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A survey on institutions and new firm entry: How and why do entry rates differ in emerging markets?

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  • Estrin, Saul
  • Prevezer, Martha

Abstract

This paper considers the impact of institutions on new firm entry in emerging markets. In particular, it surveys the findings of a 2-year research project on the sources of success in terms of entry rates and conditions (including gross entry rates, exit rates and therefore net entry rates) across the BRIC countries (Brazil, Russia, India, China). These emerging market economies display widely varying entry and exit rates and a framework is developed to capture the interaction between key aspects of formal institutions, how those institutions play out in practice, and their impact on entry and exit rates. The country case studies reveal that, whilst different contingencies affect the relationships between institutions and entry in each country, there are some empirical regularities in the determinants of successful entry and conversely in its constraints. One such regularity is the critical interaction between formal rules and informal mechanisms. There is also variation in whether these works so as to compensate for deficiencies in formal institutions, as in China and India, or whether deficiencies in formal mechanisms are compounded by poor informal mechanisms, as is sometimes true in Brazil. Indeed, relatively good formal rules and structures can be undermined by informal mechanisms deterring or blocking entry, as is largely the case in Russia.

Suggested Citation

  • Estrin, Saul & Prevezer, Martha, 2010. "A survey on institutions and new firm entry: How and why do entry rates differ in emerging markets?," Economic Systems, Elsevier, vol. 34(3), pages 289-308, September.
  • Handle: RePEc:eee:ecosys:v:34:y:2010:i:3:p:289-308
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    1. Goel, Rajeev K. & Korhonen, Iikka, 2011. "Exports and cross-national corruption: A disaggregated examination," Economic Systems, Elsevier, vol. 35(1), pages 109-124, March.
    2. Christopher Andrew Hartwell, 2014. "Capital Controls and the Determinants of Entrepreneurship," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(6), pages 434-456, December.
    3. Ichiro Iwasaki & Mathilde Maurel, 2017. "The Impact of Crisis on Firm Creation and Regeneration in Russia: Regional Panel Data Analysis," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01505659, HAL.
    4. Davis, Lewis S. & Williamson, Claudia R., 2016. "Culture and the regulation of entry," Journal of Comparative Economics, Elsevier, vol. 44(4), pages 1055-1083.
    5. Iwasaki, Ichiro, 2014. "Global financial crisis, corporate governance, and firm survival:," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 178-211.
    6. Doan, Quang Hung & Vu, Hoang Nam & Dao, Ngoc Tien, 2013. "Sub-National Institutions and Firm Survival in Vietnam," MPRA Paper 63653, University Library of Munich, Germany.
    7. repec:ekd:006356:6689 is not listed on IDEAS
    8. repec:eee:rujoec:v:2:y:2016:i:2:p:162-191 is not listed on IDEAS
    9. Daphne Yiu & Jun Su & Yuehua Xu, 2013. "Alternative financing and private firm performance," Asia Pacific Journal of Management, Springer, vol. 30(3), pages 829-852, September.
    10. 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.
    11. repec:eee:rujoec:v:2:y:2016:i:4:p:349-374 is not listed on IDEAS
    12. 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 Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 72, number 72.
    13. Saul Estrin & Martha Prevezer, 2011. "The role of informal institutions in corporate governance: Brazil, Russia, India, and China compared," Asia Pacific Journal of Management, Springer, vol. 28(1), pages 41-67, March.
    14. Canfei He & Rudai Yang, 2016. "Determinants of Firm Failure: Empirical Evidence from China," Growth and Change, Wiley Blackwell, vol. 47(1), pages 72-92, March.
    15. Iwasaki, Ichiro & Maurel, Mathilde & Meunier, Bogdan, 2016. "Firm entry and exit during a crisis period: Evidence from Russian regions," Russian Journal of Economics, Elsevier, vol. 2(2), pages 162-191.
    16. Iwasaki, Ichiro, 2013. "Global Financial Crisis, Corporate Governance, and Firm Survival: The Russian Experience," RRC Working Paper Series 37, Russian Research Center, Institute of Economic Research, Hitotsubashi University.

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