Many are called but few are decided: the impact of the regulation of entry on the decision to start a new business

Abstract

2 0. Abstract The purpose of this paper is to causally examine the institutional impact of the regulation of entry on the decision to start a new business in a border region. Theoretically, we build an embedded overarching tri-faceted framework-regulatory, normative, cultural-cognitive-on different heuristics. We argue that the negative effect of the regulatory dimension on the decision to start a new venture is positively moderated by the informal dimensions. Empirically, we are one of the first-ever to conduct an entrepreneurship experiment, which reflects actual institutional entrepreneurial settings for starting a business in the Meuse-Rhine Euroregion, to assess causality between the regulatory environment and the decision to start a new business in a border region. Our forthcoming results provide embedded understanding on why new venture creation fluctuates so significantly between countries and regions, and thus answer the calls for explanatory power on these phenomena, as many governments recognize the positive economic growth expectancies related to the promotion of new business formation. In so doing, this work can induce important policy developments based on robust causal evidence of the total institutional impact of entry regulations on nascent entrepreneurs' decision to start a new business in a border region.