Maksym W. Sitnicki

West Virginia University, Department of Management, USA;

VIZJA University, School of Business, Poland;

Taras Shevchenko National University of Kyiv, Management of Innovation and Investment Activities Department, Ukraine

maksym.sitnicki@mail.wvu.edu

ORCID 0000-0002-0452-0404

Economic freedom and the dynamics of energy start-ups: Cross-country evidence on green and digital entrepreneurship and financing

Ruslan Serhiienko

University of Warsaw, Faculty of Management, 

Poland

ruslan.r.serhiienko@gmail.com

ORCID 0009-0002-5056-1044

Dmytro Halynskyi

Sumy State University, Department of Financial Technologies and Entrepreneurship, Ukraine 

vondarin@gmail.com

ORCID 0009-0004-9035-188Х

Maksym Zhytar

National Aviation University, Faculty of Management, Finance and Marketing, Ukraine

maksym.zhytar@kai.edu.ua

ORCID 0000-0003-3614-0788

Abstract. The transition towards low-carbon, digitalised energy systems has heightened the importance of understanding how institutional environments shape entrepreneurial activity and investment in the energy sector. This study aims to assess the role of economic freedom and its subcomponents in shaping cross-country differences in the creation and financing of green and digital energy start-ups, with a focus on non-linear institutional effects and stage-specific investment dynamics. The analysis is based on a cross-country panel dataset combining start-up and funding data from the International Energy Agency with institutional indicators from the Fraser Institute, using two-way fixed effects models with Driscoll–Kraay standard errors and quadratic specifications. The results show that economic freedom has a weak, mostly negative effect on start-up formation, with coefficients of approximately −0.157 for green start-ups and −0.185 for digital start-ups. In contrast, its impact on financing is strong and consistently negative, with coefficients ranging from −5.2 to −5.6 across early- and later-stage funding models. Significant non-linear effects are identified for later-stage digital funding, with an inverted U-shaped relationship, a turning point of approximately 5.35. Subindex results indicate that trade freedom and sound money drive negative effects, while legal institutions exhibit threshold effects at approximately 7.6–8.6.

Received: June, 2025

1st Revision: February, 2026

Accepted: March, 2026

DOI: 10.14254/2071-8330.2026/19-1/14

JEL Classification: L26, Q42, G24, C23

Keywords: economic freedom, energy start-ups, green entrepreneurship, digital entrepreneurship, entrepreneurial finance, non-linear effects, panel data, cross-country