Institutions and Entrepreneurship: The Role of The Rule of Law
AbstractThis paper examines variations in entrepreneurship across twenty developed countries, using three measures of entrepreneurship which we broadly describe as prestart, early-stage and established enterprises. It then links these measures to the economic institutional framework, holding constant a range of other factors. Two groups of conclusions emerge. The first is that the factors that influence pre-start, early-stage and established enterprises differ often quite sharply. Second, our results broadly confirm earlier work suggesting that social security entitlements, taxes, and employment protection legislation are negatively associated with (different forms of) entrepreneurial activity. However, our novel finding is that countries with a "better" rule of law have lower entrepreneurship. We explain this apparently counter-intuitive finding by arguing that in developed economies the benefits of the rule of law accrue primarily to large enterprises. �
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Bibliographic InfoPaper provided by EIM Business and Policy Research in its series Scales Research Reports with number H201003.
Length: 23 pages
Date of creation: 07 Jan 2010
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-16 (All new papers)
- NEP-ENT-2010-01-16 (Entrepreneurship)
- NEP-SBM-2010-01-16 (Small Business Management)
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- Gerrit de Wit & Mercedes Teruel, 2011. "Determinants of high-growth firms," Scales Research Reports H201107, EIM Business and Policy Research.
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