Testing Baumol: Institutional quality and the productivity of entrepreneurship

Baumol's [Baumol, W.J., 1990. Entrepreneurship: productive, unproductive and destructive. Journal of Political Economy 98 (5), 893–921] theory of productive and unproductive entrepreneurship is a significant recent contribution to the economics of entrepreneurship literature. He hypothesizes that entrepreneurial individuals channel their effort in different directions depending on the quality of prevailing economic, political, and legal institutions. This institutional structure determines the relative reward to investing entrepreneurial energies into productive market activities versus unproductive political and legal activities (e.g., lobbying and lawsuits). Good institutions channel effort into productive entrepreneurship, sustaining higher rates of economic growth. I test and confirm Baumol's theory, and discuss its significance to the literature, economic prosperity, and policy reform.     

Explaining ethnic entrepreneurship: An evolutionary economics approach

The cultural approaches and the economic approaches advocated by mainstream neoclassical economists and new institutional economists fail to provide an adequate explanation of the differences between ethnic groups in the rate of business formation. These approaches provide only a partial explanation, much of which is based on static, predetermined exogenous and/or endogenous factors. By comparison the old institutional economists’ framework, when applied to this area, offers a more holistic explanation of differential ethnic business formation by bringing together a range of cultural and economic factors that emphasize the path dependency of activities and the dynamic evolution of behaviour and actions.     

International issues in entrepreneurship

In recent decades, there has been a substantial increase in private and public investment in entrepreneurship. This trend has important managerial, financial, and public policy implications. There is also considerable interest in understanding the financial practices of early stage companies. The recent global resurgence of leveraged buyouts and the concomitant rise of “private equity” markets have also heightened interest in entrepreneurship (e.g., Cumming et al. 2007). In this essay, we provide focused summaries of the papers in this special issue, which address these issues.      

Examining the formation of human capital in entrepreneurship: A meta-analysis of entrepreneurship education outcomes

Effective human capital formation through the medium of entrepreneurship education and training (EET) is of increasing concern for governments, as EET is growing rapidly across the world. Unfortunately, there is a lack of consistent evidence showing that EET helps to create more or better entrepreneurs. We undertake the first quantitative review of the literature and, in the context of human capital theory, find that there is indeed support for the value of EET. Based on 42 independent samples (N = 16,657), we find a significant relationship between EET and entrepreneurship-related human capital assets (r_w = .217) and entrepreneurship outcomes (r_w = .159). The relationship between EET and entrepreneurship outcomes is stronger for academic-focused EET interventions (r_w = .238) than for training-focused EET interventions (r_w = .151). We find evidence of heterogeneity in many of our correlations, and recommend that future studies examine potential moderators to more clearly delineate EET effect sizes. We also find a number of methodological weaknesses among the studies analyzed and that those studies with lower methodological rigor are overstating the effect of EET. Recommendations to improve the quality of future work in the field are provided.     

Transaction cost entrepreneurship

When offering a novel product, the entrepreneur desires the customer to choose to “buy” (from the entrepreneur) rather than to “make.” Transaction cost economics provides guidance to firms considering a make-versus-buy decision. In this paper we extend transaction cost economics to examine the novel transactions proposed by the entrepreneur. Application of the theory identifies three crucial considerations for the transaction: the cost of quality measurement, the risk of overconfidence by the entrepreneur (here termed identity risk), and the required cost of necessary transaction specific assets. By extending transaction cost analysis to cover novel transactions across customers, entrepreneurship can be analyzed using established theories and measures to generate novel propositions.     

Embedded entrepreneurship in the creative re-construction of place

This paper focuses on ways in which entrepreneurs engage with place and community. Drawing on the ideas of embeddedness and transferring value across spheres, we develop insight about how the relationship between entrepreneurs and communities influences entrepreneurial practices and outcomes. Employing an ethnographic perspective including participant observation, we explored the situated practices of entrepreneurs in two depleted communities in the Northwest of Ireland. We found that entrepreneurs not only drew on the community in running their business, but were also involved in a wide range of “other” activities that engaged, involved and worked with the community. This entrepreneurship produced a range of projects that addressed social and economic issues (unemployment, employability and emigration) and the depleted sense of place which was adversely affecting these communities. We show how social bonds and an affinity to community enable entrepreneurship to create, renew and reify a positive identity of place by combining understanding with entrepreneurial purpose.     

Can genetic factors influence the likelihood of engaging in entrepreneurial activity?

This article offers an argument for how genetic factors may influence the tendency of people to engage in entrepreneurial activity, and describes four mechanisms through which genetic factors could operate. It also explores ways that researchers can use quantitative and molecular genetics to examine entrepreneurship, and discusses the potential implications of a genetic perspective for management research on entrepreneurship.     

Innovation, rule breaking and the ethics of entrepreneurship

This article examines a feature of the ethics of entrepreneurship that is infrequently directly discussed, viz., rule breaking. Entrepreneurs are widely said to engage in rule breaking. Many examples of this appear in popular and academic literature. But how may this be integrated into an account of the ethics of entrepreneurship? One response would be that when entrepreneurs break legal and moral rules then what they do is wrong and ought to be condemned. There is a great deal to be said for this rule model of entrepreneurial ethics. However, this view is also mistaken. Instead, this article defends a virtue-based account of the ethics of entrepreneurship in which certain instances of rule breaking, even if morally wrong, are nevertheless ethically acceptable and part of the creative destruction that entrepreneurs bring not only to the economy but also to morality.     

Linking globalization of entrepreneurship in small organizations

The field of entrepreneurship spans a wide variety of topic areas, and among the most important is that of the small and medium-sized enterprise (SME). The aim of this paper is to link entrepreneurship and SMEs. Attempting to generalize the outcomes of entrepreneurship in small organizations from different sectors, countries or industries should be activities that are part of daily life on an international scale. In extracting and transferring the outcomes of this research into entrepreneurship and SMEs, policy makers should see an aspect that must be consolidated within the environment of international globalization that surrounds us. It should not be forgotten that what starts out as small (i.e. an SME) can become large over time and this entrepreneurship can form a part of a new organizational structure. A brief overview of the contents of each of the articles included in this special issue on the globalization of entrepreneurship in small organizations is also presented herein.      

Ethics and entrepreneurship

As the study of entrepreneurship and the study of business ethics become increasingly established, the intersection of entrepreneurship and ethics is receiving increasing scholarly attention. In this paper, we review the research connecting ethics and entrepreneurship, classifying the literature into three broad themes; we also identify and integrate the key themes that emerge, and we offer suggestions for future research. We conclude by introducing the articles in this special issue.     

Informal institutions and international entrepreneurship

This study examines the influence of three informal institutions, performance orientation, self-expression and social desirability, on the extent of internationalization by early stage entrepreneurial firms. We employed multi-level modeling techniques using 20,656 individual-level responses obtained from the Global Entrepreneurship Monitor (GEM) survey for 39 countries from 2001 to 2008, and supplementing with country-level data obtained from the World Values Survey (WVS) and the Global Leadership and Organizational Behavior Effectiveness (GLOBE) study. The results demonstrate that high performance orientation, high self-expression, and low social desirability of entrepreneurship in societies increase the extent of internationalization by early-stage entrepreneurial firms. The study promotes new theory and empirical findings on the relationship between informal institutions and entrepreneurial agency.     

Creating opportunities for institutional entrepreneurship: The Colonel and the Cup in English County Cricket

This paper examines how actors within a mature cultural field use their field positions to create opportunities for institutional entrepreneurship. Our analysis of the product innovation of a Knock-Out Cup in English County Cricket between the 1930s and 1960s shows that when the economic viability of a mature cultural field is threatened, actors learn to recursively create market and political opportunities for institutional entrepreneurship by deploying the resources of their field positions in tactics targeted at shifting product category boundaries. We find that ‘lone hero’ institutional entrepreneurs who experience failure from working in relative isolation learn to acquire new resources and deploy them in new tactics leading to a more collective approach, which is necessary for disrupting the institutional gatekeeping work that maintains a mature cultural field.     

高校创业教育工作现状及对策研究

分析创业教育的内涵和高校创业教育工作的现状,提出高校要明确创业教育的目标,构建完善的创业教育体系,建立高水平的创业教育师资队伍,创造全方位的创业教育支持体系,对高校深入开展创业教育工作,推动"以创业促就业"战略的贯彻和落实,具有重要意义.     

The economics of formal business networks

This paper analyzes the under-researched issue of formal business networks comprising voluntary groupings of entrepreneurs who share knowledge and experiences between themselves. Economic analysis is used to show how formal business networks which enable entrepreneurs to share good and bad practice can improve efficiency and social welfare. The paper also derives conditions for the existence and equilibrium size of formal business networks. Two principles of network design are proposed to promote their stability and to avoid their collapse.     

The knowledge spillover theory of entrepreneurship

Contemporary theories of entrepreneurship generally focus on the recognition of opportunities and the decision to exploit them. Although the entrepreneurship literature treats opportunities as exogenous, the prevailing theory of economic growth suggests they are endogenous. This paper advances the microeconomic foundations of endogenous growth theory by developing a knowledge spillover theory of entrepreneurship. Knowledge created endogenously results in knowledge spillovers, which allow entrepreneurs to identify and exploit opportunities.

Sustainable development and entrepreneurship: Past contributions and future directions

This article discusses the emerging research concerned with sustainable development and entrepreneurship, which is the focus of this special issue of the Journal of Business Venturing. Entrepreneurship has been recognized as a major conduit for sustainable products and processes, and new ventures are being held up as a panacea for many social and environmental concerns. However, there remains considerable uncertainty regarding the nature of entrepreneurship's role and how it may unfold. We begin with an overview of sustainable development and the role of entrepreneurship and outline recent contributions exploring this role. We then summarize the papers presented in this special issue and conclude with suggestions for further research.     

Theoretical milestones in international business: The journey to international entrepreneurship theory

For many decades global business was considered the preserve of large multinationals and traditional international business theory was developed to explain the behaviour of these firms. However, increasingly there is a realization that the small entrepreneurial firm has an important role to play in international business especially given that there are strong globalization pressures that both pull and push the small firm into international markets to ensure its very survival. On the questions of how and why international business takes place, several theoretical approaches have been developed that appear to run parallel to each other. However, this paper posits that the point of convergence is international entrepreneurship.     

Institutions and entrepreneurship development in Russia: A comparative perspective

In this paper we use a comparative perspective to explore the ways in which institutions and networks have influenced entrepreneurial development in Russia. We utilize Global Entrepreneurship Monitor (GEM) data to study the effects of the weak institutional environment in Russia on entrepreneurship, comparing it first with all available GEM country samples and second, in more detail, with Brazil and Poland. Our results suggest that Russia's institutional environment is important in explaining its relatively low levels of entrepreneurship development, where the latter is measured in terms of both number of start-ups and of existing business owners. In addition, Russia's business environment and its consequences for the role of business networks contribute to the relative advantage of entrepreneurial insiders (those already in business) to entrepreneurial outsiders (newcomers) in terms of new business start-ups.