Small Business Economics

, Volume 47, Issue 1, pp 179–199 | Cite as

Does corruption ever help entrepreneurship?

  • Nabamita Dutta
  • Russell Sobel


The current literature contains mixed results regarding the impact of corruption on entrepreneurship and economic growth. In this paper, we examine a much larger set of countries and time periods to attempt to gain insights into this relationship. In particular, the central question is whether corruption can compensate for a bad business climate. Our results are clear; corruption hurts entrepreneurship. The impact is smaller, but remains negative, when business climates are bad. This is in contrast to previous literature that suggests corruption may increase entrepreneurship under a bad business climate. We find corruption never improves entrepreneurship; it simply hurts less when business climates are not conducive to growth in the first place.


Entrepreneurship Corruption Business regulations 

JEL Classifications

D73 L26 O43 



We thank the editor and the referees for their invaluable comments and suggestions. We also thank the session participants at Southern Economic Association, 2013, and the seminar participants at University of Wollongong, Wollongong, New South Wales, Australia, for their feedback.


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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.Department of Economics, College of Business AdministrationUniversity of WisconsinLa CrosseUSA
  2. 2.School of Business AdministrationThe CitadelCharlestonUSA

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