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Entrepreneurial Entry: Which Institutions Matter?

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  • Aidis, Ruta

    (University College London)

  • Estrin, Saul

    (London School of Economics)

  • Mickiewicz, Tomasz

    (Aston University)

Abstract

In this paper we explore the relationship between the individual decision to become an entrepreneur and the institutional context. We pinpoint the critical roles of property rights and the size of the state sector for entrepreneurial activity and test the relationships empirically by combining country-level institutional indicators for 44 countries with working age population survey data taken from the Global Enterprise Monitor. A methodological contribution is the use of factor analysis to reduce the statistical problems with the array of highly collinear institutional indicators. We find that the key institutional features that enhance entrepreneurial activity are indeed the rule of law and limits to the state sector. However, these results are sensitive to the level of development.

Suggested Citation

  • Aidis, Ruta & Estrin, Saul & Mickiewicz, Tomasz, 2009. "Entrepreneurial Entry: Which Institutions Matter?," IZA Discussion Papers 4123, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4123
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    Cited by:

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    2. Hernando Zuleta, 2021. "Competitividad y entorno institucional en Colombia," Documentos CEDE 19623, Universidad de los Andes, Facultad de Economía, CEDE.
    3. André van Stel & David Storey & Chantal Hartog, 2010. "Institutions and Entrepreneurship: The Role of The Rule of Law," Scales Research Reports H201003, EIM Business and Policy Research.
    4. Andrés Barreneche García, 2014. "Analyzing the determinants of entrepreneurship in European cities," Small Business Economics, Springer, vol. 42(1), pages 77-98, January.
    5. Ferrante, Francesco & Ruiu, Gabiele, 2014. "Entrepreneurship. How important are institutions and culturally-based prior beliefs?," MPRA Paper 41915, University Library of Munich, Germany.
    6. Ali Hussein Samadi, 2019. "Institutions and entrepreneurship: unidirectional or bidirectional causality?," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 9(1), pages 1-16, December.
    7. Tino Sanandaji & Peter T. Leeson, 2013. "Billionaires," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(1), pages 313-337, February.
    8. Niklas Elert, 2014. "What determines entry? Evidence from Sweden," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 55-92, August.
    9. Niranjan Chipalkatti & Jonathan P. Doh & Meenakshi Rishi, 2011. "Institutional quality, knowledge spillovers and entrepreneurship," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 4(4), pages 307-329.
    10. Farzana Chowdhury & David Audretsch, 2014. "Institution as looting apparatus: impact of gender equality and institutions on female entrepreneurship," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 4(2), pages 207-225, December.
    11. Vivekananda Mukherjee & Siddhartha Mitra & Swapnendu Banerjee, 2020. "Corruption, Pricing of Public Services, and Entrepreneurship in Economies with Leakage," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 176(4), pages 595-619.
    12. Mario Holzner & Florin Peci, 2011. "The Impact of Customs Procedures on Business Performance: Evidence from Kosovo," wiiw Working Papers 76, The Vienna Institute for International Economic Studies, wiiw.
    13. Zuzana Brixiova & Balázs Égert, 2010. "Modeling Institutions, Start-ups and Productivity during Transition," OECD Economics Department Working Papers 773, OECD Publishing.
    14. Potts Mark D & Affholter Joseph A & Harless Sydney, 2021. "Entrepreneurship Factors Among Developed Countries and Emerging Regions," South East European Journal of Economics and Business, Sciendo, vol. 16(2), pages 82-100, December.
    15. Ioana PETRESCU, 2016. "Size Matters: Entrepreneurship and Institutions," Management Dynamics in the Knowledge Economy, College of Management, National University of Political Studies and Public Administration, vol. 4(1), pages 63-80, March.
    16. Niklas Elert & Magnus Henrekson, 2016. "Evasive entrepreneurship," Small Business Economics, Springer, vol. 47(1), pages 95-113, June.
    17. Efendic, Adnan & Pugh, Geoff & Adnett, Nick, 2011. "Institutions and economic performance: A meta-regression analysis," European Journal of Political Economy, Elsevier, vol. 27(3), pages 586-599, September.
    18. Braunerhjelm, Pontus, 2010. "Entrepreneurship, Innovation and Economic Growth – Past experiences, current knowledge and policy implications," Working Papers 2010:2, Swedish Entrepreneurship Forum.
    19. Ruta Aidis, 2023. "Do institutions matter for entrepreneurial development?," IZA World of Labor, Institute of Labor Economics (IZA), pages 334-334, August.
    20. Tomasz Mickiewicz & Arnis Sauka & Ute Stephan, 2010. "Entrepreneurship and Philanthropy after Socialism," TeliaSonera Institute Discussion papers 10, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
    21. Yue Bao & Qi Miao & Ying Liu & Daniel Garst, 2016. "Human Capital, Perceived Domestic Institutional Quality And Entrepreneurship Among Highly Skilled Chinese Returnees," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 21(01), pages 1-21, March.
    22. Estrin, Saul & Korosteleva, Julia & Mickiewicz, Tomasz, 2009. "Better Means More: Property Rights and High-Growth Aspiration Entrepreneurship," IZA Discussion Papers 4396, Institute of Labor Economics (IZA).
    23. Andersson, Martin & Baltzopoulos, Apostolos & Lööf, Hans, 2012. "R&D strategies and entrepreneurial spawning," Research Policy, Elsevier, vol. 41(1), pages 54-68.

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    More about this item

    Keywords

    entrepreneurship; property rights; access to finance;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal

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