Abstract
Different studies had point out the importance of public governance to promote entrepreneurship. We used multilevel modelling on a sample of 206 countries, for the period 2004-2014, to empirically test three hypotheses. Firstly, whether business creation is determine by the regions. Secondly, the immediate impact of governance on entrepreneurial entry rates and thirdly, delayed effect of governance was considered. Our results showed countries located in the same region are more homogeneous in terms of entrepreneurship. Also, a significant immediate effect of Rule of Law and Regulatory Quality and a delayed effect of several variables were detected.
Highlights
The last few decades have brought economic, political and social changes, which have sparked the interest of academics, entrepreneurs and politicians, emphasising the role played by new business and companies in todays societies
Through a study about the relationship between several governance indicators and business creation, Klapper and Love (2010) concluded that none of these indicators showed statistical significance. This situation may be due to the fact that governance is a slow-moving variable, reason to believe that improvements in this variable are only observed over long time periods
DESCRIPTION Natural log of new firms registered per 1,000 people aged 15 to 64 years Control of Corruption Government Effectiveness Political Stability and Absence of Violence/Terrorism Regulatory Quality Rule of Law Voice and Accountability Natural log of gross domestic product (GDP) per capita (PPP)
Summary
The last few decades have brought economic, political and social changes, which have sparked the interest of academics, entrepreneurs and politicians, emphasising the role played by new business and companies in todays societies. Entrepreneurship produces positive externalities that spill over into other sectors and regions This has allowed a greater understanding of the importance of business creation, considered by many authors as a strategic vector and a key element to design the most effective growth and development policies. Governance is related to the process of selecting, monitoring and replacing governments, the effective capacity of governments to establish and perform structural policies, and the respect for national citizens and the state for the institutions that govern (Kaufmann et al, 2010) In this context, good governance is synonymous with transparency, rule of law, efficient public services, and civil rights, among others (World Bank, 2013). To study the effects of governance quality in new business creation, contemporary and delayed perspectives are used in the multilevel panel approach. The last section presents the main conclusions, highlights the most relevant aspects of this research, and establishes some future research lines
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