Governance Quality, Entrepreneurship and Economic Growth

Abstract

Governance is a factor that affects new entrepreneurial activities and economic growth. However, the effectiveness of governance will vary depending on a country’s development level and entrepreneurial motivation. The main goal of this study is to use global entrepreneurship monitor (GEM) data and to apply a three-stage least squares (3SLS) regression to investigate the impact of six governance indicators on the entrepreneurship-growth nexus in 64 countries during 2010-2018. In addition, this paper describes whether the impact of governance indicators varies according to the country’s development stage. The results show that entrepreneurship and governance indicators have a significant impact on economic growth. However, depending on the development stage of the country, major differences can arise regarding the degree and nature of this relationship among countries. Specifically, the results show that entrepreneurship can promote economic growth in innovation-driven countries, but it cannot promote economic growth in factor- and efficiency-driven countries. In particular, the results show that opportunitydriven entrepreneurship (ODE) is only positively correlated with the economic growth of innovation-driven countries. In contrast, necessity-driven entrepreneurship (NDE) is negatively correlated with the economic growth of factor- and efficiency-driven countries. In addition, the survey results show that governance quality indicators contribute to entrepreneurial activities in the three groups of countries examined. This research contributes to the literature from a theoretical perspective (the use of good governance as an intermediary between entrepreneurship and growth) and a practical perspective (providing insights to improve the quality of governance to promote entrepreneurship and economic growth).

The Impacts of the Entrepreneurial Conditions on Economic Growth: Evidence from OECD Countries

“…As previously verified, some literature relates entrepreneurship to economic growth (Xu et al 2021;Khyareh and Amini 2021;Farinha et al 2020). Crowley and McCann (2018) examined firm-level productivity and innovation in Europe's transition-driven and innovation-driven economies.…”

“…Entrepreneurship, essentially opportunity-driven entrepreneurship, supported by the innovation capacity of companies and territories, and the density of cooperation networks, is defended by many authors as an impulse for economic growth (Edler and Fagerberg 2017;Farinha et al 2020;Khyareh and Amini 2021). This study aimed to assess the impacts of EFCs on economic growth in OECD countries in transition and innovation-driven economies.…”

“…Scientific consensus agrees that entrepreneurial activity is related to economic growth. However, the role of entrepreneurship in economic growth can be strongly influenced by the quality of governance or the business environment in which economic growth occurs (Khyareh and Amini 2021;Gu et al 2021). Marshall (1961) and Krüger and Meyer (2021) see entrepreneurship as the spirit of adventure, the refoundation of the entrepreneur, giving him the capacity for the innovation necessary to maximize profits through identifying new market opportunities, surrounded by an inevitable level of risk and uncertainty.…”

The Enhancement of Sustainable Competitiveness of the CEE Regions at the Time of the COVID-19 Pandemic Instability

“…Institutional enablers determine the potential for competitiveness, being the most important factor in the regional system [53]. High quality institutions have a significant impact on entrepreneurship and economic growth [54].…”

Investigation of the relationship between incidence of mental disorders and economic growth among the Visegrad countries

“…However, studies with V4 countries data were published regarding the determinants of financial indebtedness of enterprises, earnings management practices, analysis of the development of earnings of transport sector and tax aspects of mining companies, but there is a lack of studies which focus was to assess the relationship between mental disorders and economic growth ( 25 – 29 ). Furthermore, economic growth could be associated with several factors, for example with foreign direct investments or entrepreneurship activities, but there is no data regarding the relationship with mental diseases ( 30 , 31 ). Thus, the purpose of this study was to investigate the relationship between economic growth and the incidence of mental disorders.…”