How Strategic Entrepreneurship and The Institutional Context Drive Economic Growth

Authors

  • Christian Bjørnskov,

    1. Department of Economics and Business, Aarhus University, Aarhus, Denmark
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  • Nicolai Foss

    Corresponding author
    1. Department of Strategy and Management, Norwegian School of Economics and Business Administration, Bergen, Norway
    • Department for Strategic Management and Globalization, Copenhagen Business School, Frederiksberg, Denmark
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Correspondence to: Nicolai Foss, Department for Strategic Management and Globalization, Copenhagen Business School, Kilen, Kilevej 14, 2nd Floor, DK-2000 Frederiksberg, Denmark. E-mail: njf.smg@cbs.dk

Abstract

The economics of growth has shown that countries grow by better allocating whatever resources are at their disposal and by introducing productivity-enhancing innovations. Strategic entrepreneurship plays a key role in this process by searching for, combining, trying out, etc., new resource combinations in the pursuit of profits under uncertainty. Institutions that support economic freedom allow such experimentation to take place at low transaction costs, positively influencing total factor productivity. We test these ideas on a unique panel data set derived from Compendia, World Bank data, and the Fraser Institute's economic freedom data. Copyright © 2013 Strategic Management Society.

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