Regulatory burden, rule of law, and entry of strategic entrepreneurs: an international panel study

Jonathan Levie, Erkko Autio

Research output: Contribution to journalArticle

121 Citations (Scopus)

Abstract

Entry into entrepreneurship is a strategic act for individuals who seek an optimal way to exploit their human, social and financial capital. Trade-offs associated with this choice are influenced by institutional conditions. We use signalling theory, employment choice theory and theory on strategic entry to develop hypotheses on the effect of business regulations and rule of law on strategic and non-strategic entrepreneurial entry. Analysing a six-year panel of 54 countries, we find lighter burden of regulation associated with a higher rate and relative prevalence of strategic entrepreneurial entry. Rule of law moderates this effect such that regulation has a significant effect on strategic entry only when rule of law is strong. These findings are robust against alternative proxies. Implications are drawn for prospective entrepreneurs, existing organisations, policy, and further research.
LanguageEnglish
Pages1392-1419
Number of pages28
JournalJournal of Management Studies
Volume48
Issue number6
Early online date27 Jul 2011
DOIs
Publication statusPublished - Sep 2011

Fingerprint

Industry
Panel study
Burden
Rule of law
Entrepreneurs
Financial capital
Signaling theory
Social capital
Choice theory
Human capital
Entrepreneurship
Trade-offs

Keywords

  • Entrepreneurship
  • regulation
  • rule of law
  • signalling
  • employment choice
  • strategy

Cite this

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abstract = "Entry into entrepreneurship is a strategic act for individuals who seek an optimal way to exploit their human, social and financial capital. Trade-offs associated with this choice are influenced by institutional conditions. We use signalling theory, employment choice theory and theory on strategic entry to develop hypotheses on the effect of business regulations and rule of law on strategic and non-strategic entrepreneurial entry. Analysing a six-year panel of 54 countries, we find lighter burden of regulation associated with a higher rate and relative prevalence of strategic entrepreneurial entry. Rule of law moderates this effect such that regulation has a significant effect on strategic entry only when rule of law is strong. These findings are robust against alternative proxies. Implications are drawn for prospective entrepreneurs, existing organisations, policy, and further research.",
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Regulatory burden, rule of law, and entry of strategic entrepreneurs : an international panel study. / Levie, Jonathan; Autio, Erkko.

In: Journal of Management Studies, Vol. 48, No. 6, 09.2011, p. 1392-1419.

Research output: Contribution to journalArticle

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