Foreign direct investment and entrepreneurship: Does the role of institutions matter?

Slesman, Ly; Abubakar, Yazid Abdullahi; Mitra, Jay

doi:10.1016/j.ibusrev.2020.101774

Cited by 54 publications

(65 citation statements)

References 81 publications

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“…Additionally, we find our macroeconomic control variables also promote entrepreneurial activity. More specifically, foreign direct investment, trade openness, economic development and education levels have a positive and significant relationship with new business formation, consistent with recent empirical studies (Slesman et al, 2021). As expected, the time required to start a business is negatively associated with new business formation, as longer registration periods can discourage people to undertake entrepreneurial pursuits.…”

Section: Regression Coefficients and Associated Parameterssupporting

confidence: 89%

“…However, the empirical and theoretical literature have focused on institutional measures such as voice and accountability, political stability and the absence of violence, government effectiveness, regulatory quality, the rule of law, and the control of corruption (Slesman et al, 2021), or measures that focuses on economic freedom (Urbano et al, 2019). Additionally, other researches also explore the role of income inequality in entrepreneurship, as a measure of poor institutional quality (Goel and Saunoris, 2020).…”

Section: Theoretical Considerations and Hypothesismentioning

confidence: 99%

“…We estimate this by taking the derivative of the interaction term with respect to financial access, as shown in Equation ( 3). Finally, we employ various control variables that are commonly used to examine the determinants of new business creation based on previous empirical studies (Farzanegan, 2014;Slesman et al, 2021;Sternberg and Wennekers, 2005;Quatraro and Vivarelli, 2015;Urbano et al, 2019). These include: the institutional capacity of an economy (wgi it ), measuring using the average value of the six dimensions from the World Governance Indicators such as the voice and accountability, political stability and the absence of violence, government effectiveness, regulatory quality, the rule of law, and the control of corruption; the share of net inflows from foreign direct investment to GDP (fdi it ); the level of trade openness measured by the ratio of imports and exports to GDP (opn it ); the level of economic development of a country measured by real GDP per capita (gdppc it ); the regulatory procedures of starting a business measured by the time required to start a business (bus it ); the level of education measured using the education index developed by the Human Development Reports (edu it ); and a dummy variable that captures the impact of the recent 2008 global financial crisis (gfc2008 i ).…”

Section: Financial Access and New Business Formationmentioning

confidence: 99%

See 2 more Smart Citations

Internet penetration, financial access and new business formation: evidence from developing economies

Haini

Loon

2022

IJSE

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PurposeThis study examines whether Internet penetration has a complementary effect on the relationship between financial access and new business formation in 57 developing economies from 2006 to 2018.Design/methodology/approachUsing the generalised least squares estimator, the authors employ a framework that allows us to distinguish between the marginal impact of financial access on new business formation in developing economies with high and low levels of Internet penetration rates. Furthermore, the authors distinguish between financial institutions and financial markets.FindingsThe authors find that increased accessibility for financial institutions promotes entrepreneurial activity, while financial market access has a negative relationship with new business formation. Furthermore, the authors find that the marginal impact of financial institution access increases in magnitude as Internet penetration increases. The effect does not hold for financial markets.Research limitations/implicationsThe major limitation lies in the measurement of new business formation, as it focuses on the formal entrepreneurial sector and overlooks the informal economy and entrepreneurs operating as sole proprietors.Practical implicationsPolicymakers should continue to promote the development of the information communication and technology sector and digitalisation policy while increasing financial accessibility in the financial system.Originality/valueThis study provides new empirical evidence on the greasing role of technology to leverage the impact of financial access on new business formation. Furthermore, the study distinguishes this effect by differentiating between financial institutions and markets.

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Section: Regression Coefficients and Associated Parameterssupporting

confidence: 89%

Section: Theoretical Considerations and Hypothesismentioning

confidence: 99%

Section: Financial Access and New Business Formationmentioning

confidence: 99%

See 1 more Smart Citation

Internet penetration, financial access and new business formation: evidence from developing economies

Haini

Loon

2022

IJSE

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“…In addition, the basic market system of the host country is an important foundation for FDI to function [12]. However, due to China's vast territory and uneven regional development, the level of institutional development, the amount and composition of FDI are also different in different regions [13].…”

Section: Introductionmentioning

confidence: 99%

Research on the Impact Factors of Green Economy of China—From the Perspective of System and Foreign Direct Investment

et al. 2021

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The outbreak of COVID-19 has had an immeasurable impact on the global economy. It has damaged parts of the real economy, but also provided new opportunities for China’s green development. Both the system and foreign direct investment (FDI) have an important impact on China’s green recovery path. Based on the provincial panel data of China from 2007 to 2016, this paper uses a slacks-based measure (SBM) model and Malmquist–Luenberger (ML) index to measure the green total factor productivity (GTFP), and empirically analyzes the regulatory role of system in the influencing mechanism of FDI on GTFP. The results show that the overall level of FDI significantly inhibits the improvement of GTFP, and the interaction between system and FDI makes it shift from inhibition to promotion, but the promotion would be weakened with the improvement of the system. FDI in the eastern region shows a positive effect on GTFP, which will be weakened with the improvement of the system. FDI in central and western regions shows a negative effect on GTFP, and the negative effect in western regions will be increased with the improvement of the system. Then this article puts forward targeted policy suggestions for further improving the level of regional systems and introducing FDI of high quality.

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“…In [18], it was pointed out that FDI has reduced corruption levels in recipient countries and has justified that this is due to good governance and better management practices from foreign investors. In [19], it was suggested that FDI induced technological innovation and institutional efficiency, which are very determinant of economic growth. Although FDI and institutional quality are very important for economic growth, there is very limited literature on the causal relationship between FDI and institutional quality.…”

Section: Introductionmentioning

confidence: 99%

Asymmetric and Symmetric Link between Quality of Institutions and Sectorial Foreign Direct Investment Inflow in India: A Fresh Insight Using Simulated Dynamic ARDL Approach

et al. 2021

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This study explores the bicausality between institutional quality and FDI inflow both aggregated and sector-wise, i.e., the agricultural, manufacturing, and tertiary sectors in the Indian economy, by applying simulated autoregressive distributed lag (SARDL) dynamic new techniques, an extended variant of orthodox ARDL and NARDL. The study confirms that aggregated and sectorial FDI are enhanced by adequate institutional quality, and similarly, FDI promotes quality institutions. The nexus between institutional quality and FDI inflow is an inspiration for India to compete with developed economies by enhancing its institutional quality. The study observes cointegration and bidirectional causality between institutional quality and aggregated FDI.

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Foreign direct investment and entrepreneurship: Does the role of institutions matter?

Cited by 54 publications

References 81 publications

Internet penetration, financial access and new business formation: evidence from developing economies

Internet penetration, financial access and new business formation: evidence from developing economies

Research on the Impact Factors of Green Economy of China—From the Perspective of System and Foreign Direct Investment

Asymmetric and Symmetric Link between Quality of Institutions and Sectorial Foreign Direct Investment Inflow in India: A Fresh Insight Using Simulated Dynamic ARDL Approach

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