Entrepreneurial Entry: Which Institutions Matter?
AbstractIn this paper we explore the relationship between the individual decision to become an entrepreneur and the institutional context. We pinpoint the critical roles of property rights and the size of the state sector for entrepreneurial activity and test the relationships empirically by combining country-level institutional indicators for 44 countries with working age population survey data taken from the Global Enterprise Monitor. A methodological contribution is the use of factor analysis to reduce the statistical problems with the array of highly collinear institutional indicators. We find that the key institutional features that enhance entrepreneurial activity are indeed the rule of law and limits to the state sector. However, these results are sensitive to the level of development.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7278.
Date of creation: Apr 2009
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Other versions of this item:
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- P14 - Economic Systems - - Capitalist Systems - - - Property Rights
- P37 - Economic Systems - - Socialist Institutions and Their Transitions - - - Legal
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
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