Abstract

The idea that corruption may, in some situations, be beneficial is widely studied within the context of growth. In the field of entrepreneurship, a unique paper by Dreher and Gassebner (2011) explicitly documents it. Their findings support the assumption that corruption “greases the wheels” of strict regulation for early stage firms. In this article, we complement their seminal work. We provide evidence that entrepreneurs are heterogeneous in their response to the institutional environment. In particular, corruption and regulation affect entrepreneurship to different extent, according to the underlying motivation compelling an individual to open a business. Opportunity-driven entrepreneurs are much more affected by corruption and regulation than necessity-driven ones.
Original languageEnglish
Number of pages24
Publication statusPublished - 4 Mar 2014

Publication series

NameUniversity of Namur. Department of Economics Working Papers Series
No. WP1402

Keywords

  • Entrepreneurship
  • Corruption
  • Regulation
  • Doing business

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