Entrepreneurship and second-best institutions: going beyond Baumol’s typology

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. ABSTRACT: This paper reconsiders the predominant typology pioneered by Baumol (1990) among productive, unproductive and destructive entrepreneurship. It is shown that the foundation of Baumol's classificatory scheme is the restrictive concept of first-best outcomes, and therefore it easily fails to appreciate the true impact of entrepreneurship in real world circumstances characterized by suboptimal institutions. We present an alternative way of generalizing the notion of entrepreneurship and show how and why it encompasses the Baumol typology as a special case. Our main distinction is between business and institutional entrepreneurship. We draw on Schumpeter and introduce the entrepreneur in an additional function: as a potential disturber of an institutional equilibrium. Various subsets of institutional entrepreneurship are posited and discussed. It is shown that changing the workings of institutions constitutes an important set of entrepreneurial profit opportunities. An implication of this is that entrepreneurial efforts to reform or offset inefficient institutions can in many cases be welfare-improving. Terms of use: Documents inJEL Codes: L5; M13; O31; O17.

Tough on criminal wealth? Exploring the link between organized crime’s asset confiscation and regional entrepreneurship

“…Most previous studies used formal models or qualitative evidence (Dixit 2007;Leeson 2007a, b). To our knowledge, this work is the first econometric study that indirectly shows that, under certain conditions, activities which at first glance appear to be obvious examples of non-productive entrepreneurship can provide a second-or third-best substitute for inefficient institutions (Douhan and Henrekson 2010). The idea that confiscation of organized crime's operational assets may, in some circumstances, increase the degree of uncertainty faced by economic actors and discourage their productive entrepreneurial efforts represents a provocative intuition worth further reflection by those interested in institutions and entrepreneurship.…”

“…Even though criminal organizations do so by exercising coercion and threat, extorting payments for the services they provide (Vaccaro 2012), their intervention might facilitate social and economic exchanges when the state is incapable of upholding law and order (Greif et al 1994;Dixit 2007). In such Hobbesian situations, organized crime can stabilize and make the market environment of productive activities more predictable (Douhan and Henrekson 2010). Weakening governance provided by private-order institutions through confiscation of operational assets might engender uncertainty that can reduce founding rates.…”

Linking firm characteristics to perceived important social factors for entrepreneurial activity

“…Scholars link entrepreneurship (Stenholm et al, 2013) with institutions (Baumol, 1990;North, 1990;Sobel, 2008) by arguing that institutional environment, consisting on regulatory framework, legislation and social norms, creates the proper circumstances for adults to make decisions, which is vital in entrepreneurial cognition (Zajkowski & Domańska, 2019;Pinho, 2017;Raza et al, 2018;Sobel, 2008). As Douhan and Henrekson (2010) claim, institutional environment possess the power to determines whether an activity is productive, unproductive or destructive. This lead to the fact that business activity is affected by institutions (Draskovic et al, 2017).…”

Análisis bibliométrico de la influencia de la corrupción y la regulación en la actividad emprendedora

“…Para poder explicar el porqué de estas diferencias entre países, y debido a la imposibilidad de abordar la situación a través de los modelos de crecimiento económico tradicionales, basados en la acumulación de factores de producción, aparecen una serie de trabajos que ayudados de distintos indicadores para medir las instituciones, persiguen el objetivo de mostrar el origen de las diferencias de desarrollo económico (Fabro & Aixalá, 2009), señalando la relación causa efecto directa de la estructura de incentivos (instituciones) en el crecimiento económico (Douhan & Henrekson, 2010). Así, "la infraestructura institucional es un factor fundamental para explicar el nivel de desarrollo económico.…”