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Entrepreneurship and second-best institutions: going beyond Baumol’s typology
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
IFN, Institutet för Näringslivsforskning.
2010 (English)In: Journal of evolutionary economics, ISSN 0936-9937, E-ISSN 1432-1386, Vol. 20, no 4, 629-643 p.Article in journal (Refereed) Published
Abstract [en]

This paper reconsiders the predominant typology pioneered by Baumol (J Polit Econ 98(5):893-921, 1990) among productive, unproductive and destructive entrepreneurship. It is shown that the foundation of Baumol's classification scheme is the restrictive concept of first-best outcomes, and therefore it easily fails to appreciate the true impact of entrepreneurship in real-world circumstances characterized by suboptimal institutions. We present an alternative way of generalizing the notion of entrepreneurship and show how and why it encompasses the Baumol typology as a special case. Our main distinction is between business and institutional entrepreneurship. We draw on Schumpeter and introduce the entrepreneur in an additional function: as a potential disturber of an institutional equilibrium. Various subsets of institutional entrepreneurship are posited and discussed. It is shown that changing the workings of institutions constitutes an important set of entrepreneurial profit opportunities. An implication of this is that entrepreneurial efforts to reform or offset inefficient institutions can, in many cases, be welfare-improving.

Place, publisher, year, edition, pages
Springer , 2010. Vol. 20, no 4, 629-643 p.
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URN: urn:nbn:se:uu:diva-131911DOI: 10.1007/s00191-010-0174-4ISI: 000279370900006OAI: oai:DiVA.org:uu-131911DiVA: diva2:356044
Available from: 2010-10-10 Created: 2010-10-10 Last updated: 2010-12-30Bibliographically approved

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