Registration at founding and firm performance: Generalization and extension replication from global data

The decision to not register an enterprise at its founding is pervasive globally, even though research has shown that nonregistration at founding may adversely influence the performance of legally registered businesses (hereinafter called firms). In this “generalization and extension” study, we extend the literature on the registration–performance relationship by (a) documenting the heterogeneity across countries in the effect of registration at founding on firm performance of legally registered businesses and (b) examining potential reasons driving this heterogeneity. Building upon the legitimacy-based view, we replicate the work of Assenova and Sorenson (Organ Sci 28(5):804–818, 2017), who analyzed enterprise-level data on 12,146 firms across 18 countries in sub-Saharan Africa. To test for generalizability, we analyze enterprise-level data on 134,198 firms across 143 countries. Our analyses reveal that the positive effect of registration at founding on firm performance successfully replicates in sub-Saharan Africa. However, there is remarkable heterogeneity across countries globally. We find that the country’s regulatory burden and market openness moderate the effect of registration at founding. Lower regulatory burden and greater openness of the country’s markets substantially strengthen the positive effect of the decision to register at founding on firm performance.