Public Entrepreneurship and the Economics of Reform

Journal of Institutional Economics, Forthcoming

24 Pages Posted: 30 May 2006

See all articles by Jan Schnellenbach

Jan Schnellenbach

BTU Cottbus-Senftenberg, Institute for Economics, Chair for Microeconomics; Walter Eucken Institute


Public entrepreneurship is commonly understood as the outcome of the activities of a Schumpeterian political innovator. However, empirical research suggests that changes to a more efficient economic policy, even if it is known and technically easy to implement, are usually delayed. This is difficult to reconcile with Schumpeterian notions of public entrepreneurship. In this paper, it is argued that the attempt to transfer a Schumpeterian approach to the public sector is fundamentally flawed. Institutional checks and balances that characterise most modern liberal democracies make the strategy of bold leadership an unlikely choice for an incumbent. If change occurs, it occurs normally as a response to the fact that the status quo has become untenable. From a normative point of view, it is argued that if public entrepreneurship nevertheless occurs, it will often be associated with unwanted consequences. A dismantling of formal institutional checks and balances is therefore not reasonable.

Keywords: public entrepreneurship, political innovation, reform processes

JEL Classification: H11, H40, H77

Suggested Citation

Schnellenbach, Jan, Public Entrepreneurship and the Economics of Reform. Journal of Institutional Economics, Forthcoming, Available at SSRN:

Jan Schnellenbach (Contact Author)

BTU Cottbus-Senftenberg, Institute for Economics, Chair for Microeconomics ( email )

Erich-Weinert-Str. 1
Cottbus, 03046


Walter Eucken Institute ( email )

Goethestr. 10
Freiburg, 79100


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