What Matters for Entrepreneurship? A Global View on Its Determinants

The role of entrepreneurship in societal wellbeing is well documented in the economic literature and well perceived in the public arena. The extensive positive externalities of entrepreneurship, such as innovation or increased productivity, have made researchers be interested in the conditions and motivations that can determine it to flourish. Many empirical studies test the relations between the entrepreneurial activity and different determinant variables, but the empirical results are mixed and sometimes contradictory, especially for developing versus developed countries. This can make public policy makers confused and misguided. In this article, we are interested in identifying the factors that influence the dynamics of entrepreneurship, aiming to understand whether there is a set of common factors globally, which explain entrepreneurship development. We use the density of newly registered companies for a set of 57 countries for yearly observations from 2004 to 2012, as a proxy for entrepreneurship development. Our conclusions indicate that the bankruptcies, the economic situation, the producer prices and competitiveness are directly influencing the new density, while the wages, the bank lendings to the private sector, the bankruptcies and the leading indicator show cointegration with the new density. We consider this as evidence that there is a common set of determinants that affect entrepreneurship development. Such an analysis at global level increases knowledge in the entrepreneurship research, as it has the merit to inquire into the nature and conditions of entrepreneurship as a universal human behavior, in the countries of the world.