Revolutions as Disrupting Despotism but Freeing Infrastructure: Initial Insights from State Entrepreneurial Financing During the Arab Spring
57 Pages Posted: 3 Nov 2016 Last revised: 23 Jan 2023
Date Written: March 5, 2022
Abstract
How do revolutions affect entrepreneurial financing? Prior studies argue that revolutions generate political uncertainty that decrease financing. Yet amidst the Arab Spring, there is evidence that state financing increased rather than decreased. Using a novel dataset collected during the Arab Spring in Tunisia and Egypt, our study argues that prior work has predominantly focused on how revolutions erode state despotic power (i.e., the degree to which the state can issue rules without consulting its citizenry). However, we argue that revolutions may also free state infrastructural power (i.e., the degree to which citizenry rely on state institutions for goods and services). We specifically find that firms founded during the revolution paid less bribes (“despotic-disrupting”), and informal firms received more state funding (“infrastructure-freeing”). In paying greater attention to state infrastructural power, this study brings more nuanced understanding regarding the role of revolutions on entrepreneurial activity. More generally, in studying how revolutions detach institutional carriers (e.g., state banks) from their dominant logic (e.g., authoritarian state logic), our study brings insights from political sociology to advance our understanding of institutions and entrepreneurship, especially amidst political turmoil.
Keywords: Revolutions, Institutions, Informality, Middle East, State, Entrepreneurship
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