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Size Matters: Entrepreneurial Entry and Government

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  • Aidis, Ruta

    ()
    (University College London)

  • Estrin, Saul

    ()
    (London School of Economics)

  • Mickiewicz, Tomasz

    ()
    (University College London)

Abstract

We explore the country-specific institutional characteristics likely to influence an individual's decision to become an entrepreneur. We focus on the size of the government, on freedom from corruption, and on 'market freedom' defined as a cluster of variables related to protection of property rights and regulation. We test these relationships by combining country-level institutional indicators for 47 countries with working age population survey data taken from the Global Entrepreneurship Monitor. Our results indicate that entrepreneurial entry is inversely related to the size of the government, and more weakly to the extent of corruption. A cluster of institutional indicators representing 'market freedom' is only significant in some specifications. Freedom from corruption is significantly related to entrepreneurial entry, especially when the richest countries are removed from the sample but unlike the size of government, the results on corruption are not confirmed by country-level fixed effects models.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5052.

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Length: 59 pages
Date of creation: Jul 2010
Date of revision:
Publication status: published in: Small Business Economics, 2012, 39 (1), 119-139
Handle: RePEc:iza:izadps:dp5052

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Keywords: market freedom; government; entrepreneurship; corruption;

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Cited by:
  1. Claudia Álvarez & David Urbano & José Amorós, 2014. "GEM research: achievements and challenges," Small Business Economics, Springer, vol. 42(3), pages 445-465, March.
  2. Troilo, Michael, 2011. "Legal institutions and high-growth aspiration entrepreneurship," Economic Systems, Elsevier, vol. 35(2), pages 158-175, June.
  3. Estrin, Saul & Korosteleva, Julia & Mickiewicz, Tomasz, 2013. "Which institutions encourage entrepreneurial growth aspirations?," Journal of Business Venturing, Elsevier, vol. 28(4), pages 564-580.
  4. Traikova, Diana & Mollers, Judith & Buchenrieder, Gertrud, 2012. "How Farmers Become Entrepreneurs - Prenatal Diagnostic of Rural Firms in Bulgaria," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126816, International Association of Agricultural Economists.
  5. Bosma, Niels, 2013. "The Global Entrepreneurship Monitor (GEM) and Its Impact on Entrepreneurship Research," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 9(2), pages 143-248, February.
  6. Islam, Asif, 2014. "Economic growth and crime against small and medium sized enterprises in developing economies," Policy Research Working Paper Series 6768, The World Bank.
  7. Estrin, Saul & Korosteleva, Julia & Mickiewicz, Tomasz, 2011. "Which Institutions Encourage Entrepreneurs to Create Larger Firms?," IZA Discussion Papers 5481, Institute for the Study of Labor (IZA).
  8. Islam , Asif, 2014. "Do government private subsidies crowd out entrepreneurship?," European Economic Letters, European Economics Letters Group, vol. 3(1), pages 22-25.
  9. Traikova, Diana, 2013. "Determinants of non-farm entrepreneurial intentions in a transitional context: Evidence from rural Bulgaria," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 72, number 72.
  10. Maksim Belitski & Julia Korosteleva, 2011. "Entrepreneurship and cities: evidence from the post-communist world," ERSA conference papers ersa11p288, European Regional Science Association.
  11. Saul Estrin & Tomasz Mickiewicz, 2011. "Institutions and female entrepreneurship," Small Business Economics, Springer, vol. 37(4), pages 397-415, November.
  12. Mihai Nica, 2013. "Spending allocation and entrepreneurship," Journal of International Entrepreneurship, Springer, vol. 11(4), pages 351-369, December.
  13. Heiko Bergmann & Ute Stephan, 2013. "Moving on from nascent entrepreneurship: measuring cross-national differences in the transition to new business ownership," Small Business Economics, Springer, vol. 41(4), pages 945-959, December.
  14. Maksim Belitski & Julia Korosteleva, 2011. "Entrepreneurship and Cities: Evidence from the Post-communist World," WIFO Working Papers 397, WIFO.
  15. Driffield, Nigel L. & Mickiewicz, Tomasz & Temouri, Yama, 2013. "Institutional reforms, productivity and profitability: From rents to competition?," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 583-600.

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