New Venture Attempts to Influence State Institutions: Effects on Innovation

Abstract

Despite recognition of the importance of facilitative environments to promote new ventures and the corresponding efforts of many governments to provide the necessary infrastructure to fuel growth in entrepreneurship, our understanding of the relationship between the new venture and the state is surprisingly uninformed. To fill gaps in our knowledge of firm-state relationships, we focus on an interesting issue: new venture behaviors to influence state institutions. We pose questions that are related to three distinct issues a) the existence of captor firms and state capture in new ventures, b) the impact of state capture on new venture innovation and c) whether country level characteristics have an impact on the effect of corruption new venture innovation in 26 transition economies. Results indicate the presence of captor firms in new ventures in transition economies. We also find support for the impact of state influencing behaviors on the innovation of new ventures in transition economies, as well as the impact of country characteristics.

Keywords: Entrepreneurship

JEL Classification: M13