Does Control of Corruption Matter for Entrepreneurship in Emerging Economies: Evidence from Post-Communist Countries

Abstract

Corruption has been shown to discourage entrepreneurship in both developed and developing countries. However, it is less clear to what extent corruption affects the development of institutions’ impact on entrepreneurial activity in the context of emerging economies, such as those in the post-communist countries. This study used Institutional Economics as a conceptual framework with the aim of analysing the moderating effect of control of corruption (informal institution) on the relationship between formal institutions (such as the number of procedures, education and training, access to finance, and technology absorption) and entrepreneurial activity. The study used panel data of 14 post-communist countries and different secondary databases from the years 2006-2014. The article has several implications from both theoretical perspectives (advancing the application of Institutional Economics for the study of entrepreneurship) and from the practical point of view (providing insights for governmental policies interested in fostering higher entrepreneurial levels).