The role of corruption and risk aversion in entrepreneurial intentions

ABSTRACT

The literature on entrepreneurship has suggested that an individual’s entrepreneurial intention depends on three types of factor: personal characteristics, the individual’s expertise and professional background, and external factors. Our study investigates how corruption, an external factor, and risk aversion, a personal characteristic, may simultaneously affect individuals’ entrepreneurial intentions. With data on 76 203 individuals in 53 countries, our estimation results indicate that risk aversion decreases the individual’s probability of having an entrepreneurial intention by 6.67 percentage points. In addition, an increase in 1 SD in the perceived level of corruption in a country decreases the individual’s probability of having an entrepreneurial intention by 0.96 percentage points.

KEYWORDS:

• Entrepreneurship
• corruption
• risk aversion

JEL CLASSIFICATION:

• L26
• D73
• D81

Notes

¹ We excluded data for two geographic regions: West Bank and Gaza Strip, and Shenzhen.

² We also excluded individuals who refused or did not know how to answer one of the questions used to construct our variables of interest.