ICT Penetration and Entrepreneurial Activity

Abstract

Entrepreneurial activity is a critical factor for performance of firms and economies. Therefore, firms and governments try to create an entrepreneurial environment given positive economic and social gains of entrepreneurship. Furthermore, governments stimulate the entrepreneurial activities through financial and legal incentives. This study investigates the mutual interaction between ICT penetration and entrepreneurial activity in 13 high income countries for the 2002-2018 period by a panel causality test which considers the cross-sectional dependence and heterogeneity. The results of panel level causality analysis reveal a bidirectional causal interaction between ICT penetration and entrepreneurial activity. However, the results of country level causality analysis uncover that interaction between ICT penetration and entrepreneurial activity differs among higher income countries depending on country specific characteristics.