The nexus between entrepreneurship and property rights: Role of legal origin in entrepreneurship, property rights, and economic growth

Abstract

Differences in legal origins result in varieties of capitalism, and this may influence the impact of property rights on entrepreneurship and the relationship between entrepreneurship and economic growth. Therefore, we explored the relationship between entrepreneurship, property rights, and economic growth by examining macro data from 51 countries from 2001 to 2020 and classifying the countries based on their legal origins (English, French, German, and Scandinavian). We obtained data on entrepreneurship from the Global Entrepreneurship Monitor, a research consortium developed by Babson College and the London Business School. The results indicated that entrepreneurship is associated with economic growth in civil law countries rather than in common law countries. In addition, the form of the function between entrepreneurship and property rights differs depending on the legal origin. We observed a rising trend in the association between entrepreneurship and property rights for countries with English and German legal origins, while we noted a gradual quadratic function in the bell curve trend for countries with French legal origin. As for countries with Scandinavian legal origin, we found a negative linear relationship between property rights and entrepreneurial activity. JEL: L26, M13, P14, K15, O47