Policy Implications of IPR and Competition Policy on Entry into Entrepreneurship across Countries

Abstract

Institutions, as the rules of the game, have significant influences the emergence and development of entrepreneurship. This paper investigates two important elements in country’s legal and institutional environment — the intellectual property rights (IPRs) and the enforcement of the competition policy, as well as their interaction effect on the entry into entrepreneurship within a multi-country setting. We propose that the effect of IPRs on the entrepreneurial activity varies across different types of entrepreneurship and is contingent upon the enforcement level of competition policy. The hypotheses are examined within a framework of pooling a cross-section of 60 countries during a 6-year time period. The findings show that IPRs protection is conducive to the total early-stage entrepreneurs of a country, while strengthened IPRs adversely affects the entry of entrepreneurs adopting new technologies and this relationship is attenuated by the increasing enforcement of competition policy.