De jure determinants of new firm formation: how the pillars of constitutions influence entrepreneurship

Enrico Santarelli, Emanuela Carbonara, Hien Tran

Research output: Contribution to journalArticle

18 Citations (Scopus)
130 Downloads (Pure)

Abstract

This paper provides empirical evidence supporting the view that constitutions are the primary and fundamental institutional determinant of entrepreneurship. It shows that some of the provisions contained in national constitutions are positively and significantly associated to a standard measure of entrepreneurial dynamics, namely the rate of new business density. Using for 115 countries a novel dataset containing the characteristics of the constitutions enacted in the world, applying an IV-GMM treatment to deal with the endogeneity of constitutional rules, and controlling for de facto variables, the paper finds that provisions about the right to conduct/establish a business, the right to strike, consumer protection, anti-corruption, and compulsory education promote higher rates of new firm formation. Contrasting results are instead obtained for provisions concerning protection of intellectual property rights.
Original languageEnglish
Pages (from-to)139-162
JournalSmall Business Economics
Volume47
Issue number1
Early online date3 Mar 2016
DOIs
Publication statusE-pub ahead of print - 3 Mar 2016

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