Natural disasters, entrepreneurship activity, and the moderating role of country governance

The purpose of this paper is to investigate if a country’s quality of governance moderates the effect of natural disasters on start-up activity within that country. We test our hypotheses using a panel of 95 countries from 2006 to 2016. Our findings suggest natural disasters discourage start-up activity in countries with low-quality governance but encourage start-up activity in countries with high-quality governance. Moreover, our estimates reveal natural disasters’ effects on start-up activity persist for the short term (1–3 years) but not the long term. Our findings provide new insights into how natural disasters affect entrepreneurship activity and highlight the importance of country governance during these events.