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Institutional quality, conforming and evasive entrepreneurship

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  • Julien Hanoteau

    (KEDGE Business School
    Aix-Marseille Univ., CNRS, EHESS, IRD, AMSE)

  • Virginie Vial

    (KEDGE Business School
    Institut d’Asie Orientale (IAO, UMR CNRS 5062), ENS Lyon)

Abstract

In this article, we unpack Baumol’s (J Polit Econ 98(5):893–921, 1990) theory of entrepreneurship’s outcomes (productive, unproductive, and destructive) in a framework of failing institutions, considering that entrepreneurship is instead first characterized by two non-mutually exclusive types of behavior (conforming versus evasive). We hypothesize that the evasive activity (firm-level corruption) is undertaken as a second-best response to poor institutional quality, supporting the conforming activity. Using instrumental variable panel regression in the context of Indonesia, we evidence the mediating effect of bribing on the relation between local institutional quality and new business density, thus unveiling the real effect of institutional quality on entrepreneurship.

Suggested Citation

  • Julien Hanoteau & Virginie Vial, 2020. "Institutional quality, conforming and evasive entrepreneurship," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(1), pages 97-121, March.
    • Handle: RePEc:spr:eurasi:v:10:y:2020:i:1:d:10.1007_s40821-020-00151-z
    DOI: 10.1007/s40821-020-00151-z
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    More about this item

    Keywords

    Entrepreneurship; Institutions; Corruption; Mediation; Indonesia;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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