Management & Economics Research Journal
ISSN 2710-8856 (Online)
ISSN 2676-184X (Print)

Vol. 4 No. 1 (2022): March, pp. 1-17

https://doi.org/10.48100/merj.2022.172

Faculty of Economics, Commercial & Management
Sciences, Ziane Achour University of Djelfa, BP

3117, Djelfa - Algeria
1

www.mer-j.com

Evaluating Starting a Business Indicators Innovation
in the World

Antoine Niyungeko1

1 PhD in International Entrepreneurship, Independent Consultant, Temporary Teacher,
Bujumbura Light University (Burundi)

 niyungantoine@yahoo.fr

Published online: 23 -09-2021 Accepted: 21-09-2021 Received: 26-06-2021

How to Cite:
Niyungeko, A. (2022). Evaluating Starting a Business Indicators Innovation in the
World. Management & Economics Research Journal, 4(1), 1-17.
https://doi.org/10.48100/merj.2022.172

Abstract:

Since 2003, the World Bank has produced an annual report ranking
economies based on ease of doing business score. However, little is known
whether the improvements made by evaluated economies on starting business
indicators are statistically significant, as claimed by the World Bank. This
study aims to evaluate the extent to which starting business indicators were
improved in the 145 economies evaluated. Indicators assessed are starting a
business score (SBS), starting a business procedure for men (SBPM), starting
a business time for men (SBTM), starting a business cost for men (SBCM),
starting a business procedure for women (SBPW), starting a business time for
women (SBTW), starting a business cost for women (SBCW), and starting a
business in paid-in minimum capital (SBPMC). This study used secondary
quantitative data retrieved from the database of the World Bank for the 2004
and 2020 periods. The sample size was made up of 145 economies. Wilcoxon-
sign-rank-test-paired-sample was computed using the R programming
environment. The results of the Wilcoxon-sign-rank-test-paired-sample

Corresponding author: Bujumbura Light University (Burundi).
[ niyungantoine@yahoo.fr]

©2022 the Author(s). This is an open-access article distributed under the terms of (CC BY-NC 4.0)
which permits use, distribution and reproduction in any medium, provided the original work is properly
cited and is not used for commercial purposes.

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Evaluating Starting a Business Indicators Innovation in the
World Niyungeko, A.

indicated that the mean differences are statistically different from zero for all
indicators except those evaluated. This means that the economies evaluated
improved those indicators for 2020 compared to 2004. The study's findings
provide clear insight to policymakers regarding innovations made to ease of
doing business improvement. Better use of the results of this study would
reduce corruption and increase formal business, increase the number of newly
registered businesses, increase business opportunities for starting a new
business, and increase companies' productivity. This study evaluated whether
business regulations implemented regarding starting a business were
statically significant. Future research should be conducted to empirically test
the significance of implemented procedures related to other indicators
evaluated in doing business reports. This research is novel by empirically
testing innovations made in 145 world economies on starting business
requirements.
Keywords: Starting Business, Business Procedures, Business Cost.
JEL Codes: M48.

1. Introduction

Since 2003, the World Bank (W.B.) has issued an annual report
evaluating how economies improve their business environment. During the
evaluation process, the W.B. considers several indicators which are supposed
to directly affect the ease of doing business. The first production of this report
was inspired by the work of Djankov, La Porta, Lopez-De-Silanes, and
Shleifer (2002). These authors investigated data related to the number of
procedures, official time, and official costs that a startup must bear before it
can operate legally. They concluded that official costs of entry were
extremely high in most countries. Moreover, countries with heavier
regulation of entry had higher corruption and larger unofficial economies,
nonetheless not better quality of public or private goods. Countries with more
democratic and limited governments had lighter regulations of entry.

Many studies were conducted to evaluate the impact of regulation on
the business environment. For instance, Canare (2018) indicated that starting
a business component positively affected business creation in 120 countries
examined. Davari and Farokhmanesh (2017) and Farokhmanesh
(2017)concluded that legislation positively encouraged startup opportunities.
Chambers and Munemo (2019) established a negative correlation between
procedures and new business creation. They indicated that when the number
of steps required to create a new business increased by unit, entrepreneurial
activity decreased between three and seven per cent. The W.B. (2020)
indicated that improvement in firm entry regulation was correlated with

pp. 1-17 Vol. 4 No. 1 (2022) Management & Economics Research Journal

higher productivity. Olagunju and Ikeolumba (2019) concluded that even
though the policy had recorded some small degree of success, the business
climate in Nigeria was still far from friendly due to some implementation
inconsistencies that had beclouded the policy objectives.

Even though regulations impact the business environment, to the best
of the author’s knowledge, no study has been conducted evaluating to what
extent starting business components have been improved in the world from
2004 to 2020. The W.B. claims that starting a business has improved, but
there is no/little empirical evidence to support this statement. The W.B. only
reports changes made by countries regarding ten indicators evaluated in doing
business reports. However, little is known about whether those changes are
statistically significant, as indicated by the W.B. (2020). These ten economies
advanced the most efforts in starting a business, dealing with construction
permits, and trading across borders. Furthermore, significant innovations
have been made since 2003/04, as indicated by the W.B. 178 economies have
executed 722 reforms related to starting a business indicator set, either
reducing or eliminating barriers to entry. In all, 106 economies removed or
reduced minimum capital requirements; about 80 introduced or improved
one-stop shops, and more than 160 simplified preregistration and registration
formalities.

This study was organized into five sections. After the introduction,
the second section shows a literature review. The third section offers the
methods used in the study. Section four presents the result and discussion.
Finally, the fifth section represents the conclusion.

2. Literature review

2.1. Theoretical overview

Many theories have been developed to support the ease of doing
business. For instance, transaction cost theory (TCT) recommends that
conducting transactions is costly (e.g., discussing contracts, monitoring
performance, and solving disputes) and that diverse modes of organizing
businesses involve different costs (Rindfleisch,2019). Therefore, according
to this theory, a comparative analysis of the relative business costs of these
alternative modes tells how a particular transaction should be led. Based on
this theory, a country with high transaction costs will not be able to attract
investors. The TCT has been used in examining firms' limitations, vertical
integration choices, the rationale for leading an acquisition, the networks, and
other mixture governance forms (Martins, Serra, Leite, Ferreira, and Li,
2010). Another theory that needs to be mentioned is the internalisation theory.

Evaluating Starting a Business Indicators Innovation in the
World Niyungeko, A.

Internalisation theory examines how the corporation's owners, managers, or
trusted establishments make decisions. The hypothesis presupposes that these
decisions are rational. In this case, rationality means that the decision-maker
can recognize a set of possibilities, has a goal by which these options can be
ranked, and can identify and select the highest-ranked choice (Buckley &
Casson, 2009). According to these authors, rational agents internalise markets
when the anticipated benefits surpass the estimated costs. In addition to the
mentioned theory, an eclectic paradigm can be presented. In the eclectic
paradigm, it is assumed that multinational corporations have competitive or
ownership advantages vis-à-vis their major competitors, which they exploit
in establishing attractive production sites due to their location advantages.
Competitive advantage can result from the ownership of particular unique
intangible assets (e.g., firm-specific technology) or is due to the ownership of
complementary assets (e.g., the ability to create new technologies or the
ability to coordinate cross-border activities effectively) (Cantwell & Narula,
2001). Based on this approach, countries must make their economies
attractive to foreign investors. Another theory related to the decision of firm
competitive advantage is the theory of the resource-based view (RBV). The
RBV emphasises internal resources (e.g., knowledge, physical assets, human
capital, and other tangible and intangible factors owned or controlled) and
capabilities to detect the determinants of a firm's competitive advantage and
performance (Juan, Raquel, and Pedro, 2019). These authors indicated that
RBV advises that inter-organizational interactions can allow small and
medium-sized enterprises to gain access and availability to tangible and
intangible resources that fortify their current resource base, which will affect
performance.

The public choice theory clarifies how all decisions made by
policymakers can serve their interest, not the mass. Holcombe (2018)
indicated that this theory clarifies how some can use the system for their profit
at the cost of others, but it does not classify who those are. He added that the
99 per cent are rationally ignorant and that focused interests can use the
political system for their benefit at the expense of the masses. Djankov, La
Porta, Lopez-De-Silanes, and Shleifer (2002) indicated that the tollbooth
theory explains that regulation is pursued interest of politicians and
bureaucrats. These authors indicated that politicians use regulation to
generate rents and extract them through campaign contributions, votes, and
bribes. The main reason many of these permits and regulations exist is to give
administrators the power to deny them and to gather bribes in return for the
permits. The last theory is the theory of regulatory capture. This theory claims
that regulations are routinely and predictably 'captured' and manipulated to

pp. 1-17 Vol. 4 No. 1 (2022) Management & Economics Research Journal

work for the interests of those who are supposed to be subject to them or the
bureaucrats and legislators who write or control them (Etzioni,2009).
Politicians acting in the way tollbooth and regulatory capture theories will
destroy their economies. They may be characterized by the dark triad, a
psychological term explaining individual negative dispositions. As stated by
Myung and Choi (2017), the dark triad is composed of Machiavellianism,
which refers to a tendency to manipulate others to gain an advantage;
psychopathy, which refers to a general lack of empathy; and narcissism,
which refers to excessive self-love.

The objectives of these theories are twofold. First, some support
creating a friendly business environment (transaction cost theory). It was
shown that an economy with low transaction costs attracts investors. Second,
some theories explain the motivation of policymakers (the tollbooth theory,
public choice theory, etc.). These theories argue that politicians use regulation
for their interests, not for the mass.

Nevertheless, besides the theories that show the dark side of
politicians' regulation, recent studies show a positive impact of regulation on
the business environment. Among those studies, Canare (2018) indicated that
the components of starting a business positively affected business creation in
120 countries examined. Additionally, Davari and Farokhmanesh (2017)
revealed that legislation positively encouraged the opportunity to start.
Farokhmanesh (2017) established that legislation had a positive
encouragement effect on the opportunity to startup. Stel, Storey, and Thurik
(2007) found that the minimum capital requirement required to start a
business and labour market regulations drop entrepreneurship rates across
countries. Musara and Gwaindepi (2014) found that bureaucracy, corruption,
policy credibility, policy compliances, and labour restrictions were the
topmost factors within the business regulatory environment that distress the
process of starting new businesses in South Africa. These researchers also
found a positive and significant relationship between bureaucracy and
corruption. The more stringent corporate laws could be a hindrance to any
overseas investment.

2.2. Objective of the study

The main objective of this study is to assess if there are statistically
significant improvements in starting a business indicator set since the
publication of the World Bank report on ease of doing business. Specifically,
this study examines improvements in the starting a business score, starting a
business procedure for men (SBPM), starting a business time for men
(SBTM), starting a business cost for men (SBCM), starting a business

Evaluating Starting a Business Indicators Innovation in the
World Niyungeko, A.

procedure for women (SBPW), starting a business time for women (SBTW),
starting a business cost for women (SBCW), and starting a business in paid-
in minimum capital (SBPMC).

This study contributes to the existing literature by empirically testing
to what extent the world has innovated regarding starting business indicators.
This study indicates to what extent the world is improving in the business
environment. The study supports the publications of the W.B.’s reports on
ease of doing business, which lack statistical tests confirming whether there
are statistically significant innovations.

2.3. Research questions

The business environment is improved when starting a business score
is increased. This indicator increases when starting a business score starting
a business procedure, time, and costs are reduced. The main research question
of this study is as follows:

What innovations are made in starting a business indicator set? The
sub-questions of this study are:

 What innovations are made in starting a business score in the world
economies?

 What innovations are made in starting a business procedure for men
in the world economies?

 What innovations are made in starting a business time for men in the
world economies?

 What innovations are made in starting a business cost for men in the
world economies?

 What innovations are made in starting a business procedure for
women in the world economies?

 What innovations are made in starting a business time for women in
the world economies?

 What innovations are made in starting a business cost for women in
the world economies?

 What innovations are made in starting a business in paid-in minimum
capital in the world economies?

2.4. Research hypotheses

Prasad, Rao, and Rehani (2001) identified various meanings of the
hypothesis. Accordingly, a hypothesis refers to a conjectural statement of the
relation between two or more variables. It is a formal statement that indicates
the expected relationship between an independent and dependent variable. It

pp. 1-17 Vol. 4 No. 1 (2022) Management & Economics Research Journal

can be understood as a tentative explanation of the research problem, an
expected outcome, or an educated guess about the research outcome. These
authors differentiated the hypothesis from the research question. A research
question is a hypothesis requested in the form of a question.

H0: There are no statistically significant innovations in starting a

business indicator set since the publication of the World Bank.

H1: There are statistically significant innovations in starting a business

indicator set since the publication of the World Bank.

3. Methods

3.1. Data collection/sample

Data were collected on the World Bank website
(https://www.doingbusiness.org/en/data) to evaluate innovations made on
starting a business requirement. To select needed data, creating a customer
dataset is used (https://www.doingbusiness.org/en/custom-query). This
option allowed for selecting indicators and customizing the year. Data for the
year ended 2004 and 2020 were collected. The choice of these periods is
based on data availability.

3.2. Measuring variables

Data collected are the measures of starting a business score. Starting a
business score refers to the simple average of the scores for each component
indicator: the procedures, time, and cost for an entrepreneur to start and
legally work a business, as well as the paid-in minimum capital requirement.
These components indicators are defined by the World Bank as follows:

 Starting a business procedure for men (SBPM): is the number of
procedures for men to record all the procedures required in practice
for five married male entrepreneurs to start and operate a local limited
liability company.

 Starting a business time for men (SBTM): captures the median
duration in days that business incorporation experts indicate is
necessary for five married male entrepreneurs to complete all
procedures required to start and operate a business with minimum
follow-up and no extra payments. It is calculated in calendar days.

 Starting a business cost for men (SBCM): refers to the total cost
required for five married male entrepreneurs to complete the

Evaluating Starting a Business Indicators Innovation in the
World Niyungeko, A.

procedures to incorporate and operate a business. It is calculated as a
percentage of income per capita.

 Starting a business procedure for women (SBPW): registers all the
procedures required in practice for five married female entrepreneurs
to start and operate a local limited liability company.

 Starting a business time for women (SBTW): indicates the median
days' duration that business incorporation experts indicate is
necessary for five married female entrepreneurs to complete all
procedures required to start and operate a business with minimum
follow-up and no extra payments.

 Starting a business cost for women (SBCW): is the total cost required
for five married female entrepreneurs to complete the procedures to
incorporate and operate a business. It is calculated as a percentage of
income per capita.

 Starting a business in paid-in minimum capital (SBPMC): the amount
that the entrepreneur needs to deposit in a bank or with a third party
before registration or up to three months after incorporation. It is
calculated as the percentage of income per capita.

The sample size of this research was calculated by using Yamane's (1973)
formula with a 95% confidence level.

n =

1 + ( )

n =

213
1 + 213(0.05)

= 138.98

With n = sample size required, N = number of economies in the

population, and e = allowable error (%). 213 is the number of economies
reported in doing business. To raise the data reliability, the sample size was
raised to 145 economies.

3.3. Data analysis technique

To test whether there is a statistically significant difference in the
analyzed indicated, two types of techniques can be used: 1) paired sample t-
test and Wilcoxon signed-rank test. Paired sample t-test is used when the
differences for the matched pairs are normally distributed. While Wilcoxon-
sign-rank-test-paired-sample is used when the differences for the matched
pairs are not normally distributed. These tests aim to test the null hypothesis
that the true mean difference is zero. If the true mean difference is zero, that

pp. 1-17 Vol. 4 No. 1 (2022) Management & Economics Research Journal

means no improvement was made from 2004 compared to 2020 on the
indicator analyzed.

The Wilcoxon signed-rank test evaluates shifts in median values
between two groups. This test makes no condition on data distribution and
uses the sum of the signed ranks as the test statistic W. The differences of
pairs of each indicator were performed using the following formula:
Difference = Indicator 2020- Indicator 2004.

The Shapiro-Wilk test was used to test the difference of pairs’
normality. Kolmogorov-Smirnov test, the Shapiro-Wilk test, and the
Anderson-Darling test are among the most general methods used to test
normality (Kwak& Park, 2019). The significance level considered was 5%. If
the probability value (p-value) is less than .05, the null hypothesis of
normality is rejected. The result of the Shapiro test Wilk showed that
differences for the matched pairs were not normally distributed. Therefore,
Wilcoxon-sign-rank-test-paired-sample was used instead of paired t-test.

To choose between paired sample t-test and paired samples Wilcoxon
test, the distribution of the difference for each pair of the indicator was tested
using the Shapiro Wilk test. Paired sample t-test, which is a parametric test,
is used when the distribution of differences is approximately normal. When
the distribution of differences is not normally distributed, the paired-samples
Wilcoxon test is used. As indicated by Ghasemi and Zahediasl (2012) that
normality and other hypotheses should be taken seriously because it is
difficult to draw accurate conclusions if they do not hold. Nevertheless, these
authors added that the breach of the normality principle does not trigger major
problems with large enough sample sizes (> 30 or 40); this means that we can
use parametric procedures even though the data are not normally distributed.
Kwak and Park (2019) indicated that when the number of samples is greater
than 30, the sample mean distribution satisfies the normal distribution,
according to the central limit theorem. R programming environment was used
to test the normality of pairs of differences. JASP was used to compute
Wilcoxon signed-rank test and effect size.

4. Result and discussion

Before going ahead with the data analysis, descriptive statistics are
presented. Tables 1 to Table 3 present central tendency (mean and median),
which shows the tendency of the analyzed indicators. The same Tables also
give the measure of dispersion which indicates how data deviate from the
mean. The standard deviation is a kind of average of these deviations from
the mean. It is the square root of the sum of squared deviations divided by the
number of observations. Mishra et al. (2019) showed that skewness and

Evaluating Starting a Business Indicators Innovation in the
World Niyungeko, A.

Kurtosis could be used to test normality. According to them, skewness
assesses symmetry, or lack of symmetry, of the normal distribution, while
Kurtosis appraises the peakedness of a distribution.

Table1. Descriptive statistics of SBS, SBPM, and SBTM

SBS2020 SBS2004 SBPM2020 SBPM2004 SBTM2020 SBTM2004

Valid 145 145 145 145 145 145

Mean 84.256 60.494 6.552 10.317 20.541 52.686

Median 86.900 62.900 6.000 11.000 12.000 42.000

Standard deviation 11.869 20.857 3.002 3.429 28.299 40.356

Skewness -1.974 -0.534 0.839 -0.013 4.425 1.972

Kurtosis 5.701 -0.381 1.733 -0.066 26.033 5.385

Minimum 25.000 11.600 1.000 2.000 0.500 3.000

Maximum 100.000 96.200 20.000 20.000 230.000 260.000

Source: Author’s calculation using World Bank indicator data

Table 2. Descriptive statistics of SBCM, SBPW, and SBTW
SBCM2020 SBCM2004 SBPW2020 SBPW2004 SBTW2020 SBTW2004

Valid 145 145 145 145 145 145

Mean 19.971 101.431 6.648 10.414 20.638 52.783

Median 6.700 28.000 6.000 11.000 12.000 42.000

Standard
deviation

36.157 223.862 3.015 3.511 28.309 40.376

Skewness 3.529 4.833 0.798 0.014 4.415 1.968

Kurtosis 13.558 26.522 1.575 -0.041 25.937 5.366

Minimum 0.000 0.000 1.000 2.000 0.500 3.000

Maximum 211.800 1540.200 20.000 20.000 230.000 260.000

Source: Author’s calculation using World Bank indicator data

There is asymmetric distribution if the mean, median, and mode of a
distribution coincide. The skewness for normally distributed data is near,
0while kurtosis should be around 3. The minimum and maximum values for
each indicator are presented.

pp. 1-17 Vol. 4 No. 1 (2022) Management & Economics Research Journal

Table 3. Descriptive statistics of SBCW and SBPMC
SBCW2020 SBCW2004 SBPMC2020 SBPMC2004

Valid 145 145 145 145

Mean 19.974 101.432 5.560 192.916

Median 6.700 28.000 0.000 29.200

Standard deviation 36.157 223.863 18.864 526.991

Skewness 3.529 4.833 6.575 6.427

Kurtosis 13.557 26.522 53.375 53.820

Minimum 0.000 0.000 0.000 0.000

Maximum 211.800 1540.200 179.600 5109.400

Source: Author’s calculation using World Bank indicator data

Table 4 shows the results of the normality test. As indicated, this test

allows choosing between paired sample t-test (parametric) and Wilcoxon
signed-rank test (nonparametric). As can be seen, at a significant level of 5%,
only SBPW is normally distributed. However, the p-value of 0.068 is not very
far from the significance level. In other words, the differences of paired
observations are not normally distributed. Therefore, to test the innovations
made for each indicator under analysis, Wilcoxon signed-rank test can be
applied.

Table 4. Test of normality (Shapiro-Wilk)

W p
SBS2020 - SBS2004 0.978 0.021

SBPM2020 - SBPM2004 0.981 0.037

SBTM2020 - SBTM2004 0.869 <0.001

SBCM2020 - SBCM2004 0.453 <0.001

SBPW2020 - SBPW2004 0.983 0.068

SBTW2020 - SBTW2004 0.869 <0.001

SBCW2020 - SBCW2004 0.453 <0.001

SBPMC2020 - SBPMC2004 0.378 <0.001

Source: Author’s calculation using World Bank indicator data

To assess if there is a statistically significant change in starting

business components after the World Bank's ease of doing business
publication, a Wilcoxon Signed Rank Test was used. Table 5 presents the
results of the Wilcoxon Signed Rank Test. It also presents the effect of the
difference. The location parameter, the Hodges–Lehmann estimate, is the
median difference between the two groups. The rank-biserial correlation (rB)

Evaluating Starting a Business Indicators Innovation in the
World Niyungeko, A.

can be considered as an effect size measuring how important a difference is
and is interpreted the same as Pearson's r as the effect size is greater than 0.7
for all indicators. It means that the effect size is large. In other words, the size
of the difference between the 2004 and 2020 scores is large, indicating
significant innovations in reducing starting a business burden.

Table 5. Wilcoxon signed-rank test

Measure 1 Measure 2 W df p Hodges-Lehmann Estimate
Rank-Biserial
Correlation

SBS2020 - SBS2004 10155.000 <0.001 23.050 0.919
SBPM2020 - SBPM2004 655.000 <0.001 -4.000 -0.859
SBTM2020 - SBTM2004 743.000 <0.001 -28.500 -0.854
SBCM2020 - SBCM2004 1131.500 <0.001 -33.050 -0.783
SBPW2020 - SBPW2004 659.000 <0.001 -4.000 -0.854
SBTW2020 - SBTW2004 766.000 <0.001 -28.000 -0.851
SBCW2020 - SBCW2004 1131.500 <0.001 -33.050 -0.783
SBPMC2020 - SBPMC2004 89.500 <0.001 -122.450 -0.965

Source: Author’s calculation using World Bank indicator data

To assess if there are statistically significant innovations in starting a
business score (SBS), a Wilcoxon Signed Rank Test indicated that the median
for 2020, Mdn = 86.9, was statistically significantly higher than the median
for 2004, Mdn = 62.9, W = 10155, p < 0.001. The effect size is 0.919 is
positive and significant.

To assess if there are statistically significant innovations in the starting
a business procedure for men (SBPM), a Wilcoxon Signed Rank Test
indicated that the median for 2020, Mdn = 6, was statistically significantly
less than the median for 2004, Mdn = 11, W = 655, p < 0.001. The effect size
is -0.859 is negative and significant.

To assess if there are statistically significant innovations in starting a
business time for men (SBTM), a Wilcoxon Signed Rank Test indicated that
the median for 2020, Mdn = 12, was statistically significantly less than the
median for 2004, Mdn = 42, W = 743, p < 0.001. The effect size is -0.854 is
negative and significant.

To assess if there are statistically significant innovations in the starting
a business cost for men (SBCM), a Wilcoxon Signed Rank Test indicated that
the median for 2020, Mdn = 6.7, was statistically significantly less than the
median for 2004, Mdn = 28, W = 1131.5, p < 0.001. The effect size is -0.783
is negative and significant.

To assess if there are statistically significant innovations in starting a
business procedure for women (SBPW), a Wilcoxon Signed Rank Test
indicated that the median for 2020, Mdn = 6, was statistically significantly

pp. 1-17 Vol. 4 No. 1 (2022) Management & Economics Research Journal

less than the median for 2004, Mdn = 11, W =659, p < 0.001. The effect size
is -0.854 is negative and significant.

To assess if there are statistically significant innovations in starting a
business time for women (SBTW), a Wilcoxon Signed Rank Test indicated
that the median for 2020, Mdn = 12, was statistically significantly less than
the median for 2004, Mdn = 42, W = 766, p < 0.001. The effect size is -0.851is
negative and significant.

To assess if there are statistically significant innovations in starting a
business cost for women (SBCW), a Wilcoxon Signed Rank Test indicated
that the median for 2020, Mdn = 6.7, was statistically significantly less than
the median for 2004, Mdn = 28, W =1131.5, p < 0.001. The effect size is -
0.783is negative and significant.

To assess if there are statistically significant innovations in starting a
business in paid-in minimum capital (SBPMC), a Wilcoxon Signed Rank Test
indicated that the median for 2020, Mdn = 0.00, was statistically significantly
less than the median for 2004, Mdn = 29.2, W = 89.5, p < 0.001. The effect
size is -0.965 is negative and significant.

The results of this analysis indicated that countries made many
innovations to improve their business environment. Starting a business
indicator was improved in the world, which is a good sign in doing business
environment innovation. The results reveal that the procedures and time
required for men to start a business have been reduced. It was found that the
cost for men to start a business was reduced. The results indicate that the time
and cost to start a business for women have been reduced. Finally, it was
found that the paid-in minimum capital has been reduced since 2004.

Improving the business environment would lead to positive economic
spillovers. For instance, Canare (2018) indicated that starting a business
component had a positive effect on business creation in 120 countries
examined. Davari and Farokhmanesh (2017) stated that legislation had
positive encouragement on the opportunity to startup.

Regarding minimum capital to start, Stel, Storey, and Thurik (2007)
found that the minimum capital requirement required to start a business and
labour market regulations drop entrepreneurship rates across countries.
Musara and Gwaindepi (2014) concluded that bureaucracy, corruption, policy
credibility, policy compliances, and labour restrictions were the topmost
factors within the business regulatory environment that distress the process
of starting new businesses in South Africa. These researchers also found a
positive and significant relationship between bureaucracy and corruption. The
more stringent corporate laws could be a hindrance to any overseas
investment. On the other hand, a company climate that is notably devoid of
laws may be less appealing to prospective investors and more vulnerable to

Evaluating Starting a Business Indicators Innovation in the
World Niyungeko, A.

malpractices. Mottaleb and Kalirajan (2010) state that a more business-
friendly environment attracts foreign direct investment

5. Conclusion

This study evaluates the innovations made by economies to reduce
starting business requirements. It empirically demonstrates the significance
of the innovations to support the ease of starting a business. The Wilcoxon
Signed Rank Test results show that the starting a business score has
significantly increased. The component of this indicator, such as starting a
business procedure for men, starting a business time for men, starting a
business cost for men, starting a business procedure for women, starting a
business time for women, starting a business cost for women, and starting a
business in paid-in minimum capital has been significantly decreased. The
results allow us to reject the null hypothesis indicating that there are no
statistically significant innovations in starting a business indicator set since
the publication of the World Bank. Therefore, the alternative hypothesis was
confirmed that there are statistically significant innovations in starting a
business indicator set since the publication of the World Bank in 145
economies examined. This study empirically validates the claims of the
World Bank (2020) that most of the reforms addressed aspects of starting a
business, dealing with construction permits, getting electricity, and paying
taxes. The study revealed that the effect size of changes was significant.

5.1. Theoretical implications

Since 2003, the World Bank has evaluated economies based on ten
areas that are supposed to impact the business environment. Annually, the
World Bank produced a report of the regulatory reforms made by each
economy in the doing business report since that period. Nevertheless, no
study has been conducted to investigate empirically to what extent the
regulatory reforms were statistically significant. This study contributes to the
existing literature by evaluating and demonstrating the extent and
significance of the regulatory reforms carried out since 2004. In light of
transaction cost theory stating that conducting transactions is a costly effort
(e.g., discussing contracts, monitoring performance, and solving disputes)
and diverse modes of organizing businesses involve different costs
(Rindfleisch,2019), economies have made efforts to reduce starting a business
cost.

pp. 1-17 Vol. 4 No. 1 (2022) Management & Economics Research Journal

5.2. practical implications

This study has practical implications regarding improving the
business environment. Reducing starting a business cost can contribute to
reducing corruption and increasing formal business. Djankov, La Porta,
Lopez-De-Silanes, and Shleifer (2002) concluded that most countries' official
entry costs were extremely high. Moreover, countries with heavier regulation
of entry had higher corruption and larger unofficial economies, nonetheless
not better quality of public or private goods. This can contribute to the
increase in the number of newly registered businesses. Opportunities for
starting a new business are supposed to increase, as Farokhmanesh (2017)
hypothesized that legislation had a positive encouragement effect on the
opportunity to startup. Chambers and Munemo (2019) established a negative
correlation between procedures and new business creation. They indicated
that when the number of steps required to create a new business increased by
unit, entrepreneurial activity decreased between three and seven per cent. The
productivity of companies is predicted to increase. This idea is supported by
the World Bank (2020) by indicating that improving firm entry regulation
was correlated with higher productivity.

5.3. Limitation of the study

The World Bank indicated that more than 3,800 business regulatory
reforms had been realized across the 190 economies measured by Doing
Business since 2005. Additionally, most reforms addressed starting a
business, dealing with construction permits, getting electricity, and paying
taxes. This study evaluated whether business regulations implemented
regarding starting a business were statically significant. Future research
should be conducted to empirically test the significance of implemented
procedures related to other indicators evaluated in doing business reports, like
dealing with construction permits, getting electricity, registering property,
getting credit, protecting minority investors, paying taxes, trading across
borders, enforcing contracts, and resolving insolvency.

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect
to the research, authorship, and/or publication of this article.

Evaluating Starting a Business Indicators Innovation in the
World Niyungeko, A.

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1. Introduction
2. Literature review
2.1. Theoretical overview
2.2. Objective of the study
2.3. Research questions
2.4. Research hypotheses

_Hlk122958315
3. Methods
3.1. Data collection/sample
3.2. Measuring variables
3.3. Data analysis technique

4. Result and discussion
5. Conclusion
5.1. Theoretical implications
5.2. practical implications
5.3. Limitation of the study

Declaration of conflicting interests
References