Entrepreneurial entry: which institutions matter?

Ruta Aidis, Saul Estrin, Tomasz Mickiewicz

Research output: Preprint or Working paperDiscussion paper


In this paper we explore the relationship between the individual decision to become an entrepreneur and the institutional context. We pinpoint the critical roles of property rights and the size of the state sector for entrepreneurial activity and test the relationships empirically by combining country-level institutional indicators for 44 countries with working age population survey data taken from the Global Enterprise Monitor. A methodological contribution is the use of factor analysis to reduce the statistical problems with the array of highly collinear institutional indicators. We find that the key institutional features that enhance entrepreneurial activity are indeed the rule of law and limits to the state sector. However, these results are sensitive to the level of development.
Original languageEnglish
Place of PublicationBonn (DE)
Number of pages46
VolumeDP No. 4123
Publication statusPublished - Apr 2009

Publication series

NameIZA discussion paper series
Publisher IZA
No.DP No. 4123


  • entrepreneurship
  • property rights
  • access to finance


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