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The Influence of the Quality of Government Institutions on Entrepreneurial Motivation: Exploring the Variance across Countries

José Amorós Espinosa () and Pekka Stenholm ()
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Pekka Stenholm: TSE Entre, Turku School of Economics, University of Turku

No 1401, Working Papers from Departament Empresa, Universitat Autònoma de Barcelona

Abstract: Despite the increasing understanding of the relationships between institutions and entrepreneurship, the influence of the quality of government institutions on entrepreneurship is less addressed. This paper focuses on this critical eterminant of entrepreneurship in developing and developed ountries. Drawing from institutional theory we hypothesize and empirically assess the role of the quality of institutions in entrepreneurial activity. We examine how the quality of government institutions influences the rate of necessity-based entrepreneurial activity across countries and over time by using a cross-sectional time-series approach on data from the Global Entrepreneurship Monitor (GEM) database covering the years 2001–2011. Our results suggest that higher economic development associated with better quality of institutions reduces the prevalence of necessity-based entrepreneurship. Our findings imply that developing countries must rationally organize their functions, and seek to remove unnecessary barriers, decrease political instability, and controls that hamper entrepreneurial activity.

Keywords: Government Institutions; Quality; Regulation; Global Entrepreneurship Monitor; Entrepreneurial Motivation. (search for similar items in EconPapers)
JEL-codes: H11 L26 E02 O20 (search for similar items in EconPapers)
Date: 2013-12, Revised 2013-12
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Published in Working Papers at the Department of Business, February, pages 1-41

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http://www.uab.cat/doc/DOC_WP_14_01 Revised version, 2013 (application/pdf)
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