The more the merrier? Economic freedom and entrepreneurial activity

The current research addresses the question of how policy makers might design specific components of economic freedom (EF) to most effectively encourage high levels of entrepreneurial activity (EA). Given that entrepreneurship is a multifaceted phenomenon, the study analyzes the effects of four components of EF on EA and relies on fuzzy-set qualitative comparative analysis (fsQCA) to do so. The research collates data from 63 different countries and analyzes EA as it applies to factor-driven, efficiency-driven, and innovation-driven economies. The current research also differentiates between opportunity-driven entrepreneurship and necessity-driven entrepreneurship. The results suggest that the effects of EF vary according to the developmental stage of an economy and the type of EA in question. The results reveal that simplistic explanations implying that high levels of EF trigger high levels of EA regardless of a country's developmental stage are inadequate.