The spatial interplay between productive and destructive entrepreneurship: do institutions meet expectations in rural areas?

ABSTRACT

Little is known about the coexistence and possible substitutability of destructive and productive entrepreneurship in regions characterized by weak institutions. This study explores the role of institutions in the interplay between destructive entrepreneurial activity (i.e. new coca crops share) and productive entrepreneurship (i.e. new coffee crops share) in rural Colombia. Institutional economics is used to frame our analysis, which is supported by an empirical spatial Durbin model. Using data from the municipal level of the Coffee National Information System during the 2000–2010 period, we found that destructive entrepreneurship has directly displaced productive entrepreneurship and the other way around. Although it is hypothesized that the presence of coffee-supportive institutions such as extensionists (i.e. regional representation of the national coffee association) mitigates the relationship between these entrepreneurial activities in favour of productive entrepreneurship, our results show that institutions are insufficient to control the crowding-out effect of destructive on productive entrepreneurship. The theoretical and policy implications of the study are considered in light of these findings.

KEYWORDS:

• Destructive entrepreneurship
• productive entrepreneurship
• institutions
• rural areas
• spatial econometrics
• Colombia

Acknowledgments

David Urbano and Sebastian Aparicio acknowledge the financial support from the projects PID2022-141777NB-I00 (Spanish Ministry of Science & Innovation) and 2021 SGR 00719 (Research & Universities Department, Catalan Government). Particularly, David acknowledges ICREA under the ICREA Academia programme; whilst Sebastian, as a Serra Hunter Fellow, acknowledges the Serra Hunter programme for all the support. In addition, Sebastian acknowledges financial support from COLCIENCIAS Ph.D. Program chapter 3 (617/2013) and Enlaza Mundos Municipio de Medellín (2013). Juan Carlos Muñoz-Mora acknowledges Universidad EAFIT. Finally, Diego Martinez-Moya acknowledges Fundación ECSIM for financial support.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The work was supported by the Agència de Gestió d’Ajuts Universitaris i de Recerca [2021 SGR 00719]; Institució Catalana de Recerca i Estudis Avançats [ICREA Academia programme]; Ministerio de Ciencia e Innovación [PID2022-141777NB-I00].