Informal Institutions as Inhibitors of Rent-Seeking Entrepreneurship: Evidence From U.S. Legal History

Abstract

Rent-seeking entrepreneurship occurs whenever an entrepreneur expends resources on activities that benefit their firm while reducing overall economic efficiency. Since rent-seeking ultimately makes nations poorer, we need to know more about how institutions can discourage rent-seeking entrepreneurship. Using historical data from the Unites States, we explore how changes in judicial thinking altered individuals’ incentives to engage in rent-seeking entrepreneurship. Traditionally, entrepreneurship researchers interested in policy issues have paid little attention to changes in judicial thinking. We argue that entrepreneurship researchers who are interested in why levels of entrepreneurial dynamism vary over time should pay more attention to how judges think.

Fuzzy Methods in Entrepreneurship Research

“…The additional context provided by fuzzy-set theory could further advance knowledge on these topics. Other emerging topics that could benefit from a fuzzy method approach include research on unproductive or rent-seeking entrepreneurship (Litan & Hathaway, 2017;Smith & Brownlow, 2023) and corruption in entrepreneurship (Dejardin & Laurent, 2023).…”

Untitled

“…Empirical studies of informal institutions confi rm those institutions' role in many areas such as economic development (Aron, 2000;Casson, Della Giusta, Kambhampati, 2010;Cunningham, Dibooglu, 2020, pp. 166-175;Glaeser et al, 2004;Knack, Keefer, 1997;Lipsey, 2009;Tabellini, 2010;Williamson, 2009) but also in specifi c problems of effi ciency in certain areas, e.g., securing property rights (Williamson, Kerekes, 2011), response to shocks and disasters (Bentkowska, 2021;Paniagua, Rayamajhee, 2022;Rayamajhee et al, 2024;Storr, 2021), impeding or supporting entrepreneurship (Frølund, 2021;Nabisaalu, Bylund, 2021;Smith, Brownlow, 2022), income inequality (Chong, Gradstein, 2019), and informal economy expansion (Gërxhani, Cichocki, 2023;Odera, 2013;Webb et al, 2009). Nevertheless, the studies are confi ned to a narrow operationalisation of informal institutions and primarily relate to a single variable or a scant set.…”

Informal Institutions – Measurement and Comparison in European Countries

“…Empirical studies of informal institutions confi rm those institutions' role in many areas such as economic development (Aron, 2000;Casson, Della Giusta, Kambhampati, 2010;Cunningham, Dibooglu, 2020, pp. 166-175;Glaeser et al, 2004;Knack, Keefer, 1997;Lipsey, 2009;Tabellini, 2010;Williamson, 2009) but also in specifi c problems of effi ciency in certain areas, e.g., securing property rights (Williamson, Kerekes, 2011), response to shocks and disasters (Bentkowska, 2021;Paniagua, Rayamajhee, 2022;Rayamajhee et al, 2024;Storr, 2021), impeding or supporting entrepreneurship (Frølund, 2021;Nabisaalu, Bylund, 2021;Smith, Brownlow, 2022), income inequality (Chong, Gradstein, 2019), and informal economy expansion (Gërxhani, Cichocki, 2023;Odera, 2013;Webb et al, 2009). Nevertheless, the studies are confi ned to a narrow operationalisation of informal institutions and primarily relate to a single variable or a scant set.…”