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Does Trust Matter for Entrepreneurship: Evidence from a Cross-Section of Countries

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  • Oasis Kodila-Tedika

    (Department of Economics, University of Kinshasa, Kinshasa, Congo)

  • Julius Agbor

    (Department of Economics, Stellenbosch University, Cape Town 7602, South Africa)

Abstract

Differences in trust levels between countries explain the observed discrepancies in entrepreneurial spirit amongst them. We test this hypothesis with 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, outliers and alternative conditioning variables. The findings of the study indicate that while formal incentives to nurture entrepreneurship must be maintained, policy makers should also seek to pay attention to the role of trust cultivated through informal networks.

Suggested Citation

  • Oasis Kodila-Tedika & Julius Agbor, 2016. "Does Trust Matter for Entrepreneurship: Evidence from a Cross-Section of Countries," Economies, MDPI, Open Access Journal, vol. 4(1), pages 1-17, March.
  • Handle: RePEc:gam:jecomi:v:4:y:2016:i:1:p:4-:d:65052
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    Cited by:

    1. Simplice Asongu & Oasis Kodila-tedika, 2017. "Trust and Growth Revisited," Economics Bulletin, AccessEcon, vol. 37(4), pages 2951-2961.
    2. Esa Mangeloja & Tomi Ovaska & Ryo Takashima, 2021. "Exploring the Relationship Between Trust and Business Start-Ups in 52 Countries Over 16 Years," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 20(1), pages 17-36, June.
    3. Oasis Kodila-Tedika & Simplice Asongu & Florentin Azia-Dimbu, 2016. "The Sensitive Nature of Social Trust to Intelligence," Working Papers of the African Governance and Development Institute. 16/005, African Governance and Development Institute..
    4. Asongu, Simplice A. & Kodila-Tedika, Oasis, 2013. "Trust and Prosperity: A Conditional Relationship," MPRA Paper 46865, University Library of Munich, Germany, revised 15 Jun 2013.
    5. David Cuberes & Sadia Priyanka & Marc Teignier, 2019. "The determinants of entrepreneurship gender gaps: A cross‐country analysis," Review of Development Economics, Wiley Blackwell, vol. 23(1), pages 72-101, February.
    6. Ljunge, Martin & Stenkula, Mikael, 2021. "Fertile soil for intrapreneurship: impartial institutions and human capital," Journal of Institutional Economics, Cambridge University Press, vol. 17(3), pages 489-508, June.
    7. Ondřej Dvouletý, 2019. "Development of Entrepreneurial Activity in the Czech Republic over the Years 2005–2017," Journal of Open Innovation: Technology, Market, and Complexity, MDPI, Open Access Journal, vol. 5(3), pages 1-12, June.
    8. 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.
    9. Urszula Markowska-Przybyła & David M. Ramsey, 2018. "Social Capital and Long-Term Regional Development within Poland in the Light of Experimental Economics and Data from a Questionnaire," Sustainability, MDPI, Open Access Journal, vol. 10(9), pages 1-26, August.
    10. Ana Fernández-Laviada & Carlos López-Gutiérrez & Andrea Pérez, 2020. "How Does the Development of the Social Enterprise Sector Affect Entrepreneurial Behavior? An Empirical Analysis," Sustainability, MDPI, Open Access Journal, vol. 12(3), pages 1-15, January.

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    More about this item

    Keywords

    trust; institution; entrepreneurship;
    All these keywords.

    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; Language; Social and Economic Stratification

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