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Productive and Destructive Entrepreneurship in a Political Economy Framework

Author

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  • Douhan, Robin

    (Research Institute of Industrial Economics (IFN))

  • Henrekson, Magnus

    (Research Institute of Industrial Economics (IFN))

Abstract

Recent 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.

Suggested Citation

  • Douhan, Robin & Henrekson, Magnus, 2008. "Productive and Destructive Entrepreneurship in a Political Economy Framework," Working Paper Series 761, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0761
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    References listed on IDEAS

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    Cited by:

    1. Robin Douhan & Magnus Henrekson, 2010. "Entrepreneurship and second-best institutions: going beyond Baumol’s typology," Journal of Evolutionary Economics, Springer, vol. 20(4), pages 629-643, August.
    2. Herman Emilia, 2018. "Innovation and entrepreneurship for competitiveness in the EU: an empirical analysis," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 12(1), pages 425-435, May.
    3. Raymond J. March & Adam G. Martin & Audrey Redford, 2016. "The substance of entrepreneurship and the entrepreneurship of substances," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 5(2), pages 201-220, August.
    4. Zeynab Aeeni & Mehrzad Saeedikiya & Kamal Sakhdari & Vahid J. Sadeghi, 2025. "Blooming in the cracks: productive entrepreneurship amid institutional voids," Small Business Economics, Springer, vol. 64(4), pages 1723-1762, April.
    5. Khanh Hung DOAN, 2021. "The Relationship Between Entrepreneurship And National Competitiveness," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 30(2), pages 65-76, December.
    6. Chase, Sarah R. & Shepherd, Dean A., 2025. "Waves and rips: Abalone, entrepreneurial variants, and community functioning," Journal of Business Venturing, Elsevier, vol. 40(4).
    7. Christos Kalantaridis, 2014. "Institutional change in the Schumpeterian--Baumolian construct: power, contestability and evolving entrepreneurial interests," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 26(1-2), pages 1-22, April.
    8. Sameeksah Desai & Zoltán J. Ács & Utz Weitzel, 2015. "A Model of Destructive Entrepreneurship: Insight for Conflict and Postconflict Recovery," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 1, pages 3-23, Edward Elgar Publishing.
    9. Bylund, Per L. & McCaffrey, Matthew, 2017. "A theory of entrepreneurship and institutional uncertainty," Journal of Business Venturing, Elsevier, vol. 32(5), pages 461-475.
    10. Marcus Dejardin, 2011. "Entrepreneurship and Rent-Seeking Behavior," Working Papers 1112, University of Namur, Department of Economics.
    11. Jaroslaw Zietarski, 2018. "Legal destructive entrepreneurship in the modern economy," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 17(3), pages 339-350, September.
    12. Tran, Hien Thu & Santarelli, Enrico, 2018. "Successful Transition to a Market Economy in Vietnam: An Interpretation from Organizational Ecology Theory," GLO Discussion Paper Series 181, Global Labor Organization (GLO).
    13. Piotr Dominiak & Julita E. Wasilczuk, 2017. "Formal Institutions - the Source of Unproductive Entrepreneurship in Poland," GUT FME Working Paper Series A 44, Faculty of Management and Economics, Gdansk University of Technology.

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    JEL classification:

    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights

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