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 institutions—entrepreneurs 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 InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 830.
Length: 31 pages
Date of creation: 19 Apr 2010
Date of revision:
Publication status: Published as Henrekson, Magnus and Tino Sanandaji, 'The Interaction of Entrepreneurship and Institutions' in Journal of Institutional Economics, 2011, pages 47-75.
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Entrepreneurship; Innovation; Institutions; Regulation; Self-employment;
Other versions of this item:
- Henrekson, Magnus & Sanandaji, Tino, 2011. "The interaction of entrepreneurship and institutions," Journal of Institutional Economics, Cambridge University Press, vol. 7(01), pages 47-75, March.
- 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-2010-05-02 (All new papers)
- NEP-CSE-2010-05-02 (Economics of Strategic Management)
- NEP-ENT-2010-05-02 (Entrepreneurship)
- NEP-REG-2010-05-02 (Regulation)
- NEP-SBM-2010-05-02 (Small Business Management)
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- Henrekson, Magnus & Stenkula, Mikael, 2009. "Entrepreneurship and Public Policy," Working Paper Series 804, Research Institute of Industrial Economics.
- 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.
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