Examining the impact of corruption on entrepreneurship: a critical analysis in Asian countries

Corruption is widely regarded as an institutional barrier to entrepreneurship, yet its effects may differ across stages of the entrepreneurial process. This paper examines the associated between corruption on entrepreneurship by evaluating how institutional quality differentially shapes early-stage versus mature market entry. Utilizing a panel dataset of eight Asian economies from 2010 to 2023, we employ Fixed Effects and Random Effects (FEM/REM) panel estimation to analyze two distinct dimensions of entrepreneurial activity: nascent entrepreneurship from the Global Entrepreneurship Monitor (GEM) and, formal business entry rates from the World Bank Group Entrepreneurship Survey. The results reveal a clear stage-dependent relationship. Improved corruption control is associated with a significant decline in nascent entrepreneurship (β = −1.520 to −1.903), implying an approximately 15–19% reduction in nascent entrepreneurial activity, while simultaneously increasing the mature business entry rate (β = 3.320–4.421). These findings remain robust when controlling market size, trade openness, political stability, and human capital, which positively correlate with entrepreneurship, and stock market capitalization and corporate tax rates, which exert a negative influence. Ultimately, by showing that the observed association between corruption and entrepreneurship is fundamentally contingent upon the developmental stage of the entrepreneurial venture.