ABSTRACT Political institutions meaningfully shape entrepreneurial outcomes. In the present study, we explore how the legislative partisanship of U.S. states, which we define as the concentration of political power across legislative branches of government, influences entrepreneurial activity. We contend that states led by Republican governors and legislatures will experience elevated levels of new venture formation. Moreover, we argue that this effect becomes stronger as the political power held by the Republican Party increases. We further suggest that economic freedom strengthens the relationships between both Republican governors and legislatures and new venture outcomes. Contrary to our primary theorizing, our results demonstrate that Democratic governors are linked to a higher number of new ventures formed. However, we find support for our remaining four hypotheses. Overall, we offer novel theoretical contributions to research on political institutions and entrepreneurship, as well as political science.
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