Natural Disasters, Entrepreneurship Activity, and the Moderating Role of Country Governance

Abstract: The purpose of this paper is to investigate if a country quality of governance moderates the effect of natural disasters on startup activity within that country. We test our hypotheses using a panel of 95 countries from 2006 to 2016. Our findings suggest that natural disasters discourage startup activity in countries that have low quality governance but encourage startup activity in countries that have high quality governance. Moreover, our estimates reveal that natural disasters effects on startup activity persist for the short term (1-3 years) but not the long term. Our findings provide new insights into how natural disasters affect entrepreneurship activity and highlight the importance of country governance during these events.