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Entrepreneurship and political risk

Author

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  • Nabamita Dutta
  • Russell S. Sobel
  • Sanjukta Roy

Abstract

Purpose - – Previous literature has clearly demonstrated the need for sound government policies or “institutions” to promote and support entrepreneurship in a country. The purpose of this paper is to explore the role of one such institution – political stability – in boosting entrepreneurial endeavors. A politically stable nation will have lower risk and transaction/contracting costs, and higher levels of government transparency, predictability, and accountability. Thus, the paper should expect that with greater political stability there should be a greater degree of entrepreneurial activity. Design/methodology/approach - – Using dynamic panel estimators (System GMM estimators) and considering multiple proxies of political risk, our results confirm this hypothesis. Such estimators handle challenges associated with panel data efficiently. Findings - – The paper's results show that greater political stability for a country does indeed lead to an increased rate of entrepreneurship and wealth creation. Originality/value - – Entrepreneurship is critical to the process of economic growth and development. To prosper, countries must unleash the creative talents of their citizens through the decentralized process of formal private sector entrepreneurship. New legal businesses create jobs, opportunities, wealth, and goods and services that make a nation grow. Sadly in many nations, this process is stifled and poverty is the result. While previous research has examined which types of specific policies matter for promoting entrepreneurship, the paper considers the different question of how the stability of political institutions impacts the rate of entrepreneurship.

Suggested Citation

  • Nabamita Dutta & Russell S. Sobel & Sanjukta Roy, 2013. "Entrepreneurship and political risk," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 2(2), pages 130-143, October.
    • Handle: RePEc:eme:jepppp:v:2:y:2013:i:2:p:130-143
    DOI: 10.1108/JEPP-03-2012-0018
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    Citations

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    Cited by:

    1. Ajzenman, Nicolás & Aksoy, Cevat Giray & Guriev, Sergei, 2022. "Exposure to transit migration: Public attitudes and entrepreneurship," Journal of Development Economics, Elsevier, vol. 158(C).
    2. Wang, Guoyu & Gu, Xiao & Shen, Xi & Uktamov, Khusniddin Fakhriddinovich & Ageli, Mohammed Moosa, 2023. "A dual risk perspective of China's resources market: Geopolitical risk and political risk," Resources Policy, Elsevier, vol. 82(C).
    3. Christopher Boudreaux & Anand Jha & Monica Escaleras, 2021. "Weathering the Storm: How Foreign Aid and Institutions Affect Entrepreneurship Following Natural Disasters," Papers 2104.12008, arXiv.org.
    4. Turan Yay & Gülsün G. Yay & Tolga Aksoy, 2018. "Impact of institutions on entrepreneurship: a panel data analysis," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(1), pages 131-160, April.
    5. Hoda Zobeiri & Zahra Poulaei, 2023. "Does political capital make a difference in GDP per capita? A fuzzy logic to estimate the political capital index," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(1), pages 919-932, February.
    6. Isabel Luis-Rico & María-Camino Escolar-Llamazares & Tamara De la Torre-Cruz & Alfredo Jiménez & Álvaro Herrero & Carmen Palmero-Cámara & Alfredo Jiménez-Eguizábal, 2020. "Entrepreneurial Interest and Entrepreneurial Competence Among Spanish Youth: An Analysis with Artificial Neural Networks," Sustainability, MDPI, vol. 12(4), pages 1-17, February.
    7. Roberto Ganau & Andrés Rodríguez‐Pose, 2019. "Do high‐quality local institutions shape labour productivity in Western European manufacturing firms?," Papers in Regional Science, Wiley Blackwell, vol. 98(4), pages 1633-1666, August.
    8. Dirk De Clercq & Steven A. Brieger, 2022. "When Discrimination is Worse, Autonomy is Key: How Women Entrepreneurs Leverage Job Autonomy Resources to Find Work–Life Balance," Journal of Business Ethics, Springer, vol. 177(3), pages 665-682, May.
    9. Escaleras, Monica & Chiang, Eric P., 2017. "Fiscal decentralization and institutional quality on the business environment," Economics Letters, Elsevier, vol. 159(C), pages 161-163.
    10. Nicolás Ajzenman & Cevat Giray Aksoy & Sergei Guriev, 2020. "Exposure to Transit Migration, Public Attitudes and Entrepreneurship," Department of Economics Working Papers wp_gob_2020_02, Universidad Torcuato Di Tella.
    11. Ablam Estel Apeti & Jean-Louis Combes & Eyah Denise Edoh, 2023. "Entrepreneurship in developing countries: can mobile money play a role?," Working Papers hal-04081304, HAL.
    12. Rajeev K. Goel & Michael A. Nelson, 2023. "Which political regimes foster entrepreneurship? An international examination," The Journal of Technology Transfer, Springer, vol. 48(1), pages 126-146, February.

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