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Productive entrepreneurship and the effectiveness of insolvency legislation: a cross-country study

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Listed:
  • Kun Fu

    (Loughborough University)

  • Karl Wennberg

    (Linköping University, Sweden)

  • Björn Falkenhall

    (Swedish Pharmacy Association)

Abstract

This paper studies the association between the effectiveness of insolvency regulations and entrepreneurship using multilevel modeling of about 300,000 individuals in 27 countries over the 2005–2010 period. We investigate the relationship between three different measures of “resolving insolvency” (time, cost, and recovery rate) from the World Bank and four different measures of entrepreneurship from the Global Entrepreneurship Monitor, controlling for relevant individual- and country-level facets. We find that opportunity-driven and innovation-oriented entrepreneurs are more severely affected by onerous insolvency regulations than necessity-motivated entrepreneurs. However, entrepreneurs envisioning rapid employment growth are not affected by onerous insolvency regulations. We discuss contributions to comparative entrepreneurship research and public policy.

Suggested Citation

  • Kun Fu & Karl Wennberg & Björn Falkenhall, 2020. "Productive entrepreneurship and the effectiveness of insolvency legislation: a cross-country study," Small Business Economics, Springer, vol. 54(2), pages 383-404, February.
    • Handle: RePEc:kap:sbusec:v:54:y:2020:i:2:d:10.1007_s11187-018-0040-6
    DOI: 10.1007/s11187-018-0040-6
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    2. Luca Farè & David B. Audretsch & Marcus Dejardin, 2023. "Does democracy foster entrepreneurship?," Small Business Economics, Springer, vol. 61(4), pages 1461-1495, December.
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    More about this item

    Keywords

    Entrepreneurship; Bankruptcy; Effectiveness of insolvency laws; Cross-country;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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