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The purpose of this paper is to consider the impact of Baumol’s work on entrepreneurship has had on framing the economic development puzzle.

In many ways, the intuition behind the paper is straightforward. Entrepreneurs allocate their time and attention based on the relative payoffs they face in any given social setting. If the institutional environment rewards productive entrepreneurship, then the time and attention of entrepreneurial actors in the economy will be directed toward realizing the gains from trade and the gains from innovation. If, on the other hand, there are greater returns from the allocation of that time and attention toward rent-seeking and even criminal activity, alert individuals will respond to those incentives accordingly. The simplicity of the point being made is part of the brilliance in Baumol’s article. As with other classics in economics, once stated the proposition seems to be so basic it is amazing that others did not put it that way beforehand.

It has been 25 years since Baumol published his paper in the Journal of Political Economy, and as pointed out, it has had a significant scientific impact. But to put things in perspective, James Buchanan’s “An economic theory of clubs” published in 1965 has accumulated roughly 3,500 citations, F.A. Hayek’s “The use of knowledge in society,” published in 1945 has over 12,000, and Ronald Coase’s “The problem of social cost” published in 1960 has over 28,000 citations. So Baumol’s paper would put him in rather elite company. The great strength of the paper is to focus the attention on the relative payoffs of productive, unproductive and destructive entrepreneurial activity. But one of the most significant disappointments of the subsequent history of this paper is a methodological one. The comparative case study approach that Baumol employed did not result in a renewed appreciation for narrative forms of empirical research in political economy. It could legitimately be argued that the sort of questions about the fundamental institutional causes of economic growth and development can only be captured with these more historical methods. Attempts to force fit this analysis into a set of methodological tools which have already revealed themselves to be inadequate to do justice of the role of institutions and disregard the underlying cultural norms and beliefs that characterize human sociability.

In this paper, the authors will focus on the contribution made by Baumol’s 1990 paper on the field of comparative political economy, and in particular on the literature on transitional political economy. Section 2 places Baumol’s argument in the context of the failure of neoclassical growth theory. Section 3, the authors argue that although the Baumol framing was an improvement over the old comparative economic systems literature, contemporary transitional political economists have failed to fully realize the implications of the institutional revolution. They have therefore been unable to understand the causes of the heterogeneity of outcomes among those countries that transitioned from communism to the market economy in the 1990s. In Section 4, the authors argue that the political economy of transition will gain from a more sophisticated view of the economic process of the market economy, an appreciation of the entrepreneurial function, and a deeper understanding of the role of formal and informal institutions and their effect on entrepreneurship. The authors will illustrate the point with some examples from the recent history of the Russian political and economic transition. Credible commitment problems and the deficiencies of the institutional reforms of the early 1990s were responsible for the failure of reallocating the entrepreneurial talent that existed in the Soviet economy to productive economic activities. The framework can therefore be used to solve the puzzle of why the announced liberalization of Russian markets and privatization of previously state-owned resources led to economic stagnation, the growth of black markets, and the rise of organized crime, instead of economic development through the operations of smoothly operating markets. Section 5 briefly concludes.

The study aims to demonstrate how different arrangements and characteristics of institutions can generate or mitigate uncertainty thereby facilitating or hampering the possibilities of entrepreneurial action.

This is a conceptual paper that advances the theoretical understanding of the relationship between entrepreneurial uncertainty and the different institutional levels, their characteristics and their interplay.

Entrepreneurial uncertainty also comes from the institutional environment and this has direct impact on the propensity to take action. The characteristics of the different institutional levels, in specific, their quality, stability, alignment and the burden imposed by L2 impact in the emergence of entrepreneurial uncertainty.

This is a conceptual paper that makes a number of theoretical suggestions which need to be further analyzed by empirical work.

The findings suggest that different institutional levels need to be dealt with differently by research studies and institutional agents, including policy makers. Among others, the findings also suggest that stability is key to entrepreneurship and that the benefits of high quality regulation can be undermined by its excessive burden, reducing entrepreneurial action and harming development.

Institutional actors should provide stability and allow for the improvement of the environment overall. Specifically, policy makers should aim at good quality regulation that is valid across the board, that provides stability and gives room for improvement of the institutions. Policy makers should refrain from trying to foster specific industries; they should instead provide a leveled playing field without trying to direct the entrepreneurial efforts towards an industry or geographic region and without being overly demeaning.

This research breaks new ground. It unites ideas from entrepreneurship and institutions suggesting a novel, much more nuanced approach to their interplay. The results can be used by scholars in the fields of entrepreneurship, institutions and economic development. They also have the potential to help to educate policy makers in their quest to improve the context for entrepreneurs.

The purpose of this paper is to explore how culture affects economic development on Native American reservations by examining how culture directs the attention of entrepreneurs and interacts with formal governance institutions.

This paper combines theoretical insights from economic sociology, market process economics and institutional economics as a basis to evaluate entrepreneurship and economic development on Native American reservations. Culture, as a web of social meanings, shapes what opportunities entrepreneurs are alert to, influences how they perceive transaction costs and determines whether institutions achieve their intended ends. Historical and contemporary case studies are used to build analytical narratives to corroborate the theoretical approach.

The federal government has imposed many formal institutions on reservations, which have disrupted traditional governance and property rights structures. If formal institutions do not comport with the underlying culture, those institutions do not facilitate positive entrepreneurship and economic growth. Despite the barriers, entrepreneurs across several reservations have leveraged their cultural and social ties to create robust informal economies. In some cases, imposed institutions have fostered rent-seeking and have given rise to a culture of rent-seeking.

This paper looks at Native American entrepreneurship and institutions in the broadest sense. However, there is a large amount of diversity within the cultural and governance structures of Native American communities. Future research could examine specific tribes or reservations in more detail.

This paper elucidates cultural and institutional barriers to productive entrepreneurship on Native American lands. Policymakers must understand these root causes if they are to facilitate economic growth.

This paper’s combination of theoretical perspectives helps explain the widespread economic development issues on Native American lands.

This paper illustrates how two contemporary economic traditions - New Institutional and Austrian economics - may be used to add insight into the organization and governance of public sector investment programs. When combined, these frameworks offer a theoretical foundation that may be used for purposes of assessing relative levels of agency and transactions costs within different institutional settings. The insights provided suggest that one option for reducing these costs is to “outsource” the public sector investment function. The theories explored in the paper are not panacea for dealing with agency and transaction costs, but they do draw attention to key institutional characteristics that influence their size.

This purpose of this paper is to introduce property researchers to the principles of Austrian economics and to consider their methodological relevance and potential for understanding the dynamics of property market processes.

This paper sets out the basic principles of the Austrian economics thesis, including an outline of the entrepreneurial discovery approach to market processes, a core precept of the Austrian thesis. It then relates the core assumptions of the Austrian school to the workings of the property market.

It is argued that the driving force of property market process is provided by the entrepreneurial and profit-seeking speculative activities of human agents as they are confronted with incomplete information in an uncertain property market context. Thus, Austrian economics offers a sound and practical alternative theoretical approach to the study of property market, which places the market within its socio-economic context.

In-depth examination of the provisions, assumptions, philosophical orientation and limitations of the Austrian tradition of economic thought toward a better understanding of the workings of the property market.

The purpose of this paper is to clarify the distinctions and complementary of William Baumol and Israel Kirzner’s classifications of and insights into entrepreneurship, and thus providing a more complete taxonomy of the substance of entrepreneurial activity. This paper also attempts to clarify distinctions between unproductive and destructive entrepreneurship.

This paper illustrates a more complete taxonomy of the substance of entrepreneurial activity by examining entrepreneurial innovation in drug markets both legal and illegal, identifying cases of productive, unproductive, superfluous, erroneous, destructive, and protective entrepreneurship.

This paper finds that the classifications of entrepreneurship (productive, superfluous, unproductive, erroneous, protective and destructive) put forth by Baumol, Kirzner, and the institutional entrepreneurship literature are complementary. While Baumol seeks to explain the disequilibrating tendencies of entrepreneurship, Kirzner seeks to explain the equilibrating tendencies of entrepreneurship within the institutional context.

This paper utilizes case studies from legal and illegal drug markets to uniquely and better explain the six cases of entrepreneurship. This paper also contributes to the literature by clearly articulating the complementarity of Baumolian and Kirznerian entrepreneurship.

This paper aims to show that zakat solves the collective action problem by changing the framework of giving. An additional purpose of this paper is an attempt to fill a critical gap in the Islamic economics literature. This gap concerns the nature and role of zakat in effectively delivering aid to those in need while mitigating the potential for free riding. There is also a general gap in the current literature on Islamic economics that the issues of zakat and charity have not received the same attention as the focus remained mostly on money, banking and the issues of interest and usury. The paper is also an attempt to provide a refocus.

This paper attempts to build an argument to show how zakat can function as a unique solution to the free-rider problem in voluntary charity. The author’s argument is based on a precise theoretical framework, namely the “free-rider problem,” and how zakat can function as a unique solution to this problem. The author also uses game theory to show how reputation can lead to cooperation in a repeated game. The author uses an example from Pakistan to show how reputation can be a disciplinarian of zakat collection organizations.

Zakat solves both the free-rider problem in ordinary charity and the coordination problem between members in a large group. The free-rider problem is solved by changing the very framework of giving and the coordination problem between Muslims around the globe disappears because the rates and details of levying zakat are centrally created based on divine revelation.

This paper presents an important topic as it addresses one of the most popular giving practices in Muslim societies, called zakat. It also provides a framework in examining the meaning and function of zakat in Muslim societies.

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.

Recent studies have shown that the contribution of small firms to employment and GDP is increasing. A large amount of work has also established the significance of social and economic variables for entrepreneurial decisions. Very little is known, however, about how government policies and programs influence entrepreneurial activity, and whether these effects are consistent across countries. Using original data from a representative sample of 10,000 individuals and from more than 300 open-ended interviews in 10 countries, this article provides some suggestive evidence that government intervention aimed at enhancing the underlying environment of entrepreneurial decisions may be more effective than intervention designed to provide safety nets.