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Entrepreneurship and the Legal Form of Businesses: The Role of Differences in Beliefs

Author

Listed:
  • Gutiérrez Oscar

    (Universitat Autònoma de Barcelona – Business Department, Cerdanyola del Vallès, Barcelona, Spain)

  • Ortín-Ángel Pedro

    (Universitat Autònoma de Barcelona – Business Department, Cerdanyola del Vallès, Barcelona, Spain)

Abstract

Entrepreneurship has been considered a way to implement interpersonal authority, i. e., to convince other persons to use their resources in an alternative way to the optimal one in accordance with their beliefs. This paper presents a theoretical model that relates the above assumption with the following two questions: (i) how and why financial constraints can prevent the implementation of entrepreneurial projects; and (ii) how creditors’ priorities provided by the different legal forms of the business can reduce the financial requirements for implementing the firm. The attractiveness of such an explanation lies in its capacity to justify a wide array of features of firms (entrepreneur origin, property rights, authority, financial constraints and creditor priorities) from a single basic assumption: agents have different beliefs about how production should be organized.

Suggested Citation

  • Gutiérrez Oscar & Ortín-Ángel Pedro, 2016. "Entrepreneurship and the Legal Form of Businesses: The Role of Differences in Beliefs," Review of Law & Economics, De Gruyter, vol. 12(1), pages 119-151, March.
    • Handle: RePEc:bpj:rlecon:v:12:y:2016:i:1:p:119-151:n:5
    DOI: 10.1515/rle-2014-0027
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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