Analysis Group Consultants, Affiliate Explore the Impact of the Regulatory Environment on IT Entrepreneurship

April 11, 2013

Managing Principal Laurits Christensen, Manager Greg Rafert, and Analysis Group affiliate and Harvard Business School professor Joshua Lerner provide new insights into the key drivers of IT entrepreneurship in their white paper, "The Impact of the Regulatory Environment on IT Entrepreneurship in the U.S. and EU." The research was funded by Google.

In the paper, the authors note that differences in tax rates and the strength of property rights protection between the United States and the European Union help explain differences in the number of newly funded entrepreneurs per capita between these two regions. "The strength of business regulation (in the form of corporate taxes) and, to a lesser extent, the strength of property rights protection in a country are statistically significant determinants of the level of IT entrepreneurship," they write.

The authors also find evidence of a positive feedback cycle, "where countries with more entrepreneurs in a year are significantly more likely to increase the number of new entrepreneurs in the following year." This suggests that countries that successfully increase entrepreneurship through regulatory policies can have significant effects on the level of entrepreneurship over the long term.

Read the white paper