Informal Institutions as Inhibitors of Rent-Seeking Entrepreneurship: Evidence From US Legal History

Rent-seeking entrepreneurship occurs whenever an entrepreneur expends resources on activities that benefit their firm while reducing overall economic efficiency. Since rent-seeking ultimately makes nations poorer, we need to know more about how institutions can discourage rent-seeking entrepreneurship. Using historical data from the Unites States, we explore how changes in judicial thinking altered individuals' incentives to engage in rent-seeking entrepreneurship. Traditionally, entrepreneurship researchers interested in policy issues have paid little attention to changes in judicial thinking. We argue that entrepreneurship researchers who are interested in why levels of entrepreneurial dynamism vary over time should pay more attention to how judges think.

Automated summary

The study found that rent-seeking entrepreneurship reduces overall economic efficiency and makes nations poorer. Changes in judicial thinking have a significant impact on individuals' incentives to engage in rent-seeking entrepreneurship. Paying attention to how judges think is essential for researching the variations in entrepreneurial dynamism over time.