IDEAS home Printed from https://ideas.repec.org/p/hhs/iuiwop/0716.html
   My bibliography  Save this paper

The Political Economy of Entrepreneurship

Author

Listed:
  • Douhan, Robin

    (Research Institute of Industrial Economics (IFN))

  • Henrekson, Magnus

    (Research Institute of Industrial Economics (IFN))

Abstract

We outline a politico-economic growth system centered around the entrepreneur. By defining entrepreneurs in relation to economic rents we are able to develop a more general theory comprising central aspects of research within the fields of entrepreneurship/small business, public choice and new institutional economics. The entrepreneurial function is shown to depend crucially on the existing institutional framework. We also point to the necessity of viewing institutions as endogenously influenced by entrepreneurs. A typology of entrepreneurship is developed to further our understanding of the bilateral effects between institutional context and entrepreneurial activity. We use developments in modern history as a real-world context to substantiate our framework. Particular attention is devoted to the effects of enforcement of property rights and taxation, two of the most prominent institutions in the literature.

Suggested Citation

  • Douhan, Robin & Henrekson, Magnus, 2007. "The Political Economy of Entrepreneurship," Working Paper Series 716, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0716
    as

    Download full text from publisher

    File URL: https://www.ifn.se/Wfiles/wp/wp716.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
    2. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.
    3. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 465-490.
    4. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    5. Magnus Henrekson, 2005. "Entrepreneurship: a weak link in the welfare state?," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(3), pages 437-467, June.
    6. Oriana Bandiera, 2003. "Land Reform, the Market for Protection, and the Origins of the Sicilian Mafia: Theory and Evidence," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(1), pages 218-244, April.
    7. Daron Acemoglu & James A. Robinson, 2008. "Persistence of Power, Elites, and Institutions," American Economic Review, American Economic Association, vol. 98(1), pages 267-293, March.
    8. Steven J. Davis & Magnus Henrekson, 1997. "Industrial Policy, Employer Size, and Economic Performance in Sweden," NBER Chapters, in: The Welfare State in Transition: Reforming the Swedish Model, pages 353-398, National Bureau of Economic Research, Inc.
    9. Sharon A. Alvarez & Jay B. Barney, 2007. "The Entrepreneurial Theory of the Firm," Journal of Management Studies, Wiley Blackwell, vol. 44(7), pages 1057-1063, November.
    10. William B. Gartner, 2001. "Is There an Elephant in Entrepreneurship? Blind Assumptions in Theory Development," Entrepreneurship Theory and Practice, , vol. 25(4), pages 27-39, July.
    11. Feldstein, Martin S & Slemrod, Joel, 1980. "Personal Taxation, Portfolio Choice, and the Effect of the Corporation Income Tax," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 854-866, October.
    12. Simeon Djankov & Yingyi Qian & Gérard Roland & Ekaterina Zhuravskaya, 2006. "Entrepreneurship in China and Russia Compared," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 352-365, 04-05.
    13. William M. Gentry & R. Glenn Hubbard, 2000. "Entrepreneurship and Household Saving," NBER Working Papers 7894, National Bureau of Economic Research, Inc.
    14. Gartner, William B., 1990. "What are we talking about when we talk about entrepreneurship?," Journal of Business Venturing, Elsevier, vol. 5(1), pages 15-28, January.
    15. Holcombe, Randall G, 2002. "Political Entrepreneurship and the Democratic Allocation of Economic Resources," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 15(2-3), pages 143-159, June.
    16. Blau, David M, 1987. "A Time-Series Analysis of Self-employment in the United State," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 445-467, June.
    17. Auerbach, Alan J., 2002. "Taxation and corporate financial policy," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 19, pages 1251-1292, Elsevier.
    18. Donald Bruce & Mohammed Mohsin, 2006. "Tax Policy and Entrepreneurship: New Time Series Evidence," Small Business Economics, Springer, vol. 26(5), pages 409-425, June.
    19. Christopher J. Coyne & Peter T. Leeson, 2004. "The Plight of Underdeveloped Countries," Cato Journal, Cato Journal, Cato Institute, vol. 24(3), pages 235-249, Fall.
    20. Roger H. Gordon & Julie Berry Cullen, 2002. "Taxes and Entrepreneurial Activity: Theory and Evidence for the U.S," NBER Working Papers 9015, National Bureau of Economic Research, Inc.
    21. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    22. Baumol, William J., 1996. "Entrepreneurship: Productive, unproductive, and destructive," Journal of Business Venturing, Elsevier, vol. 11(1), pages 3-22, January.
    23. Martin D. Dietz, 2004. "Dividend and Capital Gains Taxation in a Cross-Section of Firms," Public Economics 0405004, University Library of Munich, Germany.
    24. David Daokui Li & Junxin Feng & Hongping Jiang, 2006. "Institutional Entrepreneurs," American Economic Review, American Economic Association, vol. 96(2), pages 358-362, May.
    25. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    26. Stijn Claessens & Luc Laeven, 2003. "Financial Development, Property Rights, and Growth," Journal of Finance, American Finance Association, vol. 58(6), pages 2401-2436, December.
    27. Sergei Guriev & Andrei Rachinsky, 2005. "The Role of Oligarchs in Russian Capitalism," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 131-150, Winter.
    28. A. Chong & C. Calderón, 2000. "Causality and Feedback Between Institutional Measures and Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 69-81, March.
    29. Quy-Toan Do, 2004. "Institutional trap," Policy Research Working Paper Series 3291, The World Bank.
    30. Evsey D. Domar & Richard A. Musgrave, 1944. "Proportional Income Taxation and Risk-Taking," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 58(3), pages 388-422.
    31. Ulf Jakobsson & Magnus Henrekson, 2001. "Where Schumpeter was nearly right - the Swedish model and Capitalism, Socialism and Democracy," Journal of Evolutionary Economics, Springer, vol. 11(3), pages 331-358.
    32. Freeman, Richard B. & Topel, Robert H. & Swedenborg, Birgitta (ed.), 1997. "The Welfare State in Transition," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226261782, September.
    33. Alvarez, Sharon A., 2007. "Entrepreneurial rents and the theory of the firm," Journal of Business Venturing, Elsevier, vol. 22(3), pages 427-442, May.
    34. repec:hal:spmain:info:hdl:2441/1cu21pio6c90g9i5oedr5hnaa3 is not listed on IDEAS
    35. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-937, October.
    36. Benson, Bruce L, 2002. "Regulatory Disequilibrium and Inefficiency: The Case of Interstate Trucking," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 15(2-3), pages 229-255, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Frédéric Delmar & Karl Wennberg & Karin Hellerstedt, 2011. "Endogenous growth through knowledge spillovers in entrepreneurship : an empirical test," Post-Print hal-02312920, HAL.
    2. Zoi Pittaki, 2020. "Extending William Baumol’s theory on entrepreneurship and institutions: lessons from post-Second World War Greece," Business History, Taylor & Francis Journals, vol. 62(2), pages 343-363, February.
    3. Robin Douhan & Gunnar Eliasson & Magnus Henrekson, 2007. "Israel M. Kirzner: An Outstanding Austrian Contributor to the Economics of Entrepreneurship," Small Business Economics, Springer, vol. 29(1), pages 213-223, June.
    4. Nafisa Yeasmin, 2016. "The Determinants of Sustainable Entrepreneurship of Immigrants in Lapland: An Analysis of Theoretical Factors," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 4(1), pages 129-159.
    5. Henrekson, Magnus, 2007. "Entrepreneurship and Institutions," Working Paper Series 707, Research Institute of Industrial Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Douhan, Robin & Henrekson, Magnus, 2008. "Productive and Destructive Entrepreneurship in a Political Economy Framework," Working Paper Series 761, Research Institute of Industrial Economics.
    2. Robin Douhan & Magnus Henrekson, 2010. "Entrepreneurship and second-best institutions: going beyond Baumol’s typology," Journal of Evolutionary Economics, Springer, vol. 20(4), pages 629-643, August.
    3. Henrekson, Magnus & Sanandaji, Tino, 2011. "The interaction of entrepreneurship and institutions," Journal of Institutional Economics, Cambridge University Press, vol. 7(1), pages 47-75, March.
    4. Henrekson, Magnus, 2007. "Entrepreneurship and Institutions," Working Paper Series 707, Research Institute of Industrial Economics.
    5. Mendoza, Ronald U. & Canare, Tristan A. & Ang, Alvin, 2015. "Doing Business: A Review of Literature and Its Role in APEC 2015," Research Paper Series DP 2015-37, Philippine Institute for Development Studies.
    6. Congdon Fors, Heather & Olsson, Ola, 2007. "Endogenous institutional change after independence," European Economic Review, Elsevier, vol. 51(8), pages 1896-1921, November.
    7. Niklas Elert & Magnus Henrekson, 2021. "Entrepreneurship prompts institutional change in developing economies," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 34(1), pages 33-53, March.
    8. Ang, Alvin & Mendoza, Ronald U. & Canare, Tristan A., 2015. "Doing Business: A Review of Literature and Its Role in APEC 2015," Discussion Papers DP 2015-37, Philippine Institute for Development Studies.
    9. Herrera-Echeverri, Hernán & Haar, Jerry & Estévez-Bretón, Juan Benavides, 2014. "Foreign direct investment, institutional quality, economic freedom and entrepreneurship in emerging markets," Journal of Business Research, Elsevier, vol. 67(9), pages 1921-1932.
    10. Henrekson, Magnus & Johansson, Dan, 2010. "Firm Growth, Institutions and Structural Transformation," Ratio Working Papers 150, The Ratio Institute.
    11. Elert, Niklas & Henrekson, Magnus, 2017. "Entrepreneurship and Institutions: A Bidirectional Relationship," Working Paper Series 1153, Research Institute of Industrial Economics, revised 05 May 2017.
    12. Elert, Niklas & Henrekson, Magnus & Stenkula, Mikael, 2017. "Institutional Reform for Innovation and Entrepreneurship: An Agenda for Europe," Working Paper Series 1150, Research Institute of Industrial Economics, revised 16 Feb 2017.
    13. Magnus Henrekson & Jesper Roine, 2007. "Promoting Entrepreneurship in the Welfare State," Chapters, in: David B. Audretsch & Isabel Grilo & A. Roy Thurik (ed.), Handbook of Research on Entrepreneurship Policy, chapter 5, Edward Elgar Publishing.
    14. Feng, Xunan & Johansson, Anders C. & Zhang, Tianyu, 2014. "Political participation and entrepreneurial initial public offerings in China," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 269-285.
    15. Thorsten Beck & Luc Laeven, 2006. "Institution building and growth in transition economies," Journal of Economic Growth, Springer, vol. 11(2), pages 157-186, June.
    16. Méon, Pierre-Guillaume & Sekkat, Khalid, 2022. "A time to throw stones, a time to reap: how long does it take for democratic transitions to improve institutional outcomes?," Journal of Institutional Economics, Cambridge University Press, vol. 18(3), pages 429-443, June.
    17. Abdoul’ Mijiyawa, 2013. "Determinants of property rights institutions: survey of literature and new evidence," Economics of Governance, Springer, vol. 14(2), pages 127-183, May.
    18. Beck, T.H.L., 2010. "Legal Institutions and Economic Development," Other publications TiSEM 8aa07b48-ce55-4cf6-8754-7, Tilburg University, School of Economics and Management.
    19. Wang, Cong, 2013. "Can institutions explain cross country differences in innovative activity?," Journal of Macroeconomics, Elsevier, vol. 37(C), pages 128-145.
    20. Williamson, Claudia R., 2012. "Dignity and development," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(6), pages 763-771.

    More about this item

    Keywords

    Entrepreneurship; Industrial Policy; Innovation; Property Rights; Regulation; Self-employment; Tax Policy;
    All these keywords.

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:iuiwop:0716. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Elisabeth Gustafsson (email available below). General contact details of provider: https://edirc.repec.org/data/iuiiise.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.