How has formal institutions influenced opportunity and necessity entrepreneurship? The case of brics economies

Thomas Bilaliib Udimal,Mingcan Luo,E Liu,Nicholas Oppong Mensah

doi:10.1016/j.heliyon.2020.e04931

Thomas Bilaliib Udimal, Mingcan Luo + Show 2 more

Open Access

https://doi.org/10.1016/j.heliyon.2020.e04931

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Abstract

Using a panel data of BRICS economies, this study looks at how formal institutions have influenced various types of entrepreneurship. The study concentrated mainly on the following formal institutional factors: fiscal freedom, business freedom, property rights, financial freedom, labour freedom, and investment freedom. For the opportunity entrepreneurship, the result is not statistically significant. With the exception of business freedom, the remaining institutional factors have negative relationship with opportunity entrepreneurship. Fiscal freedom and business freedom show negative significant relationship with necessity entrepreneurship. The result also shows that business freedom has a negative significant effect on female opportunity entrepreneurship. The study further reveals that fiscal freedom, business freedom and financial freedom have a negative significant effect on men necessity entrepreneurship. Population growth has a positive effect on all categories of entrepreneurship whiles unemployment contributes negatively to all categories of entrepreneurship.

Highlights

The concept of self-ownership in an economic environment is highly dependent on the economic freedom
We look at how formal institutions influence entrepreneurship in BRICS economies using OLS
The datasets are obtained from Global Entrepreneurship Monitor (GEM) World Bank Database, and Index of Economic Freedom

Summary

Introduction

The concept of self-ownership in an economic environment is highly dependent on the economic freedom. Individuals enjoy economic freedom when they are permitted to choose for themselves and enter into transactions as long as their activities do not harm other persons or properties (Gwartney, 2002). Economic freedom promotes individual choices as individuals will be permitted to decide for themselves rather than having ideas imposed on them by the political process or the use of violence, theft, or fraud by others. This is often not case in many economies as institutions that are supposed to promote economic freedom are rather stifling it. It is against this backdrop that the study seeks to look at how formal institutions have influenced entrepreneurial activities in the BRICS (Brazil, Russia, India, China and South Africa) economies

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