The impact of bankruptcy regimes on entrepreneurship and innovation. Is there any relationship?

Abstract

The literature review indicates that bankruptcy law may play an important role in and be one of the factors influencing the development of entrepreneurship, innovation, and thus economic growth, among other things. In previous studies, the analysis of the impact of bankruptcy law on individual variables has been conducted independently. Our aim was to conduct a holistic analysis, taking several factors into account simultaneously. Therefore, a descriptive model was proposed, based on which the following research hypothesis was formulated: In countries characterised by an effective legal system and at the same time debtor-friendly bankruptcy law, the level of risk acceptance among entrepreneurs is higher, which is reflected in higher levels of entrepreneurship and innovation. Based on the selected variables, a cross-sectional analysis was conducted using linear models estimated on the basis of the least-squares method. Additionally, to strengthen the conclusions drawn, the models were assessed in such a way enabling the analysis of causality as defined by Granger based on the two-step process. The results obtained allowed us to confirm the research hypothesis: in countries characterised by an efficient legal system and at the same time debtor-friendly bankruptcy law, the level of risk acceptance among entrepreneurs is higher, which is reflected in higher levels of entrepreneurship and innovation. The research results are particularly important from the point of view of legislators who are responsible for drafting amendments to bankruptcy law. Including certain debtor-friendly provisions may, in the long run, lead to increased entrepreneurship and innovation, and thus economic development.

Enterprise Management Model Innovation and Performance Index Evaluation Based on the Era of Big Data

“…The innovation of enterprise management model in various industries is showing diversification, appearing one after another in various forms [13]. Since the innovation of enterprise management mode provides new paths and possibilities for enterprise development, new enterprise management modes will inevitably emerge one after another in the future enterprise competition [14].…”

Impact of Resolving Insolvency on Entrepreneurial Activity in India

“…There is a higher level of risk tolerance among entrepreneurs and accordingly higher levels of entrepreneurship and innovation in countries with an effective and steady legal system promoting a debtor-friendly bankruptcy law lead to higher risk acceptance among entrepreneurs (Prusak et al, 2022). Acharya and Subramanian (2009) concluded that creditor-friendly bankruptcy laws are the cause and effect of more liquidations and, subsequently, fewer innovations, while a debtor-friendly system supports businesses to continue as going concerns.…”

Importance of innovations for entrepreneurship development – views of entrepreneurs in Kurzeme region

“…Cooperation and innovation are considered as key success factors for development in regions (Štefenberga, 2019). Researchers have analysed the impact of bankruptcy regimes on entrepreneurship and innovation and were looking is there any relationship (Prusak et al, 2022) analysed product and service innovation in Portugal where are indicating several patterns and specificities (Costa, Rocha, & Madeira, 2022) and have paid attention on listening to the buzz and exploring the link between firm creation and regional innovative atmosphere as reflected by social media (Corradini, Folmer, & Rebmann, 2022). Endogenous development of green finance and cultivation mechanism of green bankers are investigated in big detalisation degree (Zhang et al, 2022).…”