Entrepreneurial Action, Public Policy, and Economic Outcomes
Show Less

Entrepreneurial Action, Public Policy, and Economic Outcomes

Edited by Robert F. Salvino Jr., Michael T. Tasto and Gregory M. Randolph

Examining the economics of entrepreneurship from the perspectives of productive versus unproductive entrepreneurial behavior and the role of institutions in economic outcomes, the authors in this book seek to advance the research on institutions by providing a simple framework to analyze the broader, long-term consequences of economic policies. They examine the relationship between economic freedom and economic outcomes and summarize empirical evidence and theory. The book also provides practical policy solutions that are based on the authors' cogent analyses.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 6: Institutions and entrepreneurial productivity in the American states

Gregory M. Randolph


Although the entrepreneur was seemingly absent from public policy considerations and economic theory to some extent for decades (Baumol, 1968; Bianchi and Henrekson, 2005), scholars have long recognized the important role of the entrepreneur in driving economic progress. Schumpeter (1934, 1942) highlighted the crucial role of the entrepreneur in spurring innovation through creative destruction. Kirzner (1973) emphasized the tendency for entrepreneurs to seek out profit opportunities, providing an alternate view of the entrepreneur as an equilibrating force in the marketplace. Fortunately, the importance of the entrepreneur and their role in economic progress has received a great deal of attention in recent years (Minniti, 1999, 2008; Gwartney, Holcombe, and Lawson, 2006; Sobel, 2008; Braunerhjelm, Acs, Audretsch, and Carlsson, 2010). However, in the wake of Baumol’s (1990) theory of productive, unproductive, and destructive entrepreneurship, the entrepreneurship literature has increasingly focused on the institutional environment in which the entrepreneur operates and policies that influence entrepreneurs. While the spirit of entrepreneurship exists in all locations across the globe, creative individuals are influenced by the relative rewards from the perceived available opportunities in society (Baumol, 1990; Murphy, Shleifer, and Vishny, 1991; Boettke and Coyne, 2009). When entrepreneurial individuals identify a potential for a high relative payoff for productive activities such as providing new goods and services, the entrepreneurial pursuit of personal profit tends to spur economic growth and generate wealth. However, entrepreneurs may pursue unproductive activities such as rent seeking when the relative reward to otherwise wasteful activities provides a relatively high personal reward.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.