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De jure determinants of new firm formation: how the pillars of constitutions influence entrepreneurship

Author

Listed:
  • Emanuela Carbonara

    () (University of Bologna
    Johns Hopkins University – SAIS Europe)

  • Enrico Santarelli

    () (University of Bologna)

  • Hien Thu Tran

    () (Edge Hill University)

Abstract

Abstract This paper provides empirical evidence supporting the view that constitutions are the primary and fundamental institutional determinant of entrepreneurship. It shows that some of the provisions contained in national constitutions are positively and significantly associated with a standard measure of entrepreneurial dynamics, namely the rate of new business density. Using for 115 countries a novel dataset containing the characteristics of the constitutions enacted in the world, applying an IV-GMM treatment to deal with the endogeneity of constitutional rules, and controlling for de facto variables, the paper finds that provisions about the right to conduct/establish a business, the right to strike, consumer protection, anti-corruption, and compulsory education promote higher rates of new firm formation. Contrasting results are instead obtained for provisions concerning protection of intellectual property rights.

Suggested Citation

  • Emanuela Carbonara & Enrico Santarelli & Hien Thu Tran, 2016. "De jure determinants of new firm formation: how the pillars of constitutions influence entrepreneurship," Small Business Economics, Springer, vol. 47(1), pages 139-162, June.
  • Handle: RePEc:kap:sbusec:v:47:y:2016:i:1:d:10.1007_s11187-016-9715-z
    DOI: 10.1007/s11187-016-9715-z
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    Cited by:

    1. Bogatyreva, K. & Shirokova, G. & Osiyevskyy, O., 2016. "Intention-behavior translation in student entrepreneurship: An institutional perspective," Working Papers 6455, Graduate School of Management, St. Petersburg State University.

    More about this item

    Keywords

    Constitutional rules; Entrepreneurship; New firm formation; Economic effects of constitutions;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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