Determinants of entrepreneurial dynamics:The Case of the European Union

Jelena J. Stankoviæ (), Ivana Marjanoviæ (), Sandra Milanoviæ () and Milica Jovanoviæ Vujatoviæ ()
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Jelena J. Stankoviæ: University of Niš, Faculty of Economics, Niš, Serbia
Ivana Marjanoviæ: University of Niš, Faculty of Economics, Niš, Serbia
Sandra Milanoviæ: University of Niš, Faculty of Economics, Niš, Serbia
Milica Jovanoviæ Vujatoviæ: University of Niš, Faculty of Economics, Niš, Serbia

Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, 2022, vol. 40, issue 2, 329-351

Abstract: Since economic theory identifies new enterprises as one of the basic drivers of economic growth, it brings to the forefront the need to understand the existing dynamics of entrepreneurship. Consequently, the identification of the basic entrepreneurship’s determinants is a central issue from both a theoretical and a practical point of view in contemporary literature. A better understanding of the factors influencing the dynamics of entrepreneurship is a basic precondition for creating effective policies aimed at encouraging the creation of new companies, and consequently, the creation of new jobs. Therefore, this paper addresses several important issues. From the theoretical standpoint, the role of entrepreneurial determinants in creating a new business is examined. From a practical standpoint, the basic formal institutional factors influencing the birth rate of new companies are analyzed. The analysis was conducted on a sample of European Union countries for the period from 2010 to 2019 using data from the World Bank’s Doing Business database, as well as data on business dynamics from the Eurostat database. A panel data regression analysis using the fixed-effects estimation procedure with Driscoll-Kraay standard errors was conducted, and the results indicate that the dynamics of new enterprises’ foundation are negatively affected by the total tax burden, as well as the cost of property registration, while the amount of initial capital required to open a business has a positive impact. The results of the research can serve as a basis for fine-tuning policies that will facilitate and encourage the creation of new enterprises.

Keywords: enterprise birth rates; formal institutional factors; Doing business; EU countries; panel analysis (search for similar items in EconPapers)
JEL-codes: C33 G30 M13 M21 O52 (search for similar items in EconPapers)
Date: 2022
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