between entrepreneurs and institutions. Core features of the entrepreneur force us to view its effects on institutions as more than mechanic general equilibrium adjustments. Three analytically separate channels of influence are isolated, analyzed and exemplified. Entrepreneurs influence formal economic institutions through direct involvement in politics, by using their entrepreneurial talent to wield de facto political power and by altering the effect of formal institutions. We propose a parsimonious framework that incorporates these effects as well as the role of institutions in channeling entrepreneurial talent. We use examples from modern history as a real-world context to illustrate our framework.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 761.
Length: 23 pages
Date of creation: 26 Aug 2008
Date of revision:
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Entrepreneurship; Innovation; Institutions; Regulation; Self-employment;
Find related papers by JEL classification:
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-31 (All new papers)
- NEP-ENT-2008-08-31 (Entrepreneurship)
- NEP-POL-2008-08-31 (Positive Political Economics)
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