Entrepreneurship and the Legal Form of Businesses: The Role of Differences in Beliefs

Gutiérrez Oscar and Ortín-Ángel Pedro ()
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Gutiérrez Oscar: Universitat Autònoma de Barcelona – Business Department, Cerdanyola del Vallès, Barcelona, Spain
Ortín-Ángel Pedro: Universitat Autònoma de Barcelona – Business Department, Cerdanyola del Vallès, Barcelona, Spain
Authors registered in the RePEc Author Service: Pedro Ortín Ángel

Review of Law & Economics, 2016, vol. 12, issue 1, 119-151

Abstract: 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.

Keywords: entrepreneurship; beliefs; credit constraints; creditors’ priorities; legal form (search for similar items in EconPapers)
JEL-codes: D23 L21 L22 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1515/rle-2014-0027

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