Entrepreneurship and Institutions

30 Pages Posted: 27 Jun 2007 Last revised: 3 May 2019

See all articles by Magnus Henrekson

Magnus Henrekson

Research Institute of Industrial Economics (IFN)

Multiple version iconThere are 2 versions of this paper

Date Written: June 25, 2007


In this paper entrepreneurs are defined as agents who bring about economic change by combining their own effort with other factors of production in search of economic rents. The institutional setup is argued to determine both the supply and direction of entrepreneurial activity. Four key institutions are explored more closely: property rights protection, savings policies, taxation and the regulation of labor markets. Institutions have far-reaching effects on entrepreneurship, and they largely determine whether or not entrepreneurial activity will be socially productive. Due to the responsiveness of entrepreneurship to the institutional setup it is maintained that in-depth analyses of specific institutions are required in order to further our understanding of the determinants of entrepreneurial behavior and the economic effects of entrepreneurship. The paper also demonstrates that it is problematic to use self-employment as an empirical proxy for productive entrepreneurship.

Keywords: Entrepreneurship, Industrial policy, Innovation, Institutions, Labor security, Property rights, Regulation, Self-employment, Tax policy

JEL Classification: H32, L5, L25, M13, O31, P14

Suggested Citation

Henrekson, Magnus, Entrepreneurship and Institutions (June 25, 2007). IFN Working Paper No. 707, Available at SSRN: https://ssrn.com/abstract=996807 or http://dx.doi.org/10.2139/ssrn.996807

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