Regulatory Burden, Rule of Law, and Entry of Strategic Entrepreneurs: An International Panel Study

Journal of Management Studies, Forthcoming

55 Pages Posted: 25 Oct 2010  

Jonathan Levie

University of Strathclyde - Strathclyde Business School

Erkko Autio

Imperial College Business School; Aalto University, Department of Industrial Engineering and Management

Multiple version iconThere are 2 versions of this paper

Date Written: August 16, 2010

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 signaling 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.

Keywords: Entrepreneurship, regulation, rule of law, signalling, employment choice, strategy

Suggested Citation

Levie, Jonathan and Autio, Erkko, Regulatory Burden, Rule of Law, and Entry of Strategic Entrepreneurs: An International Panel Study (August 16, 2010). Journal of Management Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1697250

Jonathan Levie

University of Strathclyde - Strathclyde Business School ( email )

100 Cathedral Street
Glasgow G1 1XU
United Kingdom

Erkko Autio (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom
+447786226452 (Phone)

HOME PAGE: http://www.imperial.ac.uk/people/erkko.autio

Aalto University, Department of Industrial Engineering and Management ( email )

Otakaari 1
Espoo, FI-00076
Finland

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