Agency culture, constitutional provisions and entrepreneurship: a cross-country analysis

Emanuela Carbonara, Enrico Santarelli, Martin Obschonka, Hien Thu Tran, Jeff Potter and Samuel D Gosling

Industrial and Corporate Change, 2018, vol. 27, issue 3, 507-524

Abstract: Substantial and systematic cross-country variation in entrepreneurship rates has been found in various studies. We attempt to explain such differences focusing on the interaction between institutional factors and population psychological characteristics. Constitutional provisions supporting economic freedom are our measure of the institutional context, whereas we proxy psychological characteristics with a country’s endowment of agency culture. We apply an IV-GMM treatment to deal with endogeneity to a data set comprising 86 countries over the period 2004–2013, and we control for de facto variables and other factors that are likely to influence entrepreneurship. Our results demonstrate that agency culture is indeed an important predictor of entrepreneurship and that this effect is moderated by constitutional provisions supporting economic freedom. In particular, the impact of agency culture on entrepreneurship becomes stronger as a country expands the constitutional protection of economic rights.

JEL-codes: D63 D72 H10 K10 L26 Z13 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (14)

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