Genetic distance and the difference in new firm entry between countries

• Published in: Journal of evolutionary economics Vol. 29; no. 3; pp. 973 - 1016
• Main Authors: Guedes, Maria João, Nicolaou, Nicos, Patel, Pankaj C.
• Format: Journal Article
• Language: English
• Published: Berlin/Heidelberg Springer Berlin Heidelberg 01-07-2019; Springer Nature B.V
• Subjects: Economic development; Economic Growth; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Economics and Finance; Entrepreneurs; Entrepreneurship; Institutional/Evolutionary Economics; Microeconomics; Policy making; R & D/Technology Policy; Regular Article; Risk preferences; Comparative entrepreneurship; L26; Entrepreneurship; Genetic distance; Country or areas study; M13; New firm entry
• ISSN: 0936-9937; 1432-1386
• DOI: 10.1007/s00191-019-00613-2

Does genetic distance between countries explain differences in the level of entrepreneurship between them? Genetic distance, or very long-term divergence in intergenerationally transmitted traits across populations, has been recently tied to a variety of outcomes ranging from differences in economic development to differences in risk preferences between countries. Extending this recent work, we ask whether the genetic distance between countries is associated with differences in new firm entry. Based on a sample of 103 countries and 5253 country-pair observations and controlling for a large variety of factors, we find that genetic distance is positively associated with between country differences in new firm entry. The effects sizes, as expected, are small. In assessing the differences in entrepreneurial activity between country-pairs, policymakers could consider adjusting for genetic distance as an explanation for differences in entrepreneurial activity.