Institutions, Entrepreneurship, and Economic Growth: What Do We Know? And What Do We Still Need to Know?

Abstract

We review the literature that links institutions, entrepreneurship, and economic growth outcomes, focusing in particular on the empirics of the links between these. Most of this literature has an economics orientation, but we also review relevant literature from other social science and from management research. The review helps identify a number of conceptual, theoretical and empirical gaps, calling for further research. For example, the literature narrowly identifies entrepreneurship with start-ups and self-employment; does not theorize many potentially relevant inter-level links and mechanisms; and suffers from sample limitations, omitted variable biases, causality issues, and response heterogeneity. We argue that theories in management research, such as the resource-based view, transaction cost economics, and strategic entrepreneurship theory, can fill some of the conceptual and theoretical gaps.

Keywords: Entrepreneurship, judgment, the theory of the firm, institutional economics

JEL Classification: B53, D02, L26, O00, O40