Necessity or opportunity? Government size, tax policy, corruption, and implications for entrepreneurship

Abstract Government size, corruption, and tax policy can influence allocation towards necessity or opportunity-driven entrepreneurship. Using a comparative multi-source sample across 52 countries during 2005–2015, we apply mixed-process estimation of the simultaneously unrelated system equations unpack these heterogeneous complex effects. Interestingly, our results show that corruption on opportunity entrepreneurship depends government size. Our hold for numerous robustness analyses. Plain English summary Institutions matter choice necessity-driven level directly affect entrepreneurs’ motivation incentives. We study 2005–2015 to find out what extent rate, range expenditure change main implications are (1) Research: Formal informal institutions need be considered when studying allocation, particularly in an emerging developing country context. Results suggest impact same institutional settings such as is not uniform size scope have different magnitude. The effect ubiquitous. (2) Management: broader context affects entrepreneurship, potential entrepreneurs consider how particular them. (3) Policy: Policymakerscan measure which likely change, they make changes policy, resources public spending, take anti-corruption measures.