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Does Trust Matter For Entrepreuneurship : Evidence From A Cross-Section Of Countries

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  • Kodila-Tedika, Oasis
  • Agbor Agbor, Julius

Abstract

To the extent that trust is necessary to conduct informal sector business activities, its absence could possibly constrain entrepreneurial spirit and overall economic growth. This paper tests the hypothesis that differences in trust levels between countries explain the observed differences in entrepreneurial spirit amongst them. Analyzing a cross-section of 60 countries in 2010, our findings suggest that about half of the variation in entrepreneurial spirit across countries in the world is driven by trust considerations. This result is robust to regional clustering and to alternative conditioning variables. The findings of the study suggest that while formal incentives to nurture entrepreneurship must be maintained, policy-makers should also pay attention to the role of trust cultivated through informal networks.

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  • Kodila-Tedika, Oasis & Agbor Agbor, Julius, 2012. "Does Trust Matter For Entrepreuneurship : Evidence From A Cross-Section Of Countries," MPRA Paper 42292, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42292
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    Cited by:

    1. Esa Mangeloja & Tomi Ovaska & Ryo Takashima, 2021. "Exploring the Relationship Between Trust and Business Start-Ups in 52 Countries Over 16 Years," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 20(1), pages 17-36, June.
    2. David Cuberes & Sadia Priyanka & Marc Teignier, 2019. "The determinants of entrepreneurship gender gaps: A cross‐country analysis," Review of Development Economics, Wiley Blackwell, vol. 23(1), pages 72-101, February.
    3. Kodila-Tedika, Oasis & Asongu, Simplice & Azia-Dimbu, Florentin, 2016. "The Sensitive Nature of Social Trust to Intelligence," MPRA Paper 70523, University Library of Munich, Germany.
    4. Elert, Niklas & Stam, Erik & Stenkula, Mikael, 2019. "Intrapreneurship and Trust," Working Paper Series 1280, Research Institute of Industrial Economics.
    5. Asongu, Simplice A. & Kodila-Tedika, Oasis, 2013. "Trust and Prosperity: A Conditional Relationship," MPRA Paper 46865, University Library of Munich, Germany, revised 15 Jun 2013.
    6. Urszula Markowska-Przybyła & David M. Ramsey, 2018. "Social Capital and Long-Term Regional Development within Poland in the Light of Experimental Economics and Data from a Questionnaire," Sustainability, MDPI, vol. 10(9), pages 1-26, August.
    7. Simplice Asongu & Oasis Kodila-tedika, 2017. "Trust and Growth Revisited," Economics Bulletin, AccessEcon, vol. 37(4), pages 2951-2961.
    8. Esa Mangeloja & Tomi Ovaska & Ryo Takashima, 2022. "Entrepreneurial choices depend on trust: Some global evidence," Journal of International Entrepreneurship, Springer, vol. 20(4), pages 564-590, December.
    9. Kodila-Tedika, Oasis, 2012. "Entrepreneurship and property right: de Soto'r right [Entrepreneuriat et droit de propriété : de Soto a raison]," MPRA Paper 43464, University Library of Munich, Germany.
    10. Ana Fernández-Laviada & Carlos López-Gutiérrez & Andrea Pérez, 2020. "How Does the Development of the Social Enterprise Sector Affect Entrepreneurial Behavior? An Empirical Analysis," Sustainability, MDPI, vol. 12(3), pages 1-15, January.
    11. Ljunge, Martin & Stenkula, Mikael, 2021. "Fertile soil for intrapreneurship: impartial institutions and human capital," Journal of Institutional Economics, Cambridge University Press, vol. 17(3), pages 489-508, June.

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    More about this item

    Keywords

    Entrepreneurship; Trust; Institutions;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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