ENTREPRENEURSHIP AND CORRUPTION: DO CORRUPTION PERCEPTIONS INFLUENCE REGIONAL ENTREPRENEURIAL ACTIVITY?

William Baumol (1990) argued decades ago that corruption may negatively influence not only entrepreneurial and innovation activity, but also regional economic development since there is a tight link between entrepreneurship, innovation and national wealth. Increasing level of corruption may discourage some people to start a business. Therefore it is important to control the level of corruption continuously. In this study, we utilise data from Transparency International together with other data sources, and we quantify the relationship between the corruption perceptions and the regional entrepreneurial activity in the Czech Republic. We analyse years 2000-2015, and we operationalise regional entrepreneurship by the two rates: the rate of business companies per capita and rate of self-employed persons per capita. The estimated panel regressions empirically support a hypothesis about the negative impact of corruption on both types of regional business activity. Based on these findings, we recommend policymakers to put more efforts into controlling and decreasing the level of corruption.