Entrepreneurship and Democracy: A Complex Relationship
Author(s) Information
Arielle Newman, Whitman School, Syracuse University
Steven Brieger, University of Sussex
Diana Hechavarria, Texas Tech
Journal
Entrepreneurship Theory and Practice, 2023
Summary of Your Paper
We find that key measures of entrepreneurship are frequently negatively, not positively, associated with democracy and its various determinants.
Research Questions
How is democracy and entrepreneurship related? Does higher levels of democracy lead to more entrepreneurship? Are more democratic individuals more entrepreneurial.
What We Know
Recent literature has begun exploring the relationship between democracy and entrepreneurship. Our research seeks to extend this preliminary discussion and clarify certain aspect of the entrepreneurship-democracy linkage through pragmatic empirical theorizing. Specifically, we add nuance to the debate by highlighting that, using different measures of entrepreneurship available to us, the direction of the relationship between entrepreneurship and democracy at the country level is more negative than positive. Additionally, we demonstrate that important socio-economic, cultural, and institutional determinants of democracy also negatively correlate with entrepreneurship, further substantiating a negative relationship between entrepreneurship and democracy.
Novel Findings
This work finds that democracy and entrepreneurship are actually negatively correlated--more democratic societies tend to be less entrepreneurial. We find that for opportunity-driven and necessity-driven entrepreneurship, high-growth entrepreneurship, and established ownership (excluding agriculture) tend to exhibit negative correlations with democracy for both the full sample of countries and the OECD country sample. However, corporate entrepreneurship and innovative output show a positive relationship with democracy, supporting our proposition that such activities are more prevalent in democracies where large firms find it easier to invest and innovate.
Novel Methodology
This is a very interesting finding as it runs counter to another article that initiated this research on entrepreneurship and democracy. We utilized pragmatic empirical theorizing exploring this relationship using a full sample of all countries with available data as well as OECD versus non-OECD countries and overall found that democracy and entrepreneurship are negatively related.
By specifically looking at non-OECD nations and looking at necessity entrepreneurship as well as opportunity based entrepreneurship, we create a more holistic understanding of the relationship between democracy and entrepreneurship.
Implications for Research
This continues a nascent discussion exploring the relationship between political systems, such as democracy, and entrepreneurship. We challenge the dominant view with evidence in multiple contexts across the globe and invite further discussion and exploration of entrepreneurship and democracy.
Full Citation
Brieger, S., Hechavarria, D., & Badger Newman, A. Entrepreneurship and Democracy: A complex relationship. Entrepreneurship Theory and Practice.
Abstract
This research note critically extends Audretsch and Moog’s (2022) work on the relationship between democracy and entrepreneurship. While Audretsch and Moog present a positive relationship between democracy and entrepreneurship, we find that key measures of entrepreneurship are frequently negatively, not positively, associated with democracy and its various determinants. However, we do find some evidence to support Audretsch and Moog’s theorizing that democracy is learned in start-ups and small businesses, by showing that entrepreneurs in advanced economies are more democratic in their attitudes or behaviors than their employee counterparts. But the evidence on whether the transition from regular employment to entrepreneurship increases political engagement and democratic orientation
remains inconclusive.