Entrepreneurial Entry: Which Institutions Matter?
Ruta Aidis (),
Saul Estrin () and
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Saul Estrin: London School of Economics
No 4123, IZA Discussion Papers from Institute of Labor Economics (IZA)
In this paper we explore the relationship between the individual decision to become an entrepreneur and the institutional context. We pinpoint the critical roles of property rights and the size of the state sector for entrepreneurial activity and test the relationships empirically by combining country-level institutional indicators for 44 countries with working age population survey data taken from the Global Enterprise Monitor. A methodological contribution is the use of factor analysis to reduce the statistical problems with the array of highly collinear institutional indicators. We find that the key institutional features that enhance entrepreneurial activity are indeed the rule of law and limits to the state sector. However, these results are sensitive to the level of development.
Keywords: entrepreneurship; property rights; access to finance (search for similar items in EconPapers)
JEL-codes: L26 P14 P37 P51 (search for similar items in EconPapers)
Pages: 46 pages
New Economics Papers: this item is included in nep-ent, nep-soc and nep-tra
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Published in: Grzegorz Kolodko and Jacek Tomkiewicz (eds.), 20 Years of Transformation: Achievements, Problems and Perspectives, New York: Nova, 2011
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Working Paper: Entrepreneurial Entry: Which Institutions Matter? (2009)
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