This survey explores the important connection between institutions and entrepreneurship. Institutions consist of the formal and informal “rules of the game.” Entrepreneurs act within a context determined by these rules. The rules of the game create payoffs that make certain entrepreneurial opportunities more attractive than others. We explore the relevant literature from institutional economics and entrepreneurial studies, focusing on the important link between the two. Particular emphasis is placed on entrepreneurship within several different institutional settings — private for-profit, private nonprofit, and political — as well as the impact of entrepreneurship on institutions. We conclude by discussing the implications for future research on the topic. * We would like to thank the editors and an anonymous referee for detailed comments and suggestions. We would also like to thank Zac Rolnik for his patience and assistance throughout the process of preparing and revising this survey. Earlier versions of this survey were presented at the Mason Entrepreneurship Research Conference (MERC) Annual Conference, George Mason University, Fairfax, VA, March 28, 2008 and at the IHS Social Change Workshop, Brown University, Providence, RI, June 23, 2008. We would like to thank the participants for their comments and suggestions. Full text available at: http://dx.doi.org/10.1561/0300000018

Context Matters: Institutions and Entrepreneurship

Using comprehensive administrative data on France's single largest financial aid program, this paper provides new evidence on the impact of large-scale need-based grant programs on the college enrollment decisions, persistence and graduation rates of low-income students. We exploit sharp discontinuities in the grant eligibility formula to identify the impact of aid on student out-comes at different levels of study. We find that eligibility for an annual cash allowance of 1,500 euros increases college enrollment rates by up to 5 percent-age points. Moreover, we show that need-based grants have positive effects on student persistence and degree completion.

Improving College Access and Success for Low-Income Students: Evidence from a Large Need-based Grant Program

An increasing acknowledgement that financial services hold the key to mainstreaming the poor and disadvantaged in India makes this detailed account of financial inclusion - both as a concept and as a veritable solution to aid in the countryAEs development - a timely resource. The book states that the primary goal of financial inclusion is to broaden the scope of activities of the formal financial system, thus allowing people of low income to gradually participate in the system and thereby freeing the poor from poverty. The authors argue that important financial services such as credit, savings, insurance, and remittances should be provided at an affordable cost to low-income citizens. Topics discussed in the book include current financial exclusion; the roles of microfinance, banks, and nongovernmental organizations in financial inclusion; the Indian financial system; the credit needs of weaker sections of society in India; and Scheduled Castes development corporations.

Microfinance and financial inclusion

In this paper it is argued that locus of control beliefs and preferences concerning state action negatively affect the formation of new firms in former socialist countries. For this purpose Kirzner's theory of costless entrepreneurship is reviewed and criticized. German reunification, in which the formerly Socialist East joined the Federal Republic of Germany, represents an intriguing natural experiment in which the formal institutional structure of one nation was almost fully transplanted into another. Traditional as well as psychological factors are examined. The results suggest that about one third of the east-west gap in new self-employment can be explained by inert informal institutions.

Post-Socialist Culture and Entrepreneurship

Entrepreneurship has been identified as a panacea to abating the rising unemployment rate in MENA. However, the region’s institutional quality could influence whether entrepreneurship would generate/stall employment. Thus, we examined the role of institutional quality in the entrepreneurship-unemployment nexus for seven MENA countries using the dynamic ordinary least square method to analyse data covering the period, 2006-2019. The results show that opportunity-driven entrepreneurship and total-early-stage entrepreneurship have the potential to reduce unemployment while institutional quality seems to augment the unemployment-reducing effect of entrepreneurship. This implies that promoting entrepreneurship and strengthening the institutional apparatuses in the MENA region should be prioritised. 

Entrepreneurship and unemployment nexus in MENA: Does institutional quality matter?

The purpose of this paper is to consider the success and failure of microfinance institutions in generating economic growth over the past 30 years and propose a dual criterion of evaluation.,It surveys the empirical literature on microfinance and finds that while there has been small and localized success in various countries in improving access to credit, at the same time there has been a broader failure to generate economic growth. The authors argue that this broader failure should be viewed from the viewpoint of institutional failure or the lack of supporting institutions such as private property rights and stable rule of law within developing countries.,Using Baumol’s (1968) theory of entrepreneurship, the authors argue that the broader failure of microfinance is a case of poor institutional quality leading to unproductive or even destructive entrepreneurship rather than productive entrepreneurship. The paper also suggests a link between the literature criticizing foreign aid and this view on microfinance.,The paper provides a survey of the empirical literature on micro finance as well as a novel framework that aids in understanding both the localized small-scale success as well as broader failure to generate economic growth.

Martha Njolomole

Papers

Microfinance, entrepreneurship and institutional quality