How institutions affect our economic behavior?

Over the last decades, the contribution of entrepreneurship to economic growth has been widely recognized by many economic researchers (Wong et al., 2005; Desai, 2011; Acs et al., 2014; Urbano et al., 2019). Entrepreneurial literature reflects the fact that entrepreneurship creates new job places, drives innovation, and leads to more equal distribution of income (Baumol, 1990; Acs, 2006). Due to the fact that institutions may shape conditions for the development of entrepreneurship or destroy it, I (institution) is included as a third variable in the relationship between E (entrepreneurship) and EG (economic growth). The purpose of this discussion paper is to show the relationship between institutional framework and economic agents' behavior. It provides the actual definition of institutions, general understanding of its classification (formal and informal institutions), and then depicts the impact of institutions on economic behavior in the context of entrepreneurship through different case study analyses. Since the topic “Institutions-Entrepreneurship Economic Growth” is very trendy nowadays and located at the intersection of independent research areas, and due to the complexity and rapid dynamics of it, this paper attempts to provide readers with some basic aspects of this subject.