EXPRESS:The Impact of Economic Policies on Creating Restaurant Startups

This study uncovers how two economic policies—incentive alignment and risk-aversion mitigation—affect the creation of new restaurant startups based on agency theory. Through the analyses of all restaurant projects on Kickstarter.com from 2014 to 2019 in the United States, this study found that state-level free market policies (for incentive alignment) and social safety-net spending (for risk-aversion mitigation) significantly enhance state-level restaurant startup activities. Findings also show that the two policies simultaneously bolster startup activities. This study contributes to the literature by examining the dynamics of both economic policies reflecting two main goals of agency theory, as prior literature seldom combines the two, despite capitalism being a mixed-market system encompassing both free market policies and social safety-net programs.