Trust in European Institutions in Explaining the Entrepreneurship in European Union Countries

Aleksandra Gawel and Timo Toikko
Additional contact information
Aleksandra Gawel: Department of International Competitiveness, Poznan University of Economics and Business, Al. Niepodległości 10, 61-875 Poznań, Poland
Timo Toikko: Department of Social Sciences, University of Eastern Finland, P.O. Box 111, FI-80101 Joensuu, Finland

Social Sciences, 2021, vol. 10, issue 6, 1-16

Abstract: Entrepreneurship is believed to be shaped by institutions; however, the paper assumes that trust in institutions is a fundamental prerequisite for the impact of institutions on entrepreneurship. The aims of the paper are to determine (i) whether trust in European institutions affects the level of entrepreneurship in European Union countries, and (ii) whether there are any differences in this impact regarding the types of institutions and (iii) a country’s government budget size. Based on yearly panel data for 27 European Union countries in the years 2004–2019 and estimations of panel regression models, the results show that confidence in institutions is a significant factor in explaining entrepreneurship. However, institutional trust has no homogeneous effect on entrepreneurship, as the impact depends on the kind of institutions related to their functions and values as well as on the country’s characteristics in relation to the size of the government’s budget. Practical implications suggest the possibilities of supporting entrepreneurship—especially in countries with a relatively lower public redistribution—by raising the level of confidence in the European Central Bank. The originality of the paper is related to distinguishing institutional trust based on the type of institutions and the country’s characteristics of governmental budget size.

Keywords: institutions; European Union institutions; trust in European Union institutions; entrepreneurship (search for similar items in EconPapers)
JEL-codes: A B N P Y80 Z00 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2076-0760/10/6/195/pdf (application/pdf)
https://www.mdpi.com/2076-0760/10/6/195/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jscscx:v:10:y:2021:i:6:p:195-:d:562812

Access Statistics for this article

Social Sciences is currently edited by Ms. Yvonne Chu

More articles in Social Sciences from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().