Entrepreneurship and Democracy: A Complex Relationship

Abstract

This research note critically extends Audretsch and Moog’s work on the relationship between democracy and entrepreneurship. While Audretsch and Moog present a positive relationship between democracy and entrepreneurship, we find that key measures of entrepreneurship are frequently negatively, not positively, associated with democracy and its various determinants. However, we do find some evidence to support Audretsch and Moog’s theorizing that democracy is learned in start-ups and small businesses by showing that entrepreneurs in advanced economies are more democratic in their attitudes or behaviors than their employee counterparts. But the evidence on whether the transition from regular employment to entrepreneurship increases political engagement and democratic orientation remains inconclusive.