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Does Trust Matter For Entrepreuneurship : Evidence From A Cross-Section Of Countries

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  • Kodila-Tedika, Oasis
  • Agbor Agbor, Julius

Abstract

To the extent that trust is necessary to conduct informal sector business activities, its absence could possibly constrain entrepreneurial spirit and overall economic growth. This paper tests the hypothesis that differences in trust levels between countries explain the observed differences in entrepreneurial spirit amongst them. Analyzing 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 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 pay attention to the role of trust cultivated through informal networks.

Suggested Citation

  • Kodila-Tedika, Oasis & Agbor Agbor, Julius, 2012. "Does Trust Matter For Entrepreuneurship : Evidence From A Cross-Section Of Countries," MPRA Paper 42292, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:42292
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    Cited by:

    1. Simplice Asongu & Oasis Kodila-tedika, 2017. "Trust and Growth Revisited," Economics Bulletin, AccessEcon, vol. 37(4), pages 2951-2961.
    2. 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.
    3. Oasis Kodila-Tedika & Simplice Asongu & Florentin Azia-Dimbu, 2016. "The Sensitive Nature of Social Trust to Intelligence," Working Papers 16/005, African Governance and Development Institute..
    4. 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.

    More about this item

    Keywords

    Entrepreneurship; Trust; Institutions;

    JEL classification:

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