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Entrepreneurial Entry: Which Institutions Matter?

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  • Aidis, Ruta

    ()
    (University College London)

  • Estrin, Saul

    ()
    (London School of Economics)

  • Mickiewicz, Tomasz

    ()
    (University College London)

Abstract

In 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 Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4123.

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Length: 46 pages
Date of creation: Apr 2009
Date of revision:
Publication status: published in: Grzegorz Kolodko and Jacek Tomkiewicz (eds.), 20 Years of Transformation: Achievements, Problems and Perspectives, New York: Nova, 2011
Handle: RePEc:iza:izadps:dp4123

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Keywords: entrepreneurship; property rights; access to finance;

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  1. Hellman, Joel S. & Jones, Geraint & Kaufmann, Daniel, 2003. "Seize the state, seize the day: state capture and influence in transition economies," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 751-773, December.
  2. Wendy Carlin & Mark Schaffer & Paul Seabright, 2006. "Where are the Real Bottlenecks? A Lagrangian Approach to Identifying Constraints on Growth from Subjective Survey Data," CERT Discussion Papers, Centre for Economic Reform and Transformation, Heriot Watt University 0604, Centre for Economic Reform and Transformation, Heriot Watt University.
  3. Yuen-Ping Ho & Poh-Kam Wong, 2007. "Financing, Regulatory Costs and Entrepreneurial Propensity," Small Business Economics, Springer, Springer, vol. 28(2), pages 187-204, March.
  4. Minniti, Maria, 2005. "Entrepreneurship and network externalities," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 57(1), pages 1-27, May.
  5. Thierry Verdier & Daron Acemoglu, 2000. "The Choice between Market Failures and Corruption," American Economic Review, American Economic Association, American Economic Association, vol. 90(1), pages 194-211, March.
  6. Glaeser, Edward & Scheinkman, Jose & Shleifer, Andrei, 2003. "The injustice of inequality," Journal of Monetary Economics, Elsevier, Elsevier, vol. 50(1), pages 199-222, January.
  7. Baumol William J. & Litan Robert E & Schramm Carl J, 2007. "Sustaining Entrepreneurial Capitalism," Capitalism and Society, De Gruyter, De Gruyter, vol. 2(2), pages 1-38, November.
  8. Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, . "The Quality of Government," Working Paper 19452, Harvard University OpenScholar.
  9. Parker,Simon C., 2004. "The Economics of Self-Employment and Entrepreneurship," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521828130.
  10. Daron Acemoglu, 2005. "Constitutions, Politics and Economics: A Review Essay on Persson and Tabellini's "The Economic Effect of Constitutions"," NBER Working Papers 11235, National Bureau of Economic Research, Inc.
  11. Davidsson, Per & Honig, Benson, 2003. "The role of social and human capital among nascent entrepreneurs," Journal of Business Venturing, Elsevier, vol. 18(3), pages 301-331, May.
  12. Ruta Aidis & , Julia Korosteleva & , Tomasz Mickiewicz, 2008. "Entrepreneurship in Russia," Working Papers, CENTRE FOR THE STUDY OF ECONOMIC AND SOCIAL CHANGE IN EUROPE,School of Slavonic and East European Studies,University College London (SSEES,UCL) 88, CENTRE FOR THE STUDY OF ECONOMIC AND SOCIAL CHANGE IN EUROPE,School of Slavonic and East European Studies,University College London (SSEES,UCL).
  13. Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, Elsevier, vol. 82(3), pages 591-629, December.
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Cited by:
  1. Zuzana Brixiova & Balazs Egert, 2010. "Modeling Institutions, Start-Ups And Productivity During Transition," William Davidson Institute Working Papers Series wp975, William Davidson Institute at the University of Michigan.
  2. Braunerhjelm, Pontus, 2010. "Entrepreneurship, Innovation and Economic Growth – Past experiences, current knowledge and policy implications," Working Papers 2010:2, Swedish Entrepreneurship Forum.
  3. Mario Holzner & Florin Peci, 2012. "The impact of customs procedures on business performance: evidence from Kosovo," wiiw Balkan Observatory Working Papers, The Vienna Institute for International Economic Studies, wiiw 97, The Vienna Institute for International Economic Studies, wiiw.
  4. Niranjan Chipalkatti & Jonathan P. Doh & Meenakshi Rishi, 2011. "Institutional quality, knowledge spillovers and entrepreneurship," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, Inderscience Enterprises Ltd, vol. 4(4), pages 307-329.
  5. Kapeliushnikov, Rostislav & Kuznetsov, Andrei & Demina, Natalia & Kuznetsova, Olga, 2013. "Threats to security of property rights in a transition economy: An empirical perspective," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 245-264.
  6. Andersson, Martin & Baltzopoulos, Apostolos & Lööf, Hans, 2012. "R&D strategies and entrepreneurial spawning," Research Policy, Elsevier, Elsevier, vol. 41(1), pages 54-68.
  7. Sanandaji, Tino & Leeson, Peter, 2013. "Billionaires," Working Papers 2012:18, Swedish Entrepreneurship Forum.
  8. Mukherjee, Vivekananda & Mitra, Siddhartha & Banerjee, Swapnendu, 2013. "Corruption, Pricing of Public Services and Entrepreneurship in Economies with Leakage," MPRA Paper 49049, University Library of Munich, Germany.

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