Government Bureaucracy, Transactional Impediments, and Entrepreneurial Intentions

Abstract

In environments where information asymmetries and changing market conditions are ever-present, discerning between different macro-level and contextual factors that stimulate or inhibit entrepreneurial activity still needs to be validated. Utilizing our own primary data (N = 1473 across 10 countries) as well as secondary data (World Bank Economic Forum, Global Financial Data, and Transparency International), we investigate the role that several contextual indices (e.g. perceptions of an entrepreneurial culture) and macro-level indices (e.g. government corruption, GDP per capita, and ease of doing business indices) have on entrepreneurial intentions. Results reveal the impact government corruption and the concomitant transactional impediments have on the degree of entrepreneurial interest across countries.

Corruption Perceptions and Entrepreneurial Intentions in a Transitional Context–the Case of Rural Bulgaria

“…They explained this finding with the possible link between stringent regulation and corruption. Similarly, Griffiths et al (2009), utilizing a sample of 1473 individuals across ten countries, report a negative effect of their governmental corruption index on entrepreneurial intentions. Thus, there is some empirical evidence documenting the effect of corruption, as captured by macro-level indices (based on aggregated expert opinions), on individual entrepreneurial intentions.…”

“…Perceived corruption can take different cognitive paths and lead to different outcomes. On the one hand, high levels of perceived corruption may be associated with high risks and costs of engaging in economic activity, thus decreasing the perceived feasibility of the envisioned venture, thereby discouraging entrepreneurial intentions (Griffiths et al, 2009). On the other hand, high levels of perceived corruption may be associated with opportunities to engage in rent-seeking, unproductive entrepreneurial activity, thus increasing the perceived desirability of entrepreneurial activity and encouraging positive attitudes and entrepreneurial intentions (Baumol, 1990).…”

Impediments on the Way to Entrepreneurship - Some New Evidence from the EU’s Post-Socialist World

“…Schleifer and Vishny (1993) take this argument further by explaining that the adoption of techniques such as bribery and corruption comes from the cultural heritage of communist dregs in the past. In the same way, as supported by the recent work of Griffiths et al (2009), the entrepreneurial intentions of a country are lessened because of high levels of corruption. Furthermore, Saar and Unt (2008) conducting research in Estonia find that no adequate direct support measures for the development of SMEs exist, while the government is characterized as "one with limited intervention".…”

The Effect of Perceived Corruption on Entrepreneurial Intention: Evidence from Italy

“…As stated by other authors (Griffiths et al, 2009) perceived corruption is an external factor that can restrict entrepreneurial activity. Corruption is not only a social pathology but also an economic and political problem (Sevuktekin et al, 2010;Spanò et al, 2016).…”

“…This idea was shared by Azmat and Samaratunge (2004) according whom corruption represents the most corrosive bottleneck afflicting economic and social growth worldwide. Griffiths et al (2009) demonstrate that corruption considerably reduces the interest and desirability to start a new business activity. Many other authors have highlighted the problems created by corruption in different counties; acts of fraud (Cohen et al, 2010;Chwastiak, 2013), health and safety violations (Radin & Calkins, 2006), and tax evasion (Everett et al, 2007;Otusanya, 2011) are just few examples of activities that privilege self-interests over social ones.…”