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Does Monetary Aid Catalyse New Business Creation? Analysing the Impact of Global Aid Flows on Formal and Informal Entrepreneurship

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  • Elizabeth M. Moore
  • Luis Alfonso Dau
  • Jonathan Doh

Abstract

Official development aid – monetary transfers to developing countries to promote social and economic development – reached more than $140 billion in 2016. However, traditional forms of government bilateral aid continue to decline, while private aid is rising. Nevertheless, the impact of this aid, including its potential to stimulate economic development through new business formation, remains uncertain. In this study, we examine the impact of three sources of monetary aid flows on formal and informal entrepreneurship. Drawing from the international political economy literature we argue that bilateral aid and private aid are associated with higher levels of informal entrepreneurship, while multilateral aid is accompanied by lower levels. Moreover, we show that bilateral and private aid are linked with lower levels of formal entrepreneurship, while multilateral aid has no impact. The analyses of a panel of 313 observations from 49 countries provide robust support for these arguments.

Suggested Citation

  • Elizabeth M. Moore & Luis Alfonso Dau & Jonathan Doh, 2020. "Does Monetary Aid Catalyse New Business Creation? Analysing the Impact of Global Aid Flows on Formal and Informal Entrepreneurship," Journal of Management Studies, Wiley Blackwell, vol. 57(3), pages 438-469, May.
    • Handle: RePEc:bla:jomstd:v:57:y:2020:i:3:p:438-469
    DOI: 10.1111/joms.12552
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    Cited by:

    1. Luis Alfonso Dau & Elizabeth M. Moore & Jonathan P. Doh & Margaret A. Soto, 2022. "Does global integration stimulate corporate citizenship? The effect of international trade agreements and regulatory quality on state and private firm adoption of CSR standards," Journal of International Business Policy, Palgrave Macmillan, vol. 5(3), pages 328-352, September.
    2. Piers Thompson & Wenyu Zang, 2022. "A matter of life and death? Knowledge intensity of FDI activities and domestic enterprise," Papers in Regional Science, Wiley Blackwell, vol. 101(5), pages 1157-1179, October.
    3. Wei, Shihao & Su, Zhongfeng & Ahlstrom, David & Wu, Zhan, 2023. "State fragility and informal entrepreneurship: The moderating effects of human capital under varying temporal orientations," Journal of International Management, Elsevier, vol. 29(1).
    4. C. Massidda & R. Piras, 2024. "Funding sources, colonial legacy, and new firms’ creation in Africa," Economic Change and Restructuring, Springer, vol. 57(5), pages 1-68, October.
    5. Jinqian Deng & Huiling Chi & Tiantian Zhang, 2024. "Effects of Entrepreneurial Activities on Rural Revitalization: Based on Dissipative Structure Theory," Agriculture, MDPI, vol. 14(9), pages 1-22, August.
    6. Elizabeth M Moore & Luis Alfonso Dau & Santiago Mingo, 2021. "The effects of trade integration on formal and informal entrepreneurship: The moderating role of economic development," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(4), pages 746-772, June.
    7. Elizabeth M. Moore & Kristin Brandl & Luis Alfonso Dau, 2023. "Intergovernmental organizations, institutional schisms, and business environments," Journal of International Business Policy, Palgrave Macmillan, vol. 6(2), pages 141-158, June.
    8. Jiyoung Kimjeon & Per Davidsson, 2022. "External Enablers of Entrepreneurship: A Review and Agenda for Accumulation of Strategically Actionable Knowledge," Entrepreneurship Theory and Practice, , vol. 46(3), pages 643-687, May.
    9. Aristizábal, Juan & Tarapuez, Edwin & Hidalgo, Mario, 2023. "A multilevel approach to understanding the relationship between entrepreneurship and the urban environment: empirical evidence from Colombia [Un enfoque multinivel para comprender la relación entre," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 35(1), pages 311-329, June.
    10. Joshua K. Ault & Andrew Spicer, 2024. "Basic-needs social protections and own-account informal entrepreneurship: implications for policy and cross-national comparative analysis," Journal of International Business Policy, Palgrave Macmillan, vol. 7(3), pages 295-313, September.
    11. Fernhaber, Stephanie A. & Zou, Huan, 2022. "Advancing societal grand challenge research at the interface of entrepreneurship and international business: A review and research agenda," Journal of Business Venturing, Elsevier, vol. 37(5).

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