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Business regulation and red tape in the entrepreneurial economy

  • Nyström, Kristina

    ()

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

This paper discusses the interrelationship between business regulations and entrepreneurial activities. Most empirical studies find that business regulations have a negative effect on the amount of entrepreneurial activities in an economy. In addition, we argue that the regulatory quality and amount of business regulation may also be influenced by the amount of entrepreneurial activities in the society since policymakers and bureaucrats tend to respond to changing conditions in the society. In the empirical part of the paper, data for 23 OECD countries for the period 1972-2002 in order to elaborate on the interrelationship between entrepreneurship and the quality of business regulations. The empirical findings indicate that there is a positive relationship between entrepreneurship, and the quality of business regulations.

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Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 225.

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Length: 27 pages
Date of creation: 10 Apr 2010
Handle: RePEc:hhs:cesisp:0225
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  1. van Stel, A.J. & Storey, D. & Thurik, A.R., 2006. "The Effect of Business Regulations on Nascent and Young Business Entrepreneurship," ERIM Report Series Research in Management ERS-2006-052-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.
  2. 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;Academy of International Business, vol. 39(4), pages 688-704, June.
  3. Christian Bjørnskov & Nicolai J. Foss, 2006. "Economic Freedom and entrepreneurial Activity Some Cross-Country Evidence," DRUID Working Papers 06-18, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  4. Simeon Djankov & Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer, "undated". "The Regulation of Entry," Working Paper 19462, Harvard University OpenScholar.
  5. André van Stel, 2004. "COMPENDIA: Harmonizing business ownership data across countries and over time," Scales Research Reports N200413, EIM Business and Policy Research.
  6. Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, vol. 82(3), pages 591-629, December.
  7. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
  8. Lee, L W, 1991. "Entrepreneurship and Regulation: Dynamics and Political Economy," Journal of Evolutionary Economics, Springer, vol. 1(3), pages 219-35, July.
  9. David B. Audretsch & A. Roy Thurik, 2000. "Capitalism and democracy in the 21st Century: from the managed to the entrepreneurial economy," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 17-34.
  10. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
  11. Wennekers, Sander & Thurik, Roy, 1999. "Linking Entrepreneurship and Economic Growth," Small Business Economics, Springer, vol. 13(1), pages 27-55, August.
  12. Andre van Stel & David Storey & Roy Thurik, 2006. "The effect of business regulations on nascent and actual entrepreneurship," Papers on Entrepreneurship, Growth and Public Policy 2006-04, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
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