The Relationship between Governance Effectiveness and Entrepreneurship

Barry A. Friedman

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Entrepreneurship Studies and Influences Corruption and Economic Development Culture, Economy, and Development Studies

Abstract

Entrepreneurship is an essential element for job creation and economic growth. It is therefore important to better understand the conditions under which entrepreneurship flourish. This research tests the relationship between perceptions of government's effectiveness, attitudes towards entrepreneurship, and the extent that entrepreneurship exists on a national level. The data for this study were collected internationally by the World Bank (World Governance Indicators) and the Global Entrepreneurship Monitor project via extensive interviews and surveys to citizens and national experts, respectively. Contrary to expectations, perceived government effectiveness was significantly negatively related to entrepreneurship on a national level. Study implications are presented with suggestions for future research.

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1998Law and Finance 2000The Regulation of Entry 2006Uses and Abuses of Governance Indicators 2008Recent developments in the economics of entrepreneurship 2008What does “entrepreneurship” data really show?2011Legal institutions and high-growth aspiration entrepreneurship

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