The effect of corruption on entrepreneurship in the presence of weak regulatory quality: Evidence from developing countries

Suliza Abd Rashid, Tajul Ariffin Masron and Nurhafiza Abdul Kader Malim

Socio-Economic Planning Sciences, 2023, vol. 86, issue C

Abstract: Efforts to improve currently low entrepreneurship in developing countries could be necessary but likely hampered by the high corruption. With poor regulatory quality in most developing countries, the effect of corruption on entrepreneurship could be unique. By using the Generalized Method of Moments (GMM) estimator, utilizing 48 developing countries as the sample for the period from 2008 to 2016, this study finds that there is a conditional effect of corruption on entrepreneurship, implying that poor regulatory quality has forced and opened up the door for individuals to offer bribes in order to start a new business. Nonetheless, as corruption could add to the high cost of business start-ups, to enhance entrepreneurship, policymakers need to give priority to improving regulatory quality and, subsequently, force corruption to fade away.

Keywords: Corruption; Regulatory quality; Entrepreneurship; Developing countries; GMM (search for similar items in EconPapers)
JEL-codes: M13 O50 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceps:v:86:y:2023:i:c:s0038012122002774

DOI: 10.1016/j.seps.2022.101476

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