The Role of Regulation in Facilitating Entrepreneurship: A Study of Incubation in Belgium

There is a growing academic interest for the question of the impact of regulation on entrepreneurship or small businesses. The objective of this theoretical paper is to provide a literature review of the impact of regulation on entrepreneurship and, by doing so, to explain why studies on that topic have reached conflicting results. We first show that researchers have used diverse approaches regarding the question of whether to and how they should define regulation. We stress that few regulation impact studies provide a definition of what they understand as regulation. We study the existing definitions of the regulation concept and make a proposal to improve these definitions. Second, we observe that researches generally differ in the way they consider the impact to be measured. We propose our own classification of regulation impact studies by making a distinction between single effect studies, i.e. studies investigating the question of “what do entrepreneurs think about regulation?” and focused on the negative impact of regulation on one hand, and differentiated effects studies, i.e. studies asking “how do entrepreneurs adapt to regulation?” and assessing the various possible effects (negative, positive, neutral) of regulation on the other hand. We highlight that these different approaches have led to conflicting results preventing us from being able to make a clear judgment on this topic. Moreover, our classification allows us to identify some issues that have not been sufficiently investigated yet by regulation impact studies. We end by making some suggestions to overcome these controversies in future research