The Institutional Environment and New Venture Creation in a Transition Economy: Evidence from Poland

Abstract :

This paper uses data from Poland to present evidence of factors influencing new venture creation in a transition economy. Specifically, the focus is on the institutional environment. Using data combined from multiple sources, a country-level dataset for the period 2006–2017 was created to study the extent to which the institutional environment impacts new firm entry in Poland. The hypothesis was tested with the Ordinary Least Squared estimation with robust standard errors. This paper contributes to the literature on venture creation, which is largely absent of transition economies studies, by providing evidence that incentives to start a firm in a transition economy are dependent on the quality of formal institutions (rule of law, government size, regulatory efficiency, open markets), control of corruption, and the perception of safety. The findings may be useful for formulating strategies and public policies that reinforce creation of new venture in a transition economy.