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Research Institute of Industrial Economics (IFN) Working Paper Series

No 1044:
Evasive Entrepreneurship

Niklas Elert () and Magnus Henrekson ()

Abstract: We argue that evasive entrepreneurship is an important, although underrated, source of innovation, and provide the first systematic discussion of the con-cept. We define evasive entrepreneurship as profit-driven business activity in the market aimed at circumventing the existing institutional framework by using innovations to exploit contradictions in that framework. We formulate four propositions of evasive entrepreneurship and illustrate them with a number of real life examples, ranging from a secret agreement among Chinese farmers in the 1970s to activities of rides-for-hire startups in the modern sharing economy. We demonstrate that while evasive entrepreneurship can either be productive, unproductive or destructive, it may prevent economic development from being stifled by existing institutions during times of rapid economic change. Furthermore, it can spur institutional change with important welfare effects.

Keywords: Entrepreneurship; Evasion; Innovation; Institutions; Regulation; Self-employment; (follow links to similar papers)

JEL-Codes: L50; M13; O31; P14; (follow links to similar papers)

33 pages, October 22, 2014, Revised March 31, 2016

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This paper is published as:
Elert, Niklas and Magnus Henrekson, (2016), 'Evasive Entrepreneurship', Small Business Economics, Vol. 47, June, No. 1, pages 95-113



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