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Institutional Trust in the AI Economy: Why Business Formation Deserves Greater Attention in Entrepreneurship Research
By Robert Engeham
Abstract
Entrepreneurship research traditionally focuses on innovation, access to capital, education and public policy. While these factors remain fundamental, comparatively less attention has been paid to the role that business formation and corporate registration systems play in supporting entrepreneurial ecosystems.
This paper argues that company formation should be viewed not simply as the legal creation of a business, but as part of the institutional framework that enables commercial trust. As artificial intelligence transforms both entrepreneurship and business due diligence, transparent corporate information is becoming increasingly valuable to entrepreneurs, investors and financial institutions alike.
Using recent reforms in the United Kingdom as a case study, this article explores how trusted business registration systems contribute to stronger entrepreneurial environments and identifies opportunities for future interdisciplinary research.
Introduction
Entrepreneurship does not exist in isolation.
Successful businesses emerge within ecosystems shaped by universities, financial institutions, regulators, investors and policymakers. Each plays a role in reducing uncertainty and supporting innovation.
Universities are increasingly recognised as central participants within these ecosystems, helping students develop entrepreneurial capability through education, mentoring, research and collaboration. Temple University’s Innovation and Entrepreneurship Institute is one example of this integrated approach to entrepreneurial development.
Less frequently discussed is another institutional component that underpins commercial activity: business registration.
Every formal business relationship begins with legal identity. Company registration systems provide that identity while supporting transparency, accountability and confidence throughout the wider economy.
Company Formation as Institutional Infrastructure
Business formation is often viewed as an administrative process completed before “real” entrepreneurship begins.
In practice, it performs a much broader economic function.
Reliable company registers help:

• establish legal identity;
• record ownership and governance;
• support banking and financial services;
• facilitate investor due diligence;
• reduce commercial uncertainty; and
• strengthen market transparency.

Institutional economists have long argued that reducing information asymmetry improves market efficiency. Corporate registers contribute directly to this objective by providing reliable information that allows businesses to transact with greater confidence.
Rather than representing compliance alone, business registration forms part of the infrastructure supporting entrepreneurship itself.
The United Kingdom as a Contemporary Example
Recent developments within the United Kingdom illustrate how governments increasingly view corporate information as a strategic economic asset.
According to Companies House, 801,871 companies were incorporated during the financial year ending 31 March 2025, bringing the UK register to approximately 5.43 million companies.
The implementation of the Economic Crime and Corporate Transparency Act (ECCTA) has expanded Companies House’s powers to improve register accuracy, introduced phased identity verification requirements and strengthened measures designed to improve confidence in corporate information.
These reforms reflect an important policy evolution.
Rather than functioning solely as a registry, Companies House is increasingly expected to support the integrity of the UK’s business environment through higher-quality corporate data.
Artificial Intelligence Is Changing Commercial Decision-Making
Artificial intelligence is influencing entrepreneurship in two distinct ways.
First, it reduces the cost of creating businesses by accelerating software development, automation, customer support and operational planning.
Second, it changes how businesses are evaluated.
Customers increasingly research suppliers using AI-assisted tools.
Financial institutions continue expanding automated due diligence.
Commercial procurement teams increasingly analyse publicly available corporate information before entering business relationships.
As AI systems rely upon structured, verifiable information, reliable company registers become increasingly valuable.
Technology changes how information is processed.
It does not reduce the importance of information quality.
Entrepreneurial Ecosystems Depend Upon Trust
Research into university entrepreneurship ecosystems consistently identifies leadership, networks, entrepreneurial culture and institutional support as key contributors to entrepreneurial success. Universities help create environments where innovation can flourish through collaboration, mentoring and knowledge exchange.
The same principle extends beyond higher education.
Entrepreneurial ecosystems also depend upon trusted institutions that enable businesses to interact confidently with customers, lenders, investors and regulators.
Business registration systems provide one important element of that institutional trust by creating transparent, reliable corporate identities upon which commercial relationships are built.
Industry Perspective
The practical relationship between company formation and entrepreneurial confidence is becoming increasingly apparent to professionals working directly with founders.
According to UK company setup specialist Robert Engeham, CEO of Your Company Formations Ltd:
“Entrepreneurs understandably focus on innovation, customers and growth. However, sustainable businesses are also built on trusted foundations. Professional company setup creates a recognised corporate identity that supports confidence among customers, financial institutions, suppliers and investors throughout the life of the business.”
Engeham believes artificial intelligence is increasing the strategic importance of reliable corporate information.
“As AI becomes more involved in commercial due diligence and business discovery, transparent company records become increasingly valuable. Strong corporate foundations help businesses establish credibility in an increasingly digital economy.”
Opportunities for Future Research
Several questions deserve greater academic attention.
Future interdisciplinary research could examine whether stronger company registration systems contribute to:

• improved access to finance;
• higher business survival rates;
• lower transaction costs;
• greater investor confidence;
• stronger international business activity; and
• more effective AI-assisted commercial risk assessment.

Such work would deepen understanding of how institutional quality influences entrepreneurial outcomes beyond traditional measures such as startup numbers or venture capital investment.
Conclusion
Entrepreneurship depends upon more than innovative ideas.
It depends upon institutions capable of supporting trust.
Business formation and corporate registration systems provide much of the information that enables markets to function efficiently, reducing uncertainty and strengthening confidence across commercial relationships.
As artificial intelligence reshapes entrepreneurship and business evaluation, reliable corporate information is likely to become even more important.
Future entrepreneurship research should therefore consider company formation not simply as a legal process, but as an increasingly significant component of institutional trust and long-term economic development.
References

• Companies House – Annual Report and Accounts 2024–25 (UK incorporation statistics and register size).
• UK Government – Economic Crime and Corporate Transparency Act implementation guidance.
• Global Entrepreneurship Monitor (GEM) – Global Entrepreneurship Report.
• OECD – SME and Entrepreneurship Outlook.
• Research on university entrepreneurship ecosystems identifies leadership, networks, culture and institutional support as critical factors influencing entrepreneurial outcomes.
• Temple University Fox School of Business – Innovation and Entrepreneurship Institute, highlighting the role of universities in fostering entrepreneurship through education, mentoring and interdisciplinary collaboration.