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The Influence of the Quality of Government Institutions on Entrepreneurial Motivation: Exploring the Variance across Countries

Author

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  • José Ernesto Amorós

    (Universidad del Desarrollo School of Business and Economics, Santiago-Chile)

  • Pekka Stenholm

    (TSE Entre, Turku School of Economics, University of Turku)

Abstract

Despite the increasing understanding of the relationships between institutions and entrepreneurship, the influence of the quality of government institutions on entrepreneurship is less addressed. This paper focuses on this critical eterminant of entrepreneurship in developing and developed ountries. Drawing from institutional theory we hypothesize and empirically assess the role of the quality of institutions in entrepreneurial activity. We examine how the quality of government institutions influences the rate of necessity-based entrepreneurial activity across countries and over time by using a cross-sectional time-series approach on data from the Global Entrepreneurship Monitor (GEM) database covering the years 2001–2011. Our results suggest that higher economic development associated with better quality of institutions reduces the prevalence of necessity-based entrepreneurship. Our findings imply that developing countries must rationally organize their functions, and seek to remove unnecessary barriers, decrease political instability, and controls that hamper entrepreneurial activity.

Suggested Citation

  • José Ernesto Amorós & Pekka Stenholm, 2013. "The Influence of the Quality of Government Institutions on Entrepreneurial Motivation: Exploring the Variance across Countries," Working Papers 1401, Departament Empresa, Universitat Autònoma de Barcelona, revised Dec 2013.
    • Handle: RePEc:bbe:wpaper:1401
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    More about this item

    Keywords

    Government Institutions; Quality; Regulation; Global Entrepreneurship Monitor; Entrepreneurial Motivation.;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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