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

Author

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  • Oasis Kodila-Tedika

    (Kinshasa, DRC)

  • Julius A. Agbor

    (Cape Town, 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, to outliers and to alternative conditioning variables. The findings of the study suggest 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 A. Agbor, 2015. "Does Trust Matter for Entrepreneurship: Evidence from A Cross-Section of Countries," Research Africa Network Working Papers 15/057, Research Africa Network (RAN).
    • Handle: RePEc:abh:wpaper:15/057
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    3. Simplice Asongu & Oasis Kodila-tedika, 2017. "Trust and Growth Revisited," Economics Bulletin, AccessEcon, vol. 37(4), pages 2951-2961.
    4. 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.
    5. 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.
    6. 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, vol. 10(9), pages 1-26, August.
    7. Elert, Niklas & Stam, Erik & Stenkula, Mikael, 2019. "Intrapreneurship and Trust," Working Paper Series 1280, Research Institute of Industrial Economics.
    8. 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.
    9. Esa Mangeloja & Tomi Ovaska & Ryo Takashima, 2022. "Entrepreneurial choices depend on trust: Some global evidence," Journal of International Entrepreneurship, Springer, vol. 20(4), pages 564-590, December.
    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, vol. 12(3), pages 1-15, January.
    11. 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.

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    More about this item

    Keywords

    trust; institution; entrepreneurship;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - 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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