The Effect of Business Regulations on Nascent and Young Business Entrepreneurship

25 Pages Posted: 3 Mar 2008

See all articles by Andre J. van Stel

Andre J. van Stel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

D. Storey

University of Warwick; EIM Netherlands

Roy Thurik

Montpellier Business School; Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC); Erasmus Research Institute of Management (ERIM); EIM Netherlands - Business and Policy Research; Tinbergen Institute

Date Written: September 26, 2006

Abstract

We examine the relationship, across 39 countries, between regulation and entrepreneurship using a new two-equation model. We find the minimum capital requirement required to start a business lowers entrepreneurship rates across countries, as do labour market regulations. However the administrative considerations of starting a business – such as the time, the cost, or the number of procedures required – are unrelated to the formation rate of either nascent or young businesses. Given the explicit link made by Djankov et al. (2002) between the speed and ease with which businesses may be established in a country and its economic performance – and the enthusiasm with which this link has been grasped by European Union policy makers – our findings imply this link needs reconsidering.

Keywords: Global Entrepreneurship Monitor, Nascent Entrepreneurship, Business Regulations, World Bank Doing Business, Young Businesses

Suggested Citation

van Stel, Andre J. and Storey, D. and Thurik, Roy, The Effect of Business Regulations on Nascent and Young Business Entrepreneurship (September 26, 2006). ERIM Report Series Reference No. ERS-2006-052-ORG. Available at SSRN: https://ssrn.com/abstract=1101147

Andre J. Van Stel (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

D. Storey

University of Warwick

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

EIM Netherlands

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P.O. box 7001
2701 AA Zoetermeer
Netherlands

Roy Thurik

Montpellier Business School

France

Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC) ( email )

3000 DR Rotterdam
Netherlands
+31 10 408 2232 (Phone)
+31 10 408 9146 (Fax)

HOME PAGE: http://www.thurik.com

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

EIM Netherlands - Business and Policy Research

Postbus 7001
2701 AA Zoetermeer
Netherlands
+31 79 341 3634 (Phone)
+31 79 331 3742 (Fax)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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