U.S. State Government policies and entrepreneurship

Abstract

Purpose – The purpose of this paper is to test the effects of government policies on entrepreneurial activity within the 50 US states. Design/methodology/approach – Using panel data and a fixed-effects model, the authors examine the determinants of the nominal establishment entry rate, the nominal establishment exit rate, and the net establishment entry rate. To measure government policy, the authors use the Economic Freedom of North America (EFNA) index published by the Fraser Institute. The authors use both the overall index and its components. The authors also use the state and local tax burden published by the Tax Foundation. Findings – The authors find that a smaller government is associated with a net increase in business establishments. A freer labor market is also associated with a net increase in business establishments. However, the relationship between the tax burden and entrepreneurship is more complex. Using a measurement of the tax burden from the Fraser Institute, the authors find that an increase in taxes is associated with a net decrease in businesses, but the measurement from the Tax Foundation suggests that an increase in taxes is associated with a net increase in businesses. Research limitations/implications – The results can help policy makers recognize the effects of expenditure and regulation on business formation. Practical implications – However, the results do not send a clear message on the effects of taxes on entrepreneurship. Originality/value – The contribution to the literature is the examination of the effect of the components economic freedom on net business entry in the USA, along with comparing the effects of two measurements of tax burden on net business entry.

Institutions, entrepreneurial adaptation, and the legal form of the organization

“…We discuss some reasons for these findings that point to focused policy implications for those concerned with productive, successful entrepreneurial decision-making. Admittedly, like previous investigations such as Krichevskiy and Snyder (2015), we do not find a direct correlation between economic freedom indexes and survival rates. We attribute this to a nuanced relationship between different legal structures and the macroeconomic environment for venture development.…”

Targeted state economic development incentives and entrepreneurship

“…Our focus is on that state-level literature. Recent reviews of that literature can be found in Krichevskiy and Snyder (2015) and Hall et al (2016), both in this journal. Kreft and Sobel (2005) found that state economic freedom had a strong positive association with the growth rate of sole proprietorships.…”

“…Campbell et al (2013) also use a panel approach and find somewhat similar results. Krichevskiy and Snyder (2015) take a similar approach to Campbell et al (2013), but they include several important omitted variables. They find a positive association between overall economic freedom and net business formation.…”

Analisis Peran Pemerintah Terhadap Keberhasilan UMKM Kota Surabaya

“…Peraturan pemerintah yang berkualitas membuat pertumbuhan bisnis lebih tinggi dibandingkan peningkatan kebebasan ekonomi dan pertumbuhan standar hidup masyarakat. Krichevskiy and Snyder, (2015) dalam penelitiannya menegaskan peran perintah dengan meningkatan pajak berhubungan dengan penurunan netto dalam bisnis. Akinboade dan Kinfack, (2012) menjelaskaan regulasi/kebijakan yang kaku, tidak konsisten dan korupsi berdampak negatif pada bisnis.…”