Do more heavily regulated economies have poorer performing new ventures? Evidence from Britain and Spain

Joan-Lluis Capelleras, Kevin Mole, Francis J Greene and David J Storey
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Joan-Lluis Capelleras: Department of Business Economics, Universitat Autonoma de Barcelona, Bellaterra, Barcelona, Spain
Francis J Greene: Warwick Business School, University of Warwick, Coventry, UK
David J Storey: Warwick Business School, University of Warwick, Coventry, UK

Journal of International Business Studies, 2008, vol. 39, issue 4, 688-704

Abstract: We test two alternative perspectives on the start-up size and subsequent growth of new firms in a heavily regulated (HR) economy and a lightly regulated (LR) economy. The first argues that, in an HR economy, there will be fewer new firms, and those that do start will be larger than those in an LR economy, but they will grow more slowly. A second perspective is that regulation does not influence the scale of entrepreneurship – merely its distribution between that which is registered and that which is not registered. Using parallel datasets for HR Spain and LR Britain we find some support for both perspectives. Specifically we find that registered new firms in Britain do start smaller than in Spain and do grow faster. However, when both registered and unregistered firms are included, these differences disappear. Journal of International Business Studies (2008) 39, 688–704. doi:10.1057/palgrave.jibs.8400340

Date: 2008
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