INSTITUTIONAL CHANGE AS AN EXTERNAL ENABLER OF ENTREPRENEURSHIP.

Institutions are often seen as slow to change yet help explain variance in entrepreneurship rates across countries. We develop a complementary perspective exploring how short-term institutional change in constitutional institutions -- the rule of law and property rights -- may affect entrepreneurial activity. We develop hypotheses about how change in these institutions impacts entrepreneurship utilizing the lenses of prospect theory and bounded rationality. These micro- foundations help us to explain the pattern of response in entrepreneurship: positive and negative constitutional changes have asymmetric effects on the likelihood to engage in entrepreneurship that differ over time and across countries. [ABSTRACT FROM AUTHOR]