Can Entrepreneurial Initiative Blunt the Economic Inequality–Growth Curse? Evidence From 92 Countries. Issue 2 (February 2021)

• Record Type: Journal Article
• Authors: Patel, Pankaj C.; Doh, Jonathan P.; Bagchi, Sutirtha
• Other Names: Caruana Robert guest-editor.; Crane Andrew guest-editor.; Gold Stefan guest-editor.; LeBaron Genevieve guest-editor.
• Is Part Of: Business and society. Volume 60:Issue 2(2021)
• Page Start: 496
• Page End: 541
• Publication Date: 2021-02
• Subjects: entrepreneurship -- inequality -- new business formation; Industries -- Social aspects -- Periodicals; Industrial sociology -- Periodicals; Business ethics -- Periodicals; 306.3
• DOI: 10.1177/0007650318797103
• Languages: English
• ISSNs: 0007-6503

Abstract

Despite the growing interest in understanding the effects of income inequality on economic growth, the influence of entrepreneurship-related institutional constraints on the inequality–growth association remains less understood. Drawing on an institutional constraints perspective in the context of startup entry regulation and credit constraints, we propose that under increasing income inequality, ease of startup or access to credit from the financial sector is positively associated with per capita economic growth. In a sample of 92 countries, robust to alternate specifications, we find support for our hypotheses. Our findings contribute to the debates about the income inequality–growth nexus and imply potential policy interventions in the form of lower startup regulations and domestic credit provision from the financial sector to enhance economic growth under increasing economic inequality.