IDEAS home Printed from https://ideas.repec.org/a/rfe/zbefri/v40y2022i2p329-351.html
   My bibliography  Save this article

Determinants of entrepreneurial dynamics:The Case of the European Union

Author

Listed:
  • Jelena J. Stankoviæ

    (University of Niš, Faculty of Economics, Niš, Serbia)

  • Ivana Marjanoviæ

    (University of Niš, Faculty of Economics, Niš, Serbia)

  • Sandra Milanoviæ

    (University of Niš, Faculty of Economics, Niš, Serbia)

  • Milica Jovanoviæ Vujatoviæ

    (University of Niš, Faculty of Economics, Niš, Serbia)

Abstract

Since economic theory identifies new enterprises as one of the basic drivers of economic growth, it brings to the forefront the need to understand the existing dynamics of entrepreneurship. Consequently, the identification of the basic entrepreneurship’s determinants is a central issue from both a theoretical and a practical point of view in contemporary literature. A better understanding of the factors influencing the dynamics of entrepreneurship is a basic precondition for creating effective policies aimed at encouraging the creation of new companies, and consequently, the creation of new jobs. Therefore, this paper addresses several important issues. From the theoretical standpoint, the role of entrepreneurial determinants in creating a new business is examined. From a practical standpoint, the basic formal institutional factors influencing the birth rate of new companies are analyzed. The analysis was conducted on a sample of European Union countries for the period from 2010 to 2019 using data from the World Bank’s Doing Business database, as well as data on business dynamics from the Eurostat database. A panel data regression analysis using the fixed-effects estimation procedure with Driscoll-Kraay standard errors was conducted, and the results indicate that the dynamics of new enterprises’ foundation are negatively affected by the total tax burden, as well as the cost of property registration, while the amount of initial capital required to open a business has a positive impact. The results of the research can serve as a basis for fine-tuning policies that will facilitate and encourage the creation of new enterprises.

Suggested Citation

  • Jelena J. Stankoviæ & Ivana Marjanoviæ & Sandra Milanoviæ & Milica Jovanoviæ Vujatoviæ, 2022. "Determinants of entrepreneurial dynamics:The Case of the European Union," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 40(2), pages 329-351.
    • Handle: RePEc:rfe:zbefri:v:40:y:2022:i:2:p:329-351
    as

    Download full text from publisher

    File URL: https://www.efri.uniri.hr/upload/05-Stankovic_et_al-2022-2.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert N. Eberhart & Charles E. Eesley & Kathleen M. Eisenhardt, 2017. "Failure Is an Option: Institutional Change, Entrepreneurial Risk, and New Firm Growth," Organization Science, INFORMS, vol. 28(1), pages 93-112, February.
    2. Sedlacek, Petr & Sterk, Vincent, 2019. "Reviving american entrepreneurship? tax reform and business dynamism," Journal of Monetary Economics, Elsevier, vol. 105(C), pages 94-108.
    3. Farzana Chowdhury & Siri Terjesen & David Audretsch, 2015. "Varieties of entrepreneurship: institutional drivers across entrepreneurial activity and country," European Journal of Law and Economics, Springer, vol. 40(1), pages 121-148, August.
    4. Silva, Pedro Mendonça & Moutinho, Victor Ferreira & Moreira, António Carrizo, 2022. "Do social and economic factors affect the technical efficiency in entrepreneurship activities? Evidence from European countries using a two-stage DEA model," Socio-Economic Planning Sciences, Elsevier, vol. 82(PB).
    5. Selin Dilli & Niklas Elert & Andrea M. Herrmann, 2018. "Varieties of entrepreneurship: exploring the institutional foundations of different entrepreneurship types through ‘Varieties-of-Capitalism’ arguments," Small Business Economics, Springer, vol. 51(2), pages 293-320, August.
    6. Bernd Wurth & Erik Stam & Ben Spigel, 2022. "Toward an Entrepreneurial Ecosystem Research Program," Entrepreneurship Theory and Practice, , vol. 46(3), pages 729-778, May.
    7. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    8. Cheng Hsiao, 2007. "Panel data analysis—advantages and challenges," TEST: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 16(1), pages 1-22, May.
    9. Cinar, E. Mine & Hienkel, Tyler & Horwitz, William, 2019. "Comparative entrepreneurship factors between North Mediterranean and North African Countries: A regression tree analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 73(C), pages 88-94.
    10. Zhang, Chuanguo & Lin, Yan, 2012. "Panel estimation for urbanization, energy consumption and CO2 emissions: A regional analysis in China," Energy Policy, Elsevier, vol. 49(C), pages 488-498.
    11. Farzana Chowdhury & David B. Audretsch & Maksim Belitski, 2019. "Institutions and Entrepreneurship Quality," Entrepreneurship Theory and Practice, , vol. 43(1), pages 51-81, January.
    12. Diana M. Hechavarría & Amy E. Ingram, 2019. "Entrepreneurial ecosystem conditions and gendered national-level entrepreneurial activity: a 14-year panel study of GEM," Small Business Economics, Springer, vol. 53(2), pages 431-458, August.
    13. Jonathan Levie & Erkko Autio, 2008. "A theoretical grounding and test of the GEM model," Small Business Economics, Springer, vol. 31(3), pages 235-263, October.
    14. Roland Bardy & Stephen Drew & Tumenta Kennedy, 2012. "Foreign Investment and Ethics: How to Contribute to Social Responsibility by Doing Business in Less-Developed Countries," Journal of Business Ethics, Springer, vol. 106(3), pages 267-282, March.
    15. Erik Canton & Marta Petrucci, 2017. "Ease of doing business in the euro area," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 16(2), pages 21-29, October.
    16. Cheng Hsiao, 2007. "Rejoinder on: Panel data analysis—advantages and challenges," TEST: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 16(1), pages 56-57, May.
    17. Daniel L. Bennett, 2021. "Local institutional heterogeneity & firm dynamism: Decomposing the metropolitan economic freedom index," Small Business Economics, Springer, vol. 57(1), pages 493-511, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Urbano & David Audretsch & Sebastian Aparicio & Maria Noguera, 2020. "Does entrepreneurial activity matter for economic growth in developing countries? The role of the institutional environment," International Entrepreneurship and Management Journal, Springer, vol. 16(3), pages 1065-1099, September.
    2. Alice Hengevoss, 2021. "Assessing the Impact of Nonprofit Organizations on Multi-Actor Global Governance Initiatives: The Case of the UN Global Compact," Sustainability, MDPI, vol. 13(13), pages 1-13, June.
    3. Mohamed Elheddad & Mohga Bassim & Rizwan Ahmed, 2021. "FDI and economic growth in the GCC: does the oil sector matter?," Economics and Business Letters, Oviedo University Press, vol. 10(3), pages 178-190.
    4. Martey, Edward & Etwire, Prince Maxwell & Abdoulaye, Tahirou, 2020. "Welfare impacts of climate-smart agriculture in Ghana: Does row planting and drought-tolerant maize varieties matter?," Land Use Policy, Elsevier, vol. 95(C).
    5. Tilov, Ivan & Weber, Sylvain, 2023. "Heterogeneity in price elasticity of vehicle kilometers traveled: Evidence from micro-level panel data," Energy Economics, Elsevier, vol. 127(PA).
    6. Faris Alshubiri, 2022. "The financial competition, concentration and structure of financial performance nexus in the financial sector of Oman," Economic Change and Restructuring, Springer, vol. 55(2), pages 681-714, May.
    7. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, June.
    8. Hari Venkatesh & Jyoti Kumari & Gourishankar S. Hiremath & Hiranmoy Roy, 2021. "Foreign Institutional Investors: Fair-Weather Friends or Smart Traders?," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(2), pages 291-316, June.
    9. Alexandra Lavinia Horobeț & Irina Mnohoghitnei & Emanuela Marinela Luminița Zlatea & Alexandra Smedoiu-Popoviciu, 2023. "Determinants of E-Government Use in the European Union: An Empirical Analysis," Societies, MDPI, vol. 13(6), pages 1-17, June.
    10. Faris Alshubiri, 2022. "The Impact of the Real Interest Rate, the Exchange Rate and Political Stability on Foreign Direct Investment Inflows: A Comparative Analysis of G7 and GCC Countries," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 29(3), pages 569-603, September.
    11. Renato Santiago & José Alberto Fuinhas & António Cardoso Marques, 2020. "The impact of globalization and economic freedom on economic growth: the case of the Latin America and Caribbean countries," Economic Change and Restructuring, Springer, vol. 53(1), pages 61-85, February.
    12. Vithessonthi, Chaiporn & Tongurai, Jittima, 2015. "The effect of firm size on the leverage–performance relationship during the financial crisis of 2007–2009," Journal of Multinational Financial Management, Elsevier, vol. 29(C), pages 1-29.
    13. Xie, Zhimin & Wang, Xia & Xie, Lingmin & Dun, Shuai & Li, Jiaxin, 2021. "Institutional context and female entrepreneurship: A country-based comparison using fsQCA," Journal of Business Research, Elsevier, vol. 132(C), pages 470-480.
    14. Bhatt, Siddharth & Pai, Dinesh R. & DelVecchio, Devon, 2023. "The dark side of multiunit discounts: Multiunit discounts reduce rest of basket revenue," Journal of Retailing and Consumer Services, Elsevier, vol. 72(C).
    15. Vyshnevskyi, Iegor & Jombo, Wytone & Sohn, Wook, 2024. "The clarity of monetary policy communication and financial market volatility in developing economies," Emerging Markets Review, Elsevier, vol. 59(C).
    16. Faris Alshubiri, 2020. "Analysis of the Financial Model of the ICT Price Basket on Financial Development Indicators of GCC Countries," The Review of Socionetwork Strategies, Springer, vol. 14(1), pages 147-170, April.
    17. Dinesh Ramdas Pai & Siddharth Bhatt, 2023. "Is suggestive selling effective in increasing sales? Investigating its role in store promotion strategy using retail chain data from the U.S," Journal of Marketing Analytics, Palgrave Macmillan, vol. 11(1), pages 32-40, March.
    18. Sabna Ali & Syed Mansoob Murshed & Elissaios Papyrakis, 2020. "Happiness and the Resource Curse," Journal of Happiness Studies, Springer, vol. 21(2), pages 437-464, February.
    19. Mansour Naser Alraja & Faris Alshubiri & Basel M. Khashab & Mahmood Shah, 2023. "The financial access, ICT trade balance and dark and bright sides of digitalization nexus in OECD countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 13(2), pages 177-209, June.
    20. Austmann, Leonhard M. & Vigne, Samuel A., 2021. "Does environmental awareness fuel the electric vehicle market? A Twitter keyword analysis," Energy Economics, Elsevier, vol. 101(C).

    More about this item

    Keywords

    enterprise birth rates; formal institutional factors; Doing business; EU countries; panel analysis;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rfe:zbefri:v:40:y:2022:i:2:p:329-351. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Danijela Ujcic (email available below). General contact details of provider: https://edirc.repec.org/data/efrijhr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.