Entrepreneurship and the legal form of businesses: The role of differences in beliefs

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1 Citation (Scopus)

Abstract

© 2016 by De Gruyter. Entrepreneurship has been considered a way to implement interpersonal authority, i. e., to convince other persons to use their resources in an alternative way to the optimal one in accordance with their beliefs. This paper presents a theoretical model that relates the above assumption with the following two questions: (i) how and why financial constraints can prevent the implementation of entrepreneurial projects; and (ii) how creditors' priorities provided by the different legal forms of the business can reduce the financial requirements for implementing the firm. The attractiveness of such an explanation lies in its capacity to justify a wide array of features of firms (entrepreneur origin, property rights, authority, financial constraints and creditor priorities) from a single basic assumption: agents have different beliefs about how production should be organized.
Original languageEnglish
Pages (from-to)119-151
JournalReview of Law and Economics
Volume12
Issue number1
DOIs
Publication statusPublished - 1 Mar 2016

Keywords

  • beliefs
  • credit constraints
  • creditors' priorities
  • entrepreneurship
  • legal form

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