Work

Taxes, start-up costs, and innovative entrepreneurship

Year: 2018

Type: article

Abstract: Prior research investigates the role of start-up costs and taxes with regard to entrepreneurship. Yet, little distinction is made regarding the type of entrepreneurship, particularly innovative versus non-innovative entrepreneurship. We shall argue that start-up costs and taxes are associated in different ways with innovative versus non-innovative entrepreneurship. Taxes being recurring costs should mainly relate to innovative entrepreneurship, whereas start-up costs being one-off costs should mainly relate to non-innovative entrepreneurship. Analyzing a dataset of 632,116 individuals, including 43,223 entrepreneurs from 53 countries, we can partially confirm our predictions. Corporate taxes show a negative relationship with innovative entrepreneurship, whereas income taxes seem to have no relationship. High start-up costs have a positive relationship with innovative entrepreneurship, although this finding only holds true in cross-sectional investigations. Our paper contributes to the discussion on how governmental regulation and taxes relate to entrepreneurship.

Source: Small Business Economics

DOI: 10.1007/s11187-018-0005-9

Authors: Pourya Darnihamedani, Joern Hendrich Block, Jolanda Hessels, Aram Simonyan

Institutions: Tilburg University, Universität Trier, Erasmus University Rotterdam, National Academy of Sciences of Armenia

Language: English

Topic: Entrepreneurship Studies and Influences

Subfield: Management of Technology and Innovation

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,090