Culture and the regulation of entry

Does culture affect the manner in which a society regulates the entry of new firms? Our results suggest it does. We find more individualistic countries regulate entry more lightly. We investigate how culture matters presenting evidence of significant interactions between individualism and formal legal and political institutions. Individualism has a greater impact on entry regulation in societies with democratic political institutions or a common law tradition. This outcome is consistent with the idea that culture influences social preference for regulation, and political and legal institutions determine the degree to which those preferences are expressed as policy outcomes. Journal of Comparative Economics 44(4) (2016) 1055-1083. Department of Economics, Union College, 807 Union Street, Schenectady NY, 12308, USA; Department Finance and Economics, Box 9580, 312F McCool Hall, Mississippi State University, Mississippi State, MS, 39762, USA. (C) 2016 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved.