Institutional Quality and the Environment for Entrepreneurship In

Appendix A. WBES multi-item scales used in the study

Government Intervention

How often does the government intervene in the following types of decisions by your firm? Responses coded using a 6-point Likert-type scale ranging from 1 (always) to 6 (never).

1. Investment
2. Employment
3. Sales
4. Pricing
5. Merger/acquisitions
6. Dividends
7. Wages

Court System

In resolving business disputes, do you believe your country’s court system to be: Responses coded using a 6-point Likert-type scale ranging from 1 (never) to 6 (always).

1. Fair and impartial
2. Honest/uncorrupt
3. Quick
4. Affordable
5. Consistent
6. Decisions enforced

Finance

Please judge on a four point scale how problematic are these different financing issues for the operation and growth of your business. Responses coded using a 4-point Likert-type scale ranging from 1 (major obstacle) to 4 (no obstacle).

1. Collateral requirements of banks/financial institutions
2. Bank paperwork/bureaucracy
3. High interest rates
4. Need special connections with banks/financial institutions
5. Banks lack money to lend
6. Corruption of bank officials
7. Access to foreign banks
8. Access to non bank equity/investors/partners
9. Access to specialized export finance
10. Access to lease finance for equipment
11. Inadequate credit/financial information on customers

Regulations

Please judge on a four point scale how problematic are these different regulatory areas for the operation and growth of your business. Responses coded using a 4-point Likert-type scale ranging from 1 (major obstacle) to 4 (no obstacle).

1. Business licensing
2. Customs/foreign trade
3. Regulations in your country
4. Labor regulations
5. Foreign currency/exchange regulations
6. Environmental regulations
7. Fire, safety regulations
8. Tax regulations/administration
9. High taxes

Fairness of competition

Please judge on a four point scale how problematic are the following practices of your competitors for your firm? Responses coded using a 4-point Likert-type scale ranging from 1 (major obstacle) to 4 (no obstacle).

1. They avoid sales tax or other taxes
2. They do not pay duties or observe trade regulations
3. Foreign producers sell below international prices
4. Domestic producers unfairly sell below my prices
5. They avoid labor taxes/regulations (e.g. social security)
6. They violate my copyrights, patents or trademarks
7. They receive subsidies (including the toleration of tax arrears) from national/local government
8. They have favored access to credit, infrastructure services or customers

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Appendix B. Sample characteristics: Means for variables

Appendix C. Heckman selection model results

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