Lesson 3: Institutions for Entrepreneurs

In this lesson students will be introduced to institutions that affect the choices and incentives of entrepreneurs. 

Economics

Students will learn how institutions–open markets, property rights, and rule of law contribute to entrepreneurship. Countries that protect these institutions are likely to have more entrepreneurship which drives innovation and economic growth. 

Objectives:

After completing this lesson students will be able to:

• identify and define institutions such as open markets, property rights, rule of law, and entrepreneurship.
• explain how the institutions affect entrepreneurship including the incentives they face.
• evaluate how a country’s economic institutions and policies will affect entrepreneurship. 

Voluntary National Content Standards in Economics

• Standard 10: Institutions
  • Institutions evolve and are created to help individuals and groups accomplish their goals. Banks, labor unions, markets, corporations, legal systems, and not-for-profit organizations are examples of important institutions. A different kind of institution, clearly defined and enforced property rights, is essential to a market economy. 
• Standard 14: Entrepreneurship
  • Entrepreneurs take on the calculated risk of starting new businesses, either by embarking on new ventures similar to existing ones or by introducing new innovations. Entrepreneurial innovation is an important source of economic growth. 

Concepts

Entrepreneurship, Institutions, Market, Property Rights