Destructive and productive entrepreneurship: An analysis of international panel data
Economic Behavior, Economic Freedom, and Entrepreneurship
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© Richard J. Cebula, Joshua C. Hall, Franklin G. Mixon, Jr. and James E. Payne 2015. All rights reserved. This study looks at the effect of institutional quality on new business activity and organized crime. Building on the work of Baumol on productive versus unproductive entrepreneurship, I consider criminal activity as a form of unproductive entrepreneurship. The empirical analysis utilizes unbalanced international panel data of up to 75 countries between 2002 and 2012. The empirical results suggest a positive relationship between institutional quality and new business formation and a negative relationship between institutional quality and criminal activity and rent seeking. I conclude the chapter by discussing the complexity of the relationship between different forms of entrepreneurship that must be considered in future studies investigating this issue.