International Journal of Business and Economics Volume 20, No. 1 June, 2021

Exploring the Relationship Between Trust and Business Start-Ups in 52 Countries Over 16 Years

Esa Mangeloja

Department of Economics ,University of Jyväskylä, Finland

Tomi Ovaska

Williamson College of Business Administration, Youngstown State University, USA

Ryo Takashima

Department of Global Studies, Sophia University, Japan

Abstract

A well-functioning social network involves attributes such as honesty, benevolence, fairness and confidence. When this network – trust - has formed, participants can count on reliable and consistent economic transactions. This has the effect of higher level of co-operation, but also co-dependence. Strong social networks, as measured in this study by the degree of interpersonal trust and trust in institutions, are foundational elements for societies wishing to progress to new higher levels of entrepreneurship and development. In a pooled OLS of up to 52 countries and 16 years, this study estimates how changes in interpersonal trust and trust in institutions affect new business creation. The four entrepreneurship categories considered include the total early-stage entrepreneurial activity, new business formation, necessity-driven entrepreneurial activity, and improvement-driven opportunity entrepreneurial activity.

Keywords：Entrepreneurship, Improvement-driven Opportunity Entrepreneurial Activity, Institutional Trust, Necessity-driven Entrepreneurial Activity, New Business Density, Total Early-stage Entrepreneurial Activity (TEA), Trust.

JEL Classifications：D02, H11, M13, Z13.

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