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Uncertainty and entrepreneurship in oil-rich developing countries: Does institution matter?

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  • Jafari, Mahboubeh

Abstract

This paper aims to investigate how institutional quality can influence the relationship between uncertainty and entrepreneurial activities in a sample of 20 oil-rich developing countries. The World Uncertainty Index (WUI) is employed as the indicator for uncertainty. To mitigate endogeneity issues, we employ a series of panel data models estimated using the Generalized Method of Moments (GMM). We find a higher level of WUI is negatively associated with the new business formation. Furthermore, our findings underscore the vital role of institutional quality in moderating the adverse effects of uncertainty on entrepreneurship. These results remain consistent across various measurements of institutional quality, uncertainty, and new business formation. Additionally, the estimation results confirm the existence of the oil curse hypothesis. The results of this research offer valuable insights for both policy development and management practices.

Suggested Citation

  • Jafari, Mahboubeh, 2024. "Uncertainty and entrepreneurship in oil-rich developing countries: Does institution matter?," Resources Policy, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:jrpoli:v:99:y:2024:i:c:s0301420724007529
    DOI: 10.1016/j.resourpol.2024.105385
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    More about this item

    Keywords

    WUI; Entrepreneurship; Institutions; Oil-rich developing countries; GMM;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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