Entrepreneurship and Institutions: A Bidirectional Relationship

62 Pages Posted: 18 Feb 2017

See all articles by Niklas Elert

Niklas Elert

HFI, Institute of Retail Economics

Magnus Henrekson

Research Institute of Industrial Economics (IFN)

Date Written: February 17, 2017

Abstract

The interplay between entrepreneurship and institutions is crucial for economic development; however, the view that institutions determine the extent to which entrepreneurial activity is productive is only part of the story. We argue that causality is bidirectional, in that entrepreneurship is also, for better or for worse, one of the main drivers of institutional change. Through their actions, entrepreneurs have a fundamental influence on institutions, whether they abide by them, actively try to alter them, or evade them. Particular attention is given to evasive entrepreneurship, an entrepreneurial function which, until recently, has been an underappreciated and poorly understood source of innovation and institutional change. We argue that the influence of evasive entrepreneurship on the economic trajectories of societies is likely to only grow in the future.

Keywords: Economic development, Entrepreneurship, Evasive entrepreneurship, Innovation, Institutional change, Regulation

JEL Classification: L5, M13, O31, P14

Suggested Citation

Elert, Niklas and Henrekson, Magnus, Entrepreneurship and Institutions: A Bidirectional Relationship (February 17, 2017). IFN Working Paper No. 1153, Available at SSRN: https://ssrn.com/abstract=2919242

Niklas Elert

HFI, Institute of Retail Economics ( email )

Regeringsgatan
Stockholm
Sweden

Magnus Henrekson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
Grevgatan 34
Stockholm, SE-10215
Sweden
+46-8-6654502 (Phone)
+46-8-6654599 (Fax)

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