Does democracy foster entrepreneurship?

Luca Farè (), David B. Audretsch () and Marcus Dejardin ()
Additional contact information
Luca Farè: Université de Namur
David B. Audretsch: Indiana University Bloomington

Small Business Economics, 2023, vol. 61, issue 4, No 5, 1495 pages

Abstract: Abstract Entrepreneurship has been connected to several socio-economic issues. However, despite the growing conjectures, the links with democracy have yet to be substantiated. By using a country-level panel dataset over the 1972–2010 period, we find evidence that democracy is conducive to entrepreneurship. We shed light on the intensity and multidimensionality of democracy by showing that the promotion of free social interchange and the direct involvement of civil society in political processes are two dimensions of democracy driving such effect. We additionally observe that entrepreneurship is sensitive to both contemporaneous and historical values of democracy. By providing the first systematic empirical evidence that entrepreneurship and democracy are directly connected, this study suggests to consider their ongoing concomitant retreats as two related phenomena.

Keywords: Entrepreneurship; Democracy; Knowledge; Freedom; Institutional trust (search for similar items in EconPapers)
JEL-codes: H11 L26 O10 P16 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11187-023-00737-7

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