The Relationship Between Entrepreneurship, Culture and Legal Rules

Abstract

Entrepreneurs play a vital role in economic development as key contributors to technological innovation and new job growth. Further, entrepreneurs help build communities in ways such as providing jobs, conducting business locally, creating and participating in entrepreneurial networks, investing in community projects, and giving to local charities. Realizing both the economic and social impact of entrepreneurship, many states and local communities have implemented aggressive strategies aimed at cultivating and nurturing entrepreneurs. Schumpeter’s canonical depiction of the entrepreneur as an agent of social and economic change implies that entrepreneurs are especially sensitive to the social environment.  We extract teachings from several disciplines while adopting a primary perspective based on institutional economics to consider the social dimensions of entrepreneurship.  The level and modes of entrepreneurial activity are affected by the surrounding culture and by legal rules.  Entrepreneurs may partially overcome institutional deficiencies by relying on social networks that facilitate reputational bonding as a means for resource-sharing.

Keywords: Entrepreneurship, social institutions, culture, law, social networks, reputation.