Political Entrepreneurs

Firms shape public policy not only from the outside through lobbying and campaign contributions, but also from the inside when business owners hold public office. We study this channel using a novel dataset that links state legislators’ personal financial disclosures to bill sponsorship records across 26 U.S. states from 2009 to 2023. The disclosures allow us to observe business ownership during legislative service and to distinguish entrepreneurs, defined as legislators who both own and actively manage a firm, from passive shareholders and employees. Applying a large language model to bill text, we classify legislation as pro-business and identify a subset of pro-entry bills that reduce barriers facing new firms. Entrepreneurs are a substantial presence in state legislatures, accounting for over 40 percent of legislators, and their representation varies primarily across states rather than within states over time. Although entrepreneurs do not sponsor more bills overall, they initiate a greater share of bills as first or sole primary sponsor. They also do not appear to be generic advocates for business. Relative to legislators with other business ties, entrepreneurs are no more likely to sponsor pro-business bills or bills endorsed by state Chambers of Commerce. Instead, they selectively advance pro-entry legislation, especially bills related to deregulation and innovation rather than antitrust or access to capital. These findings document an important channel through which entrepreneurs shape the policy environment for entrepreneurship from within political institutions.