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Economic freedom and veto players jointly affect entrepreneurship

Author

Listed:
  • Jacob Lihn
  • Christian Bjørnskov

Abstract

Purpose - The purpose of this paper is to explore how the strength of political veto players affects the long-run credibility of economic institutions and how they jointly affect entrepreneurial activity. Design/methodology/approach - The authors employ an annual panel covering 30 OECD countries from 1993 to 2011. Findings - An error correction model identifies a positive and significant short-run effect on self-employment from large government spending at low levels of veto player strength. A static model conversely indicates that smaller government spending is positively associated with entrepreneurship at lower levels of veto player strength in the long run. Originality/value - The authors are the first to explore the interaction of economic and political institutions in the development of entrepreneurship.

Suggested Citation

  • Jacob Lihn & Christian Bjørnskov, 2017. "Economic freedom and veto players jointly affect entrepreneurship," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 6(3), pages 340-358, November.
    • Handle: RePEc:eme:jepppp:jepp-d-17-00007
    DOI: 10.1108/JEPP-D-17-00007
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    Citations

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    Cited by:

    1. Folorunsho M Ajide, 2021. "Does economic freedom affect entrepreneurship? Insights from Africa," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 13(2), pages 157-167.
    2. Lucas, David S. & Boudreaux, Christopher J., 2020. "National regulation, state-level policy, and local job creation in the United States: A multilevel perspective," Research Policy, Elsevier, vol. 49(4).
    3. Boudreaux, Christopher J. & Nikolaev, Boris N. & Klein, Peter, 2019. "Socio-cognitive traits and entrepreneurship: The moderating role of economic institutions," Journal of Business Venturing, Elsevier, vol. 34(1), pages 178-196.
    4. Christopher J. Boudreaux & Boris Nikolaev, 2018. "Shattering the glass ceiling? How the institutional context mitigates the gender gap in entrepreneurship," Papers 1812.03771, arXiv.org.

    More about this item

    Keywords

    Entrepreneurship; Economic freedom; Veto institutions; M13; O31; O50;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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