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De jure determinants of new firm formation: how the pillars of constitutions influence entrepreneurship

Emanuela Carbonara (), Enrico Santarelli () and Hien Thu Tran ()
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Emanuela Carbonara: University of Bologna
Hien Thu Tran: Edge Hill University

Small Business Economics, 2016, vol. 47, issue 1, 139-162

Abstract: Abstract This paper provides empirical evidence supporting the view that constitutions are the primary and fundamental institutional determinant of entrepreneurship. It shows that some of the provisions contained in national constitutions are positively and significantly associated with a standard measure of entrepreneurial dynamics, namely the rate of new business density. Using for 115 countries a novel dataset containing the characteristics of the constitutions enacted in the world, applying an IV-GMM treatment to deal with the endogeneity of constitutional rules, and controlling for de facto variables, the paper finds that provisions about the right to conduct/establish a business, the right to strike, consumer protection, anti-corruption, and compulsory education promote higher rates of new firm formation. Contrasting results are instead obtained for provisions concerning protection of intellectual property rights.

Keywords: Constitutional rules; Entrepreneurship; New firm formation; Economic effects of constitutions; D72; K10; H10; L26; M13; O50; P48 (search for similar items in EconPapers)
Date: 2016
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