How Political Environments Support or Suppress Entrepreneurship:
The following are some of the ways in which the political environmentinfluences entrepreneurship:
Unstable political conditions wheregovernmentpolicies change frequentlydiscourage business, as investors fear for the safety of their investments.
Government support to economic development through infrastructuredevelopment, facilitation, industrial parks, and the like all encourageentrepreneurship.
High taxes that cut into the returns usually discourage entrepreneurs. On theother hand, tax holidays to encourage business attract start-ups.
The availability of infrastructure and utilities such as good roads, power,communication facilities, and lack of corruption and bureaucratic delays inobtaining such utilities encourage entrepreneurship.
Economic freedom in the form of favourable legislationand few hurdles tostart and operate businesses encourage entrepreneurship.
While most businesses accept laws related to the safeguard of labor rightsand the environment, some countries have retrograde laws that makecompliance very difficult and time consuming. Such legal hurdles create a barrier to entrepreneurship.
How Economic Factors Influence Entrepreneurship:
The nature of the economy is a major factor that influencesentrepreneurship.
The general purchasing power of the people, manifested by income levelsand economic prosperity of the region, plays a major role in the success of entrepreneurial ventures.
During times of economic slowdown or recession, the purchasing power declines and people remain reluctant to invest, affecting entrepreneurshipadversely.