Online Resources
Catherine Fisk, "An Ingenious Man Enabled by Contract": Entrepreneurship and the Rise of Contract (2007).
http://lsr.nellco.org/cgi/viewcontent.cgi?article=1092&context=duke_fs
Abstract: A legal ideology emerged in the 1870s that celebrated contract as the body of law with the particular purpose of facilitating the formation of productive exchanges that would enrich the parties to the contract and, therefore, society as a whole. Across the spectrum of intellectual property, courts used the legal fiction of implied contract, and a version of it particularly emphasizing liberty of contract, to shift control of workplace knowledge from skilled employees to firms while suggesting that the emergence of hierarchical control and loss of entrepreneurial opportunity for creative workers was consistent with the free labor ideology that dominated American thinking on the subject of work.
Viktor Mayer-Schoenberger, Entrepreneurial Law,
http://web.hks.harvard.edu/publications/workingpapers/citation.aspx?PubId=5692
Abstract (from author): Innovative entrepreneurship is seen as a central driver of economic growth. Lawmakers around the world have attempted to use law to foster such entrepreneurship. Yet, frequently law is described as the enemy of entrepreneurs. This paper argues that this is a fundamental misconception. In part I of the paper I suggest three distinct roles leveling, protecting, and enabling - that law can play to foster entrepreneurship. Part II develops a comprehensive framework for crafting laws that facilitate entrepreneurship based on risk theory. Utilizing expected utility theory I propose that lawmakers may want to focus less on direct financial losses or gains for entrepreneurs (like subsidies or tax breaks), and more on the predictability of legal processes. Behavioral economics suggests that lawmakers need to be careful how they frame laws intended to facilitate entrepreneurship. A risk-based framework for entrepreneurial law rests on an important assumption: on the linearity of the innovation process and the central importance of the individual entrepreneur. Part III of the paper shows how a more nuanced understanding of innovation has fundamental repercussions for the role we assign law. I suggest (and demonstrate through cases) that the most appropriate role for law may not be reactive (however well thought out), but entrepreneurial actively creating market tensions that entrepreneurs then successfully exploit. I conclude that lawmakers have a much more central and important role in shaping entrepreneurial activity in our nation than has traditionally been ascribed to them.
Minnesota Journal of Business Law and Entrepreneurship
http://www.centerforbusinesslaw.org/journal/
D. Gordon Smith & Masako Ueda, Law and Entrepreneurship: Do Courts Matter? 2(1) Entrepreneurial Bus. L.J. 353 (2006), Univ. of Wis. Legal Studies Research Paper No. 1029.
http://moritzlaw.osu.edu/eblj/issues/volume1/number2/Smith.pdf
Abstract (from authors): In this essay, we sketch the outlines of a research agenda exploring links between courts and entrepreneurship. Our conception of "law and entrepreneurship" encompasses the study of positive law (including constitutions, statutes, and regulations), common law doctrines, and private ordering that relate to "the discovery and exploitation of profitable opportunities by new firms."
We briefly survey the economics literatures that relate to law and entrepreneurship, including the "law and finance" literature launched by the work of Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny ("LLSV"). Relying on the suggestive work of LLSV and other economists who have labored over the connections between entrepreneurship and law, we suspect that courts may play an important role in facilitating or hindering entrepreneurial activity. We are particularly interested in the possibility that courts may facilitate the evolution of legal rules to address novel issues raised by entrepreneurial firms. This "adaptability hypothesis" may be subject to empirical testing, thus shedding light on the otherwise perplexing divide between common law and civil law countries identified by LLSV. The motivation for such a test lies in the conjecture that common law countries update their laws more frequently than civil law countries through judicial intervention. Adaptability in this sense is said to encourage entrepreneurship because outmoded laws allow for opportunism, thus discouraging capital formation. The adaptability hypothesis implies that judges in common law systems have more room to maneuver than judges in civil law systems, and we describe the method by which we intend to approach our future study of adaptability.
Michael Whincop, Entrepreneurial Governance (August 2000).
http://www.afic.am/CG/EntrepreneurialGovernance.pdf
Abstract (from author): The primary regulatory concern with respect to small to medium enterprises (SMEs) is capital raising, which reflects the so-called finance gap. For listed corporations, however, most attention is directed to corporate governance, because of the agency costs associated with more dispersed ownership and their infrequent resort to capital markets. What is lacking is an account of corporate governance issues arising in SMEs. Why is this significant? First, existing theories of the endogeneity of boards, such as those developed by Fama and Jensen, do not explain the careful work of venture capitalists to develop strong boards, including outside directors. Why do they do such a thing, instead of addressing exchange issues on a purely bilateral basis with the entrepreneur? Second, to the extent that corporate governance influences the scale of transaction costs, we might expect that governance is systematically related to the capacity of firms to raise finance, both venture capital and in an IPO.
In order to address these issues, this paper draws on a number of distinct literatures - the economic literature on venture capital, the organizational behavior literature on trust, the management literature on industrial networks, and the law and economics theorization of the role of norms in contracts. It develops an informal theory that the venture capitalists’ contract with the entrepreneur establishes formal end-game norms; these are "kept in the bottom drawer" while the relation remains cooperative. The board has a role in providing the possibility of cooperation within the strategy space marked out by these EGNs. In addition, it functions as an information conduit by which third parties may function to enforce relational norms. The legal rules that support these functions are also examined.