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The effect of business regulations on nascent and young business entrepreneurship

  • André van Stel
  • Roy Thurik
  • David Storey

In this paper we examine the relationship, across 39 countries, between regulation and entrepreneurship using a new two-equation model. We find the minimum capital requirement required to start a business lowers entrepreneurship rates across countries, as do labour market regulations. However the administrative considerations of starting a business�- such as the time, the cost, or the number of procedures required�- are unrelated to the formation rate of either nascent or young businesses. Given the explicit link made by Djankov et al. (2002) between the speed and ease with which businesses may be established in a country and its economic performance�- �and the enthusiasm with which this link has been grasped by European Union policy makers�- our findings imply this link needs reconsidering.

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File URL: http://www.entrepreneurship-sme.eu/pdf-ez/H200609.pdf
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Paper provided by EIM Business and Policy Research in its series Scales Research Reports with number H200609.

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Length: 25 pages
Date of creation: 18 Sep 2006
Date of revision:
Handle: RePEc:eim:papers:h200609
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  1. John Armour & Douglas Cumming, 2008. "Bankruptcy Law and Entrepreneurship," American Law and Economics Review, Oxford University Press, vol. 10(2), pages 303-350.
  2. Sander Wennekers & André Stel & Roy Thurik & Paul Reynolds, 2008. "Nascent entrepreneurship and the level of economic development," Small Business Economics, Springer, vol. 30(3), pages 325-325, March.
  3. Verheul, I. & van Stel, A.J. & Thurik, A.R., 2005. "Explaining Female and Male Entrepreneurship at the Country Level," ERIM Report Series Research in Management ERS-2005-089-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  4. Adriaan J. van Stel & David J. Storey, 2004. "The link between firm births and job creation: Is there a Upas Tree effect?," Papers on Entrepreneurship, Growth and Public Policy 2004-33, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  5. Roy Thurik & Isabel Grilo, 2005. "Latent and actual entrepreneurship in Europe and the US: some recent developments," Papers on Entrepreneurship, Growth and Public Policy 2005-24, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  6. David Blanchflower & A Oswald, 1993. "Entrepreneurship," CEP Discussion Papers dp0134, Centre for Economic Performance, LSE.
  7. Andre van Stel & Martin Carree & Roy Thurik, . "The effect of entrepreneurial activity on national economic growth," Papers on Entrepreneurship, Growth and Public Policy 2005-04, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  8. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
  9. Roy Thurik & Isabel Grilo, 2006. "Entrepreneurship in the old en new Europe," Scales Research Reports N200516, EIM Business and Policy Research.
  10. David B. Audretsch & Isabel Grilo & A. Roy Thurik, 2007. "Explaining Entrepreneurship and the Role of Policy: A Framework," Chapters, in: Handbook of Research on Entrepreneurship Policy, chapter 1 Edward Elgar.
  11. Joan-Lluis Capelleras & Kevin F Mole & Francis J Greene & David J Storey, 2008. "Do more heavily regulated economies have poorer performing new ventures? Evidence from Britain and Spain," Journal of International Business Studies, Palgrave Macmillan, vol. 39(4), pages 688-704, June.
  12. Juan Botero & Simeon Djankov & Rafael LaPorta & Florencio López-de-Silanes & Andrei Shleifer, . "The Regulation of Labor," Working Paper 19483, Harvard University OpenScholar.
  13. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
  14. Rolf Sternberg & Sander Wennekers, 2005. "Determinants and Effects of New Business Creation Using Global Entrepreneurship Monitor Data," Small Business Economics, Springer, vol. 24(3), pages 193-203, 01.
  15. Isabel Grilo & Jesus-Maria Irigoyen, 2006. "Entrepreneurship in the EU: To Wish and not to be," Small Business Economics, Springer, vol. 26(4), pages 305-318, 05.
  16. Roy Thurik & Sander Wennekers & Ingrid Verheul & David Audretsch, 2001. "An eclectic theory of entrepreneurship: policies, institutions and culture," Scales Research Reports H200012, EIM Business and Policy Research.
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