Does Trust Matter For Entrepreuneurship : Evidence From A Cross-Section Of Countries
AbstractTo the extent that trust is necessary to conduct informal sector business activities, its absence could possibly constrain entrepreneurial spirit and overall economic growth. This paper tests the hypothesis that differences in trust levels between countries explain the observed differences in entrepreneurial spirit amongst them. Analyzing a cross-section of 60 countries in 2010, our findings suggest that about half of the variation in entrepreneurial spirit across countries in the world is driven by trust considerations. This result is robust to regional clustering and to alternative conditioning variables. The findings of the study suggest that while formal incentives to nurture entrepreneurship must be maintained, policy-makers should also pay attention to the role of trust cultivated through informal networks.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 42292.
Date of creation: 29 Oct 2012
Date of revision:
Entrepreneurship; Trust; Institutions;
Find related papers by JEL classification:
- D2 - Microeconomics - - Production and Organizations
- P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
- NEP-CSE-2012-11-17 (Economics of Strategic Management)
- NEP-ENT-2012-11-17 (Entrepreneurship)
- NEP-IUE-2012-11-17 (Informal & Underground Economics)
- NEP-SOC-2012-11-17 (Social Norms & Social Capital)
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