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Does Trust Matter For Entrepreuneurship : Evidence From A Cross-Section Of Countries

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  • Kodila-Tedika, Oasis
  • Agbor Agbor, Julius

Abstract

To 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 Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 42292.

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Date of creation: 29 Oct 2012
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Handle: RePEc:pra:mprapa:42292

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Keywords: Entrepreneurship; Trust; Institutions;

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Cited by:
  1. Asongu Simplice & Oasis Kodila-Tedika, 2013. "Trust and Prosperity: A Conditional Relationship," Working Papers 13/024, African Governance and Development Institute..
  2. Kodila-Tedika, Oasis, 2012. "Entrepreneurship and property right: de Soto'r right
    [Entrepreneuriat et droit de propriété : de Soto a raison]
    ," MPRA Paper 43464, University Library of Munich, Germany.

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