Business Policies and New Firm Birth Rates Internationally

Abstract

The creation of new businesses is vitally important to a healthy economy. Governments can enact laws and enforcement policies to foster and protect business. Or, the priority in some countries can be to protect employees and labor organizations. We examine how the business policies and laws enacted foster or inhibit new firm births in 19 countries. Firm birth rates are analyzed in countries with various business polices and control for legal environments, quality of government, and cultural variables. We conclude that policies which inhibit large firm competitiveness also foster more new firm births. Policies that give large firms an advantage seem to restrain firm births. High accounting standards favor the specialization ability of large firms and reduce new firm startups. Firm death rates are also examined.