The Impact of Good Governance on Entrepreneurship in Terms of Sustainable Development

Abstract

This chapter aims to examine the influence of governance on entrepreneurship in several countries, members of the European Union, in 2012–2017. The selection of the countries was based on human development index and expected years of schooling criteria, thus considering several sustainable development goals, involving the governments’ roles, the private sector, civil society, and citizens. The empirical analysis consisted of correlations, principal component analysis, and regression models. The Pearson correlation coefficient evidenced a series of negative relationships, statistically significant, between the governance indicators and business demography. The principal component analysis returned two main components for our database: the main one incorporates five governance proxies (control of corruption, rule of law, regulatory framework, government effectiveness, and political stability), while the second component is based on the voice and accountability. Therefore, the first governance component is more related to the public sector, while the second one reflects the involvement of civil society. The regression analysis considered besides the ordinary least squares model, the fixed effects and random effects model to emphasize whether or not differences across countries would impact the regression results. Several entrepreneurship variables were employed as dependent variables: business demography, high growth enterprise rates by employment, employer enterprise net growth, and business demography by size class. The consistent regression results emphasized an indirect impact from public governance toward high growth enterprise rates by employment and employer enterprise net growth. Based on our findings, the main conclusion is that public policies do not support entrepreneurship or the national context for entrepreneurs’ development. Moreover, the citizens’ involvement and their opportunities to participate in public decisions in terms of supporting entrepreneurship are also limited.

Citation

Oana-Ramona, L., Sorana, V., Alina, V., Florin, C. and Nicoleta-Claudia, M. (2021), "The Impact of Good Governance on Entrepreneurship in Terms of Sustainable Development", Grima, S., Özen, E. and Boz, H. (Ed.) Contemporary Issues in Social Science (Contemporary Studies in Economic and Financial Analysis, Vol. 106), Emerald Publishing Limited, Leeds, pp. 307-325. https://doi.org/10.1108/S1569-375920210000106019