The Social Dimensions of Entrepreneurship

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 use an organizing framework based on institutional economics, in combination with lessons from cross-cultural psychology, 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. This version: May 18, 2005 JEL Codes: L1, L2, M13, P1, Z1 * Licht – Boalt Hall School of Law, University of California at Berkeley, Berkeley, CA 94720, USA (visiting); Interdisciplinary Center Herzliya, Kanfe Nesharim St., Herzliya 46150, Israel, [email protected]; Siegel Harvard Business School, Morgan Hall 231, Soldiers Field, Boston, MA 02163, USA, [email protected]. For helpful comments we thank participants at the World Bank Workshop on Entry and three anonymous referees. 0