Abstract
This paper analyses the impact of political discretion and corruption on firm creation rates, distinguishing between formal and informal entrepreneurship. The results show that political discretion discourages the creation of formal enterprises as fewer restrictions on the government's opportunistic behaviour increases uncertainty and risks for entrepreneurial activities. Corruption also has a negative influence on formal entrepreneurship, as it increases the costs of the procedures required to create and manage the company with no assurance that the other party will fulfil the agreement. Regarding informal entrepreneurship, our results show that the negative impact of corruption also applies to non-formalised firms.
| Original language | English |
|---|---|
| Pages (from-to) | 280-300 |
| Number of pages | 21 |
| Journal | European Journal of International Management |
| Volume | 11 |
| Issue number | 3 |
| DOIs | |
| State | Published - 2017 |
| Externally published | Yes |
Keywords
- Corruption
- Firm creation
- Formal entrepreneurship
- Informal entrepreneurship
- Institutional quality
- New venture creation
- Political constraints
- Political discretion
- Political risk
- Rule of law
All Science Journal Classification (ASJC) codes
- Business and International Management
- Education
- Organizational Behavior and Human Resource Management