Baumol (1990) famously argues that entrepreneurs are individuals who exploit opportunities, be they in the productive (enterprises) or the unproductive sector (lobbying, rent-seeking, corruption…), and that the prevalence of one or the other type of entrepreneurship depends on the quality of surrounding institutions: high quality institutions foster productive entrepreneurship, whereas failing institutions trigger unproductive entrepreneurship. However, recent empirical studies evidence that the effect of institutions quality on productive entrepreneurship might be more ambiguous. Dreher and Gassebner (2013) observe that if poor quality of institutions is detrimental to firms’ entry, this effect is nonetheless moderated in presence of corruption. Our central argument in this paper, is that productive entrepreneurs may be forced by their institutional environment to bribe so as to be able to start and develop their venture. As a result, a same quality of institutions has different effects on bribing and non-bribing productive entrepreneurships. This has strong implications for the literature addressing the effect of institutions on entrepreneurship. We complement Baumol’s (1990) theory, by acknowledging that productive entrepreneurs do not form a homogenous population, but have characteristics that are shaped by the institutional context in which their venture is embedded. This recognition is likely to unveil the true effects of institutions on productive entrepreneurship, whereas analyses that make a clear distinction between productive and unproductive entrepreneurship and treat the former as a homogenous population, are likely to result in misleading observations. This contribute to the embryonic literature regarding the role of entrepreneurship in the development of emerging countries (Bruton et al., 2008; Naudé, 2010; Peng and Zhou, 2005; Stenholm et al. 2013). We use panel data econometrics, with a unique dataset that merges two databases, the Statistik Industri from the Indonesian Bureau of public statistics (BPS) and the Indonesian Family Life Survey (IFLS) from the Rand Corporation. It enables us to analyze the effect of varying formal and informal institutions quality, across regional districts (190), on the 5-digit sector-level (321) entry rates of bribing and non-bribing new ventures, over the period 2001-2007. Although cross-country studies are more robust (Bruton et al., 2010), Indonesia compensates with its institutional features (administrative inefficiency, pervasive corruption, ethnic diversity…) that are common to many emerging countries (Miguel et al., 2005) while presenting large within institutional quality variations, and will therefore allow an easier generalization of our findings. Analyzing patterns across districts within a single country permits to use homogenous survey instruments of institutions and consistently available data on the bribing component of entrepreneurship, which is rarely the case for cross country regressions and reduces some of their problems of measurement and omitted variables (Miguel et al., 2005; Sobel, 2008).The results show that regulative and resource-allocative institutions are significant factors impacting the rate of entrepreneurship. Moreover, the results confirm our main conjecture that these institutions have differentiated effects on bribing and non-bribing entrepreneurship, taken at the local and 5-digit sector level. On the one hand, deficient regulative (low quality of business permits delivery and excessive indirect taxations) and resource-allocative institutions (poor quality of access to transport infrastructures and services) are detrimental to entrepreneurship. On the other hand, we find that bribing new ventures suffer less than other ventures, from a deteriorated access to high quality business permits delivery and transport infrastructures and services. Our results also show that in districts and 5-digit sectors with a poor supply of banking services, bribing entrepreneurs have a better entry rate than others, suggesting that they have a better access to financings through corruption.