Abstract

http://ssrn.com/abstract=479982
 
 

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Institutions, Capital Constraints and Entrepreneurial Firm Dynamics: Evidence from Europe


Mihir A. Desai


Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER)

Paul A. Gompers


Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Josh Lerner


Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER)

march 2005

Harvard NOM Working Paper No. 03-59

Abstract:     
We explore the impact of the institutional environment on the nature of entrepreneurial activity across Europe. Political, legal, and regulatory variables that have been shown to impact capital market development influence entrepreneurial activity in the emerging markets of Europe, but not in the more mature economies of Europe. Greater fairness and greater protection of property rights increase entry rates, reduce exit rates, and lower average firm size. Additionally, these same factors also associated with increased industrial vintage - a size-weighted measure of age - and reduced skewness in firm-size distributions. The results suggest that capital constraints induced by these institutional factors impact both entry and the ability of firms to transition and grow, particularly in lesser-developed markets.

Number of Pages in PDF File: 39

Keywords: Entrepreneurship, Institutions, Capital Constraints, Firm Size Distributions, Entry, Exit, Legal Regimes

JEL Classification: L1, G3

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Date posted: January 12, 2004  

Suggested Citation

Desai, Mihir A. and Gompers, Paul A. and Lerner, Josh, Institutions, Capital Constraints and Entrepreneurial Firm Dynamics: Evidence from Europe (march 2005). Harvard NOM Working Paper No. 03-59. Available at SSRN: http://ssrn.com/abstract=479982 or http://dx.doi.org/10.2139/ssrn.479982

Contact Information

Mihir A. Desai (Contact Author)
Harvard Business School - Finance Unit ( email )
Boston, MA 02163
United States
617-495-6693 (Phone)
617-496-6592 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Paul A. Gompers
Harvard Business School - Finance Unit ( email )
Boston, MA 02163
United States
617-495-6297 (Phone)
617-496-8443 (Fax)
Harvard University - Entrepreneurial Management Unit ( email )
Cambridge, MA 02163
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Josh Lerner
Harvard Business School - Finance Unit ( email )
Boston, MA 02163
United States
617-495-6065 (Phone)
617-496-7357 (Fax)
HOME PAGE: http://www.people.hbs.edu/jlerner/
Harvard University - Entrepreneurial Management Unit
Cambridge, MA 02163
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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