Working Paper No. 1153

Entrepreneurship and Institutions: A Bidirectional Relationship

Published: February 16, 2017, revised May 2017Pages: 61Keywords: Economic development; Entrepreneurship; Evasive entrepreneurship; Innovation; Institutional change; RegulationJEL-codes: L50; M13; O31; P14

Entrepreneurship and Institutions: A Bidirectional Relationship Niklas Elert and Magnus Henrekson


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.

Niklas Elert

Contact

Ph: +46 8 665 4583
niklas.elert@ifn.se

Magnus Henrekson

Contact

Ph: +46 (0)8 665 4502
magnus.henrekson@ifn.se

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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