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Does Trust Matter For Entrepreuneurship: Evidence From A Cross-Section Of Countries

Oasis Kodila-Tedika () and Julius Agbor ()

MPRA Paper from University Library of Munich, Germany

Abstract: To the extent that trust is necessary to conduct informal sector business activities, its absence could possibly constrain entrepreneurial spirit and overall economic growth. This paper tests the hypothesis that differences in trust levels between countries explain the observed differences in entrepreneurial spirit amongst them. Analyzing a cross-section of 60 countries in 2010, our findings suggest that about half of the variation in entrepreneurial spirit across countries in the world is driven by trust considerations. This result is robust to regional clustering and to alternative conditioning variables. The findings of the study suggest that while formal incentives to nurture entrepreneurship must be maintained, policy-makers should also pay attention to the role of trust cultivated through informal networks.

Keywords: Entrepreneurship; Trust; Institutions (search for similar items in EconPapers)
JEL-codes: D2 P48 L26 Z13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-ent, nep-iue and nep-soc
Date: 2012-10-29
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Related works:
Journal Article: Does Trust Matter for Entrepreneurship: Evidence from a Cross-Section of Countries (2016) Downloads
Working Paper: Does Trust Matter for Entrepreneurship: Evidence from A Cross-Section of Countries (2015) Downloads
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