Structural change and the nature of innovative activity: Legal form and firm performance

Summary

This paper studies the evolution of legal forms and its effects on innovation and productivity within Colombia’s manufacturing industry. The rise of a private legal structure is evidenced by the strategy of large and powerful conglomerates to increase their size and power by absorbing firms with a public setting. The paper argues that this institutional innovation is sub-optimal since adopting a private limited liability framework excludes intrapreneurial forces from access to ownership. This was the world that the classic political economy and scholars like Schumpeter were concerned with: one in which the institutional change would favour the divorce between ownership and entrepreneurship.

Key Words:

• innovation
• productivity
• entrepreneurship
• legal form