Religion and unproductive entrepreneurship: The role of risk aversion |
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| Institution: | 1. Jinhe Center for Economic Research, Xi’an Jiaotong University, No. 28 Xianning West Road, Xi’an, Shaanxi, 710049, PR China;2. School of Economics, Southwestern University of Finance and Economics, No. 555 Liutai Avenue, Wenjiang District, Chengdu, Sichuan, 611130, PR China;1. Indian Institute of Foreign Trade, Kolkata, India;2. Centre for Training and Research in Public Finance and Policy (CSSSC), Calcutta, India;3. CES–ifo, Munich, Germany;4. GEP, Nottingham, UK;5. National Law University, Delhi, India;6. Indian Statistical Institute, Kolkata, India;1. Department of Economics and Law, Korea Military Academy, 574 Hwarang-ro, Seoul, Republic of Korea;2. School of Economic, Political & Policy Science, University of Texas at Dallas, 800 W. Campbell Rd., Richardson, TX, 75080, USA;1. Dept. of Mathematics, University of Bergen, Allégaten 41, Bergen, Vestland 5007, Norway;2. University of Rennes 1, CNRS, CREM - UMR 6211, Condorcet Center for Political Economy, F-35000, Rennes, France;3. Department of Political Sciences, University of Roma Tre, Via G. Chiabrera 199, 00145, Rome, Italy |
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| Abstract: | Institutions can shape the reward structure in the economy and thereby influence the allocation of entrepreneurship between productive and unproductive activities. This paper investigates the effect of religion, one important component of informal institutions, on unproductive entrepreneurship. Using a nationally representative survey on private enterprises in China, we find that religious entrepreneurs devote more of their resources, both in terms of money and time, to unproductive activities such as building social relations than their nonreligious peers. We further find that religion plays a significant role only in regions with weak regulatory institutions and/or for entrepreneurs vulnerable to institutional risks. Drawing on the close link between risk-aversion and religion, our results suggest that religious entrepreneurs engage in unproductive activities so as to reduce institutional risks in their business operations. |
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| Keywords: | Religion Allocation of entrepreneurship Risk aversion L26 Z12 D72 P26 |
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