Institutional barriers to productive public-sector entrepreneurship

Abstract

Purpose The purpose of this paper is to outline barriers to public-sector entrepreneurship and explore the impact of those barriers on population shifts within the USA. Design/methodology/approach This paper lays out five specific barriers to public-sector entrepreneurship: barriers to entry and exit for consumers and producers, increased centralization and concentration in government, the lack of residual claim amongst public-sector actors, the rise of public-sector union membership and increasingly uncompetitive elections. The paper then assesses the impact of each of these barriers on population and production changes within the USA from 2010 to 2017. Findings Those state governments with limited barriers for productive public-sector entrepreneurship are rewarded with faster growing populations. Specifically, states with higher incomes, less centralized spending, lower public-sector unionization rates and higher state credit ratings tend to experience the greatest levels of population growth. States with less centralized spending also experience the largest increases in gross state product per capita. Practical implications This paper offers practical applications for policy makers wishing to increase their tax bases, increase the standard of living for their constituents or increase the efficiency in production and distribution of government goods and services. In particular, this paper offers evidence that an improved credit rating carries the most economic significance for population gains. Originality/value To the best of the authors’ knowledge, this is the first paper to examine Tiebout effects from barriers to public-sector entrepreneurship in the USA. Researchers in fields including political science, economics, management and public policy have all contributed to our understanding of public entrepreneurship. And yet, there are still numerous barriers preventing productive public-sector entrepreneurship from occurring at an optimal level.

Public entrepreneurship literature from 2010 to 2019: A systematic review

“…Centralization and decentralization of government activates are also said to determine PE in localities (e.g. Beyes, 2015;de Andrade et al, 2016;Delabbio & Zeemering, 2013;Paik et al, 2018;Strow & Strow, 2018). Centralization of government leads to concentration of government power and resources on one region of government thereby limiting their entrepreneurial adaptability while decentralization, on the other hand, diffuse government resources and enhances interrelation among localities thereby encouraging PE (Rossiter& Smith, 2017).…”

Public sector entrepreneurship in South Africa

“…Risk taking from a public sector perspective highlights that public sector managers are more risk sensitive (Kearney et al , 2009). Others report that risk taking is “anathema” in the public sector and indicate that the lack of PSE activity is not due to a lack of incentives, but rather is due to the placing of risk-averse individuals into public employment (Bryson et al , 2017; Strow and Strow 2018). Furthermore, it has been argued that the cost and possible magnitude of being exposed to risk could result in disastrous consequences for the public at large or even the state as a whole and consequently it tends to be avoided (Kearney and Meynhardt, 2016).…”

“…Public sector entrepreneurship (PSE) is broadly theorised as a process that exists within public sector organisations that result in innovative activities such as the development of new and existing services, technologies, administrative techniques and new improved strategies (Kearney and Meynhardt, 2016; Morris and Jones, 1999). Strow and Strow (2018) point out that PSE is just one aspect of a broader good governance literature where knowledge on PSE has expanded with research conducted in fields diverse as political science, economics, management and public policy.…”

“…Expanding on EO research in the PSE domain is important since scholars have raised new and important research questions in an attempt to advance theoretical and empirical knowledge about the entrepreneurial behaviour on which EO is based (Covin and Lumpkin, 2011). Furthermore productive PSE is still far from manifesting itself at an optimal level as numerous barriers are prevalent (Strow and Strow, 2018), particularly in an African emerging market context (Urban, 2015).…”

Culture and Native American economic development

“…When institutions, formal or informal, guide individuals to engage in productive entrepreneurship, economic growth can take place (Baumol, 1990; Holcombe, 1998; Boettke and Coyne, 2003, 2009; Baumol and Strom, 2007; Strow and Strow, 2018; Lucas et al , 2018; Thanti and Kalu, 2018). However, entrepreneurship does not take place in a vacuum; culture shapes the way that economic development unfolds (Leeson, 2005, 2006; Williamson, 2009; Williamson and Mathers, 2011).…”