Impact of state capacity on entrepreneurship: does national developmental and technological level matter?

Abstract

PurposeThe current study empirically examines the influence of state capacity on entrepreneurship.Design/methodology/approachThis research draws upon the national measures of 118 countries and employs a more robust measure of state capacity.FindingsThe findings show a positive correlation between state capacity and entrepreneurship. However, the results reveal that the effect of state capacity on entrepreneurship is stronger in developing low-technology nations compared to developed high-technology nations.Research limitations/implicationsWhen available, future research could employ more recent data to estimate the effects of state capacity on entrepreneurship. In addition to developmental and technological levels, various other factors can also be explored such as national culture and welfare regime type.Practical implicationsThe current study enables policymakers to identify factors critical in developing state capacity. Policymakers can also have better-tailored approaches for developing targeted initiatives and establishing entrepreneurship-supportive regulative institutional arrangements.Originality/valueAvailable literature lacks in empirically examining the influence of state capacity on entrepreneurship. The current study attempts to fill this gap.