1 Connecting the dots between democracy and innovation: The mediating role of economic freedom and press freedom ABSTRACT Grounded in information processing and institutional theory, this paper theorizes the mechanisms through which democracy influences innovation. We posit the democracy- innovation relationship is channelled through an institutional configuration where entrepreneurs can freely take economic actions (i.e. economic freedom) and process information (i.e. press freedom). Our analysis shows that whereas the democracy-innovation relationship is positively mediated by press freedom, economic freedom surprisingly does not mediate the democracy-innovation relationship. While gradually or increasingly democratizing states tend to focus on enhancing their economic freedom to incentivize their entrepreneurs without much consideration on freeing the information flow, our analysis underscores the importance of improving information access through which the democracy- innovation relationship is strengthened. Keywords: Democracy, Economic Freedom, Innovation, Press Freedom
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1
Connecting the dots between democracy and innovation: The
mediating role of economic freedom and press freedom
ABSTRACT
Grounded in information processing and institutional theory, this paper theorizes the
mechanisms through which democracy influences innovation. We posit the democracy-
innovation relationship is channelled through an institutional configuration where
entrepreneurs can freely take economic actions (i.e. economic freedom) and process
information (i.e. press freedom). Our analysis shows that whereas the democracy-innovation
relationship is positively mediated by press freedom, economic freedom surprisingly does not
mediate the democracy-innovation relationship. While gradually or increasingly
democratizing states tend to focus on enhancing their economic freedom to incentivize their
entrepreneurs without much consideration on freeing the information flow, our analysis
underscores the importance of improving information access through which the democracy-
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Tables
Table 1. Correlation matrix and descriptive statistics
1 2 3 4 5 6 7 8 9 10
Dependent Variable 1 National innovation outputa 1