Entry-regulation and corruption: grease or sand in the wheels of entrepreneurship? Fresh evidence according to entrepreneurial motives

Marcus Dejardin () and Hélène Laurent
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Hélène Laurent: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, AMU - Aix Marseille Université

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Abstract: Plain English Summary Corruption and regulation can have ambiguous relationships with entrepreneurship unless you take a careful look at it. We examine the impact of corruption and entry-regulation on opportunity and necessity-motivated entrepreneurship within different economic development contexts. Corruption and entry-regulation correlate negatively with entrepreneurship but might have a tempering effect on each other. Thus, we consider whether corruption reduces the negative impact of entry-regulation on entrepreneurship while remaining globally negative (i.e., the "weak view") or if it completely counterbalance the negative effect (the "strong view"). Exploiting a cross-country dataset on 105 countries over the 2003–2016 period, we find that, while corruption might somewhat temper the negative impact of a heavy administrative machinery in developing countries, this tempering effect of corruption will generally be non-significant. Furthermore, our findings suggest that corruption deters opportunity-motivated entrepreneurship—the type of entrepreneurship that may contribute the most to productivity, economic growth and development. Corruption and regulation would then be particularly harmful for economic development. The policy-maker tackling these issues would do well to consider direct effects and possible interrelationships according to context.

Keywords: Entrepreneurship; Corruption; Regulation; Doing business; Grease the wheels; Sand the wheels; Opportunity; Necessity; Entreprenarial motives (search for similar items in EconPapers)
Date: 2023-11-14
Note: View the original document on HAL open archive server: https://hal.science/hal-04531948
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Published in Small Business Economics, 2023, 62 (3), pp.1223-1272. ⟨10.1007/s11187-023-00802-1⟩

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Journal Article: Entry-regulation and corruption: grease or sand in the wheels of entrepreneurship? Fresh evidence according to entrepreneurial motives (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04531948

DOI: 10.1007/s11187-023-00802-1

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