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The robustness of trust, institutions and entrepreneurship regressions, revisited

ABSTRACT Several studies have shown the importance of trust and economic institutions to entrepreneurship. How trust works through institutions is still unknown. We examine the joint effect trust and institutions have on entrepreneurship and complement the regressions with three sophisticated robustness tests. We find trust and legal system/property rights to be complement and trust and access to sound money substitutes to each other. Trust’s effects on entrepreneurship are quite dependent on the sample data and model specifications. The results should lead to a re-evaluation of the relationship between trust, institutions and entrepreneurship.