Abstract:

Differences in the relative stability of entrepreneurial activities across countries is of great interest as it has an impact on the economic growth. Regulations imposed by a country on its businesses have varying influences on the growth of new businesses. In this paper, we analyze the effect of insolvency through a factor associated with bankruptcy, viz. the recovery rate on the rate of entrepreneurship in countries of different income groups. Insolvency should not only be seen from the viewpoint of shutting down of businesses but from the standpoint of enablers of new entrepreneurship. This analysis was conducted covering 103 countries over a period of six years, 2010 through 2015.The study showed that recovery rate (fresh start) and discontinuation of business is strongly related to higher rates of early stage entrepreneurship activity in higher income countries.