Essays on institutions and entrepreneurial societies: Game theoretic and econometric analyses

The broad aim of this thesis is to explore endogenous and exogenous relationships between entrepreneurships and institutions theoretically and empirically. The thesis is made up of three essays with chapters one and five as the general introduction and general conclusion respectively. In the first essay (that is chapter two), Prisoner's Dilemma (PD) game is applied to analyze how a rent-seeking society emerges in the absence of institutions and communication between the players. Institutions are exogenously introduced to transform the PD game into semi or full assurance game. It is specifically shown that a society can be productive, unproductive or destructive entrepreneurially depending on the institutional strength. Again, institutional complementarity approach is utilized to analyze how interaction between the state and entrepreneurs result in two reinforcing but stable and saddle equilibria: the state with strong enforcement strategy paired with many productive entrepreneurs, and the state with weak enforcement strategy paired with many rent seekers. The endogenous and exogenous findings are contextualized in different social orders that a society belongs in. In the second essay (that is chapter three), the study tests econometrically multi-directional causality between institutional changes and changes in entrepreneurships in factor-, efficiency- and innovation-driven countries. The findings show many incidences of reinforcing causality between changes in entrepreneurships and institutional changes across both short and long runs in the innovation-driven countries. Whereas, it is observed that there are many countering feedback relationships between changes in entrepreneurships and institutional changes in the short run for factor- and efficiency-driven countries. Another important finding is that overall entrepreneurship granger-causes many institutions in the short run while reverse is the case in the long run for factor-driven countries. We note that property rights granger-causes productive entrepreneurship in the short run for both factor- and efficiency-driven countries whereas reverse is the case in the long run for efficiency-driven countries. In the third essay (that is chapter four), the thesis explores how institutions determine the allocation of entrepreneurial talents towards or away from innovations or public procurement in Nigeria as well as their industrial heterogeneity. The findings indicate that property rights and control of corruption are the key institutions shaping allocation of entrepreneurial talents towards innovation while regulatory quality and control of corruption remains the main institution influencing the allocation away from or towards public procurement. The findings suggest that property rights and control corruption have bigger impacts on innovativeness of IT entrepreneurs than on that of manufacturing ones in Nigeria. Regulatory quality and control of corruption have greater impact on public procurement in the manufacturing industry than do they in the service industry. Interestingly, property rights and oil rents promote both innovations and engagement in public procurement among the entrepreneurs. However, the institution of property rights is more impactful on the innovation than does it on public procurement. Whilst, oil rents impact more on public procurement than do they on innovation.