Do more heavily regulated economies have poorer performing new ventures? Evidence from Britain and Spain

Joan-Lluis Capelleras*, Kevin F. Mole, Francis J. Greene, David J. Storey

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

We test two alternative perspectives on the start-up size and subsequent growth of new firms in a heavily regulated (HR) economy and a lightly regulated (LR) economy. The first argues that, in an HR economy, there will be fewer new firms, and those that do start will be larger than those in an LR economy, but they will grow more slowly. A second perspective is that regulation does not influence the scale of entrepreneurship - merely its distribution between that which is registered and that which is not registered. Using parallel datasets for HR Spain and LR Britain we find some support for both perspectives. Specifically we find that registered new firms in Britain do start smaller than in Spain and do grow faster. However, when both registered and unregistered firms are included, these differences disappear.

Original languageEnglish
Pages (from-to)688-704
Number of pages17
JournalJournal of International Business Studies
Volume39
Issue number4
DOIs
Publication statusPublished - Jun 2008

Keywords

  • regulation
  • entrepreneurship
  • start-up size
  • firm growth
  • Great Britain
  • Spain
  • growth
  • firm
  • industry
  • entry
  • resources
  • policy

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