Which State Policies Lead to U.S. Firm Exits? Analysis with the Economic Freedom Index

Campbell, Noel D.; Heriot, Kirk C.; Jauregui, Andres; Mitchell, David

doi:10.1111/j.1540-627x.2011.00345.x

Cited by 36 publications

(25 citation statements)

References 46 publications

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“…Besides, the general body of work on SME performance is heavily focused on the context of large and developed countries where socio-economic and institutional factors are different from those of smaller and less developed economies (Blair-Henry and Miller, 2008). As a result, replicating findings on prosperous SMEs, or research in general, from larger and developed country context is not only risky but dangerous (Campbell et al, 2012, Kiss et al, 2011, Lashley, 2003, Nicholson and Lashley, 2016, Obeng et al, 2014, Watson, 2007, Williams, 2015a. This study therefore, takes a context specific look at the characteristics of prosperous SMEs in the Caribbean, an area of the work where little is known on this subject.…”

Section: Introductionmentioning

confidence: 90%

Exploring the characteristics of prosperous SMEs in the Caribbean

Williams

Boumediene

2018

Entrepreneurship & Regional Development

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Despite the extensive literature on small business growth and performance, relatively little is known on the features of firms that have been prosperous for a long period of time. Adopting Storey's determinants of growth framework, this study explores the characteristics of the entrepreneur, the firm, and the firm's strategy contributing to the prosperity of small firms in the Caribbean. Using multiple case studies from across the region, this study reveals that SME prosperity in the Caribbean seems to depend on combining certain characteristics namely, the entrepreneur's strategic leadership, networks, and intimate knowledge of products and business operations, and the firm's strategy of branding and market diversification.The findings show that unlike the results from previous studies in large and developed countries, it is a mix of these characteristics that determines SME prosperity. Research and policy implications of these findings are discussed.

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Section: Introductionmentioning

confidence: 90%

Exploring the characteristics of prosperous SMEs in the Caribbean

Williams

Boumediene

2018

Entrepreneurship & Regional Development

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“…While most neoclassical growth models treat the production process as a black box in which quantities of labor, capital, and technology are combined to produce new goods and services, more recent growth models emphasize the role of institutions, such as competitive markets, the banking system, or the structure of property rights as fundamental causes of entrepreneurship and ultimately economic growth and prosperity (Acemoglu, Johnson, and Robinson 2005;Baumol 1990;Bennett andNikolaev 2016a, 2016b;Campbell et al 2012;North 1990). This is because institutions, broadly defined as the rules of the game in society (North 1991), reduce uncertainty in human interactions and structure the relative rewards from different productive and unproductive activities that can influence the allocation of entrepreneurial talent in the economy (Baumol 1990).…”

Section: Formal Institutionsmentioning

confidence: 99%

Cross-Country Determinants of Early-Stage Necessity and Opportunity-Motivated Entrepreneurship: Accounting for Model Uncertainty

Nikolaev

Boudreaux

Palich

2018

Journal of Small Business Management

121

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Model uncertainty is one of the most pervasive challenges in the social sciences. Cross‐country studies in entrepreneurship have largely ignored this issue. In this paper, we evaluate the robustness of 44 possible determinants of early‐stage opportunity‐motivated entrepreneurship (OME) and necessity‐motivated entrepreneurship (NME) that are broadly classified in four groups: (1) economic variables, (2) formal institutions, (3) cultural values, and (4) legal origins and geography. The results, which are based on a representative world sample of up to 73 countries, suggest that institutional variables associated with the principles of economic freedom are most robustly correlated with OME and NME. Our findings also identify net income inequality and Scandinavian legal origins as weakly robust predictors of both types of entrepreneurial activity. Furthermore, we find that log GDP per capita is only a weakly robust predictor of NME, but not OME. We discuss implications for future research.

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“…Numerous empirical investigations have connected economic freedom and entrepreneurship (Sobel and Hall, 2008; Gohmann et al , 2008; Sobel, 2008; Sobel et al , 2010; Wiseman and Young, 2013). Specific investigations have linked the EFNA index to firm births and deaths (Campbell and Rogers, 2008; Goetz and Rupasingha, 2009; Campbell et al , 2012; Cumming and Li, 2013).…”

Section: Economic Freedom and Research Findingsmentioning

confidence: 99%

Growth-enhancing economic freedom

Ghosh

McCannon

2017

JFEP

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Purpose We explore how economic freedom measurements can be used to guide policy. Design/methodology/approach We propose a method for creating a growth-enhancing economic freedom index, which allows for nonlinearities and interaction effects between the components to economic freedom. We use this method to illustrate that US states differ in which policy area generates the greatest gains. Findings To validate the method presented, we apply our index to state bond markets. Financial market participants have the incentive to properly evaluate states’ policies. If our measurement is useful, then it should correlate with bond ratings. Consistent with this hypothesis, we present evidence that state bond ratings are strongly correlated with our growth-enhancing economic freedom index. Originality/value It has been well-established that economic freedom is associated with good economic outcomes. Economic freedom is comprised of numerous dimensions. Thus, the marginal benefit of improving policy in one area can be expected to depend on the amount of freedom in the other dimensions. Which policy improvement is most impactful depends on the entire menu of current policies and, therefore, differs between states. Our new method can then be used as a guide to determining for a particular state which policies can be expected to impact economic well-being the most.

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Which State Policies Lead to U.S. Firm Exits? Analysis with the Economic Freedom Index

Cited by 36 publications

References 46 publications

Exploring the characteristics of prosperous SMEs in the Caribbean

Exploring the characteristics of prosperous SMEs in the Caribbean

Cross-Country Determinants of Early-Stage Necessity and Opportunity-Motivated Entrepreneurship: Accounting for Model Uncertainty

Growth-enhancing economic freedom

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