Abstract and Keywords
This chapter assesses the role local institutional framework conditions play in fostering local entrepreneurship. The basic premise is that entrepreneurship is a central driver of economic renewal and change, and that institutions affect both the supply and direction of entrepreneurship. While local institutions always develop and operate against the backdrop of national institutional frameworks, in particular in nonfederal states, there is plenty of room for local initiatives and policies to influence job creation and the local entrepreneurial climate. This pertains to both formal (e.g., taxes, regulations. and stringency of enforcement) and informal (e.g., attitudes and social legitimacy) institutions. The local institutional environment is essential in any local policy aimed to foster productive (high-impact) entrepreneurship. Favorable local institutions increase not only the odds that a region develops or manages to attract entrepreneurial incumbents, but also the odds that a region reaps the full potential of its business climate by hosting entrepreneurial and knowledge-intensive activities.
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