New Firm Creation: A Global Assessment of National, Contextual, and Individual Factors

197 Pages Posted: 15 Sep 2011

See all articles by Paul D. Reynolds

Paul D. Reynolds

Florida International University, Eugenio Pino & Family Global Entrepreneurship Center

Date Written: April 1, 2011

Abstract

The prevalence of individuals actively involved in business creation among 75 countries varies from one in thirty (Japan, Belgium, France) to one in three (Peru, Uganda). Predictive models reflecting five national aspects - economic, structural, centralized control, population potential for entrepreneurship, and cultural support - are able to account for 80-95% of the variation in 23 types of business creation. The most important factors associated with the prevalence of business creation are the capacity of the population to participate in business start-ups, a high prevalence of small businesses, participation of women in the labor force, the presence of informal investors, emphasis on traditional rather than secular-rational values, presence of young adults, and income inequality. The use of log linear regression modeling to predict individual participation in 15 types of business creation explained from 14% to 41% of the variance. Personal attributes, national cultural and social norms, and personal context were much more likely to be associated with individual participation in business creation than characteristics of the national economy, economic structure, population readiness for business creation or centralized control of economic activity. The primary policy implication is that efforts to directly prepare individuals for business creation are more likely to have an impact compared to adjustments in regulatory procedures or legal standards. The assessment demonstrates the considerable value from harmonized cross national data on business creation and national attributes. There remains, however, substantial opportunity for improving understanding of the entrepreneurial process.

Keywords: nascent entrepreneurship, business creation, national factors, small business

Suggested Citation

Reynolds, Paul D., New Firm Creation: A Global Assessment of National, Contextual, and Individual Factors (April 1, 2011). Foundations and Trends in Entrepreneurship Vol. 6, Nos. 5-6, 2010. Available at SSRN: https://ssrn.com/abstract=1927534

Paul D. Reynolds (Contact Author)

Florida International University, Eugenio Pino & Family Global Entrepreneurship Center ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

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