Small Business Economics

, Volume 28, Issue 2–3, pp 171–186 | Cite as

The Effect of Business Regulations on Nascent and Young Business Entrepreneurship

  • André van Stel
  • David J. Storey
  • A. Roy Thurik
Open Access
Article

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. [Djankov et al. 2002, ‹The Regulation of Entry’, Quarterly Journal of Economics117(1), 1–37] 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.

Key words

Global Entrepreneurship Monitor nascent entrepreneurship regulation World Bank Doing Business young businesses 

JEL classifications

K20 L26 L51 M13 O57 

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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • André van Stel
    • 1
    • 2
    • 4
    • 5
  • David J. Storey
    • 1
    • 3
  • A. Roy Thurik
    • 1
    • 4
    • 5
  1. 1.EIM Business and Policy ResearchZoetermeerThe Netherlands
  2. 2.Cranfield University School of ManagementCranfieldUK
  3. 3.Centre for Small and Medium Sized Enterprises, University of WarwickCoventryUK
  4. 4.Erasmus University RotterdamRotterdamThe Netherlands
  5. 5.Max Planck Institute of EconomicsJenaGermany

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