The Implementation of Structural Equation Model for Economic Freedom to Affect the Entrepreneurship Dimension

Abstract

Purpose - It is to measure the sensitivity values of the factors affecting the economic freedom's entrepreneurship, the values of the factors contributing to the relational structure in the effect of economic freedom on entrepreneurship and the effect of economic freedom on the entrepreneurship dimension.

Design/methodology/approach - For 2019, the effect of the economic freedom dimension on the entrepreneurship dimension was measured by structural equation modeling based on the values of the factors that constitute the Economic Freedom Index and the Global Entrepreneurship Index for 115 countries.

Findings - In the research, it was concluded that economic freedom affects or provides entrepreneurship in a significant, positive and very high level. In the continuation of the research, it was determined that the most sensitive and most contributing factor to the relational structure of the economic freedom dimension is the rule of law in terms of economic freedom and entrepreneurial skills in terms of entrepreneurship dimension. In addition, it has been determined that the goverment size factor contributes the least to the relational structure towards the effect of economic freedom on the entrepreneurship dimension. It has been found that entrepreneurship contributes more to the relational structure between economic freedom and entrepreneurship dimensions than economic freedom.

Discussion – With the structuring of economic freedom activities on a legal basis and the more pronounced entrepreneurial capabilities, economic freedom plays a more functional role in the formation of entrepreneurship in the global sense. In the framework of the limited state factor affecting entrepreneurship less within the scope of economic freedom, it has been evaluated that goverment size practices of countries around the world restrict entrepreneurship and also, economic freedom is needed to ensure entrepreneurship within the framework of the relational structure, entrepreneurship contributes more than economic freedom. Apart from these, this study is thought to contribute to the literature in the context of explaining the importance of establishing economic freedom in order to ensure entrepreneurship.