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Freedom and entrepreneurship: a spatial econometric approach

Freedom and entrepreneurship: a spatial econometric approach PurposeWhile many studies find a positive relationship between economic freedom and entrepreneurship, very few of these studies account for possible spatial autocorrelation. Moreover, the development of an overall freedom measure has allowed researchers to test the relationship between overall freedom (personal plus economic) and entrepreneurship. The literature, however, does not account for spatial dependence in entrepreneurial activity. The purpose of this paper is to test for possible spatial dependence in entrepreneurial activity.Design/methodology/approachThe authors employ a spatial autoregressive model to account for possible spatial dependence in entrepreneurial activity across states. The authors have data for entrepreneurial activity and overall freedom for a cross-section of data on the 48 contiguous US states for 2009.FindingsThe authors find no evidence of spatial dependence in entrepreneurial activity.Research limitations/implicationsThe authors are limited to a cross-section. Combined with the spatial lag of the dependent variable, the authors might have too few observations to find statistical significance on either the spatial lag or other explanatory variables.Practical implicationsFuture research should continue to account for possible spatial dependence.Social implicationsEntrepreneurship is key to economic growth. Freedom has been shown to lead to more entrepreneurship at the state level in other research.Originality/valueThis brief research note is the first paper to account for spatial dependence in the relationship between overall freedom and entrepreneurial activity. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Entrepreneurship and Public Policy Emerald Publishing

Freedom and entrepreneurship: a spatial econometric approach

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
2045-2101
DOI
10.1108/JEPP-12-2015-0038
Publisher site
See Article on Publisher Site

Abstract

PurposeWhile many studies find a positive relationship between economic freedom and entrepreneurship, very few of these studies account for possible spatial autocorrelation. Moreover, the development of an overall freedom measure has allowed researchers to test the relationship between overall freedom (personal plus economic) and entrepreneurship. The literature, however, does not account for spatial dependence in entrepreneurial activity. The purpose of this paper is to test for possible spatial dependence in entrepreneurial activity.Design/methodology/approachThe authors employ a spatial autoregressive model to account for possible spatial dependence in entrepreneurial activity across states. The authors have data for entrepreneurial activity and overall freedom for a cross-section of data on the 48 contiguous US states for 2009.FindingsThe authors find no evidence of spatial dependence in entrepreneurial activity.Research limitations/implicationsThe authors are limited to a cross-section. Combined with the spatial lag of the dependent variable, the authors might have too few observations to find statistical significance on either the spatial lag or other explanatory variables.Practical implicationsFuture research should continue to account for possible spatial dependence.Social implicationsEntrepreneurship is key to economic growth. Freedom has been shown to lead to more entrepreneurship at the state level in other research.Originality/valueThis brief research note is the first paper to account for spatial dependence in the relationship between overall freedom and entrepreneurial activity.

Journal

Journal of Entrepreneurship and Public Policy – Emerald Publishing

Published: Nov 7, 2016

References

  • Entrepreneurship: productive, unproductive, and destructive
  • Economic freedom and entrepreneurial activity: some cross-country evidence
  • Self-employment in OECD countries
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  • A spatial analysis of incomes and institutional quality: evidence from US metropolitan areas
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  • The effect of social, cultural, and economic factors on entrepreneurship
  • The impact of higher quality government regulation of business and greater economic freedom on living standards: evidence from OECD nations
  • Panel evidence on economic freedom and growth in the United States
  • Income, growth, and economic freedom