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Measuring the efficiency of an entrepreneurial ecosystem at municipality level: does institutional transparency play a moderating role?

Author

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  • Muhammad Faraz Riaz

    (University of Jena
    GC University Faisalabad)

  • João Leitão

    (University of Beira Interior
    University of Lisbon
    Università Degli Studi Di Bergamo)

  • Uwe Cantner

    (Friedrich Schiller University Jena
    University of Southern Denmark)

Abstract

This study measures the output (start-ups) of an entrepreneurial ecosystem and estimates the moderating effect of institutional transparency on the relationship between entrepreneurial ecosystem and start-ups, applied to the context of Portuguese municipalities. Using factor analysis, a composite index of entrepreneurial ecosystem is constructed. The empirical results reveal that institutional transparency catalyzes the positive effect of entrepreneurial ecosystem index on the start-ups. Nevertheless, when the individual effects of entrepreneurial ecosystem’s elements on start-ups are analyzed, the composite index of institutional transparency reveals to be non-linearly related with the output of the entrepreneurial ecosystem, denoting a negative coefficient, in the linear form, and a positive coefficient, in the quadratic form. In addition, increases in financial and economic transparency and the transparency in urban planning deter the new business formation in a municipality, whereas the municipalities where public procurement is relatively transparent are found to be attracting more start-ups. Results also suggest that by increasing the transparency in public procurement, the government can raise the number of start-ups in a municipality. The empirical findings also corroborate the thesis that the presence of higher education institutions in a municipality help to attract more start-ups.

Suggested Citation

  • Muhammad Faraz Riaz & João Leitão & Uwe Cantner, 2022. "Measuring the efficiency of an entrepreneurial ecosystem at municipality level: does institutional transparency play a moderating role?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 151-176, March.
    • Handle: RePEc:spr:eurasi:v:12:y:2022:i:1:d:10.1007_s40821-021-00194-w
    DOI: 10.1007/s40821-021-00194-w
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