Is Greece a Rent Seeking Society? A Research on the Relationship Between Entrepreneurship, Trust and Institutions

Abstract

The paper analyses the various interactions among the institutional and cultural environment and the quality of entrepreneurial activity in Greece. The institutional context and the way in which institutions perform in particular, shape the structure of entrepreneurial incentives. As explicitly demonstrated by Baumol (J Political Econ 98:893–921, 1990) institutions actually channel entrepreneurial talent toward different activities which may be productive, unproductive or destructive. At the same time, informal institutions, i.e. culture and values have proven to be of equal importance for entrepreneurship. Within this context, the paper builds a simple model of rewards’ satisfaction accounting for first, the existence of income externalities, in order to test the hypothesis that individuals care about their relative position, i.e. economic status, and second, for the institutional quality, trust and values pertaining in the society, in order to analyze the possible existence of an underlying ‘social consensus’ that is supportive of rent-seeking behavior in Greece.