The interaction of entrepreneurship and institutions

Abstract

Previous research, notably Baumol (1990), has highlighted the role of institutions in channeling entrepreneurial supply into productive, unproductive or destructive activities. However, entrepreneurship is not only influenced by institutionsentrepreneurs often help shape institutions themselves. The bilateral causal relation between entrepreneurs and institutions is examined in this paper. Entrepreneurs affect institutions in at least three ways. Entrepreneurship abiding by existing institutions is occasionally disruptive enough to challenge the foundations of prevailing institutions. Entrepreneurs sometimes have the opportunity to evade institutions, which tends to undermine the effectiveness of the institutions, or cause institutions to change for the better. Lastly, entrepreneurs can directly alter institutions through innovative political entrepreneurship. Like business entrepreneurship, innovative political activity may be productive or unproductive, depending on the incentives facing entrepreneurs.JEL Codes: L5; M13; O31; P14.

Untapped Riches of Meso-Level Applications in Multilevel Entrepreneurship Mechanisms

“…Nearly all of the existing research on top-down entrepreneurial mechanisms ("ABC" research) is about formal institutions -such as legal systems, tax policies, regulations, and property rights -influencing individual aspirations and entry in entrepreneurship (Henrekson & Sanandaji, 2011). In these types of analyses, formal institutions have been most thoroughly studied, since these are arguably the most uniformly explicated in the literature (North, 1990;Williamson, 2000) and also easier to identify and measure across contexts and over time (Andersson & Henrekson, 2014).…”

Entrepreneurship and Institutions: A Bidirectional Relationship

“…We will argue that institutional change is endogenous [Eggertsson, 2005] and that the institutional framework does not merely direct entrepreneurs' actions; entrepreneurs also influence the workings of that framework, whether through "regular" business activity, institutional entrepreneurship, or evasive methods [Henrekson and Sanandaji, 2011]. In exploring both sides of the interaction, we ask: How does the institutional framework influence entrepreneurship, and how do entrepreneurs, in turn, influence the emergence and evolution of institutions?…”

The entrepreneurship of host cities of the Olympic Games – Between success and social destruction

“…Numerous authors have already made their attempts to assess economic and social results of such mass events as the Olympic Games [10][11][12][13][14][15][16][17][18]. Considering the scale of those events, it has been so far impossible to provide precise information on the gain and loss they generate.…”

“…The presented article refers to three definitions: a definition of productive entrepreneurship, which (as opposed to Baumol's [1], and Desai and Acs's [2] approach) exerts a positive net impact on the GDP of the state and contributes to social welfare [3,10]; a definition of destructive entrepreneurship, which comes in line with Baumol [1], and Desai and Acs's [2] considerations and exerts a negative net impact on the GDP of the state, as for instance rent seeking; a definition of socially destructive entrepreneurship which is assumed in accordance with the presumptions suggested by Sautet [5], namely: involvement in a zero-sum or negative-sum game, rent seeking or theft.…”