Informal institutions and entrepreneurship: a local perspective

This paper takes an institutional approach in explaining entrepreneurial activities and their differences across places. If entrepreneurial activities are socially embedded activities, the importance of informal institutions needs to be considered in research. First, a conceptual framework has been developed. Then, the two most important institutional foundations have been identified and discussed. In a next step, these two institutional foundations have been used as a base to describe three case studies in Sweden. Several conclusions have been derived from the case studies. First, the local institutional foundation will influence the amount of entrepreneurial activity in a place. Second, the presence of a strong institutional foundation will hinder local entrepreneurs to take initiatives which do not fit within the existing rules of the game. Third, a dynamic region is distinguished by a gradual and constant change of the institutional framework. In less dynamic regions, entrepreneurs will build up a parallel group culture which eventually will replace the dominant territorial one.