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Does corruption ever help entrepreneurship?

Author

Listed:
  • Nabamita Dutta

    (University of Wisconsin)

  • Russell Sobel

    (The Citadel)

Abstract

The current literature contains mixed results regarding the impact of corruption on entrepreneurship and economic growth. In this paper, we examine a much larger set of countries and time periods to attempt to gain insights into this relationship. In particular, the central question is whether corruption can compensate for a bad business climate. Our results are clear; corruption hurts entrepreneurship. The impact is smaller, but remains negative, when business climates are bad. This is in contrast to previous literature that suggests corruption may increase entrepreneurship under a bad business climate. We find corruption never improves entrepreneurship; it simply hurts less when business climates are not conducive to growth in the first place.

Suggested Citation

  • Nabamita Dutta & Russell Sobel, 2016. "Does corruption ever help entrepreneurship?," Small Business Economics, Springer, vol. 47(1), pages 179-199, June.
    • Handle: RePEc:kap:sbusec:v:47:y:2016:i:1:d:10.1007_s11187-016-9728-7
    DOI: 10.1007/s11187-016-9728-7
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