Which Institutions Encourage Entrepreneurial Growth Aspirations? (original) (raw)
Related papers
Entrepreneurial growth aspirations and the role of institutions: A multilevel approach
Academy of Management Proceedings, 2018
We apply institutional economics and human capital perspectives to advance research on the influence of institutional factors predicting entrepreneurial growth aspirations. Particularly, the moderation effect of institutions on the relationship between human capital and growth aspirations is analyzed. Building on a comprehensive dataset that combines individual-and country-level observations, obtained from the Global Entrepreneurship Monitor and World Development Indicators, for the period 2006-13, we develop a multilevel framework to test our hypotheses. The main findings show that some institutions represent a barrier to new ventures' development (cost of property registration and fear of failure) while others may enhance it (access to credit and role models). We also find that those entrepreneurs with higher levels of human capital would attenuate their growth aspirations when regulation, access to credit, and fear of failure, will not be favorable. However, the influence of role models would strengthen that relationship. Theoretical and policy implications are discussed, based on our findings.
Prevalence and Persistence of High-Growth Entrepreneurship: Which Institutions Matter Most?
Journal of Industry, Competition and Trade
Which institutions encourage high-growth entrepreneurship to emerge and to be sustained? Building on institutional theory, this study exploits a sample of 239,911 observations for micro, small, and medium–sized firms from Bulgaria during the period 2001–2010 and finds three types of effects: first, informal institutional constraints such as corruption significantly reduce both the probability to become a high growth firm and the sustainability of growth. Second and unexpected from most of the literature, formal institutional constraints do not discourage firms from pursuing their growth ambitions and even enhance further growth. Third, constraints related to institutional governance, notably limited access to finance, have a negative effect before high-growth, but become less relevant after the high-growth spurt. Results imply that institutional reforms represent a policy tool for supporting high-growth entrepreneurship in an emerging economy context. They also suggest, however, tha...
Nigerian Chapter of Arabian Journal of Business and Management Review, 2019
Entrepreneurship has long been perceived as a crucial determinant for economic growth. There has been a considerable upsurge in researches trying to determine the main elements driving entrepreneurship and the channel through which entrepreneurship generates economic growth; however, a global consensus has not been reached yet on theoretical, methodological and empirical levels. The basic problem arises from the choice of appropriate variables reflecting the measures of the entrepreneurial activity and institutional environment and the outcome of such measures. This study examines the relationship between entrepreneurship and economic growth as well as the determinants of entrepreneurship in an unbalanced data set for 86 countries for the period 1996-2015 by considering different measures of entrepreneurial activity (TEA and Business Density) and different institutional arrangements (Distance to Frontier, Global Competitiveness index and composite governance index). A system of simultaneous equations is adopted in order to adjust for the fact that we are not able of controlling all possible bases of endogeneity between Entrepreneurship and institutions. Results have revealed different coefficients sign and magnitude based on the measures being assessed. Our findings suggest that institutional variables have positive and significant effect on entrepreneurship measured by Business Density and the latter has also a positive effect on economic growth though the significance level differ depending on the institutional variables employed. Similar conclusions cannot be drawn for entrepreneurship measured as TEA where certain measures of institutions appeared to have e negative effect on entrepreneurship and the latter has also a negative effect on economic growth.
Institutions, entrepreneurship and economic growth
New Thinking in Political Economy: Entrepreneurial Action, Public Policy, and Economic Outcomes, 2014
In the last few decades entrepreneurship has slowly but steadily gained importance in public discussions about income growth. The more economic growth in high-income countries has leveled-off, the more interested policymakers have become in finding new ways to ignite growth. At the same time, there has been a realization that foreign aid in its current form won’t be able to lift the poorest countries from poverty. There seems to be political consensus that entrepreneurship could provide a partial solution to the economic problems of both the developed and developing world. The above raises three questions, though. First, what is the connection between entrepreneurship and income growth? Second, are all types of entrepreneurship equally good in creating growth? Third, in terms of public policies, what does it take to get entrepreneurs going? In this chapter I will explore each question in some length, providing an overview of the current findings in the field. The main argument underpinning the narrative is that society’s institutional set-up is absolutely critical for any entrepreneurial renaissance. Getting that set-up wrong will guarantee that entrepreneurs will be few and far between. Fortunately plenty of evidence has accumulated over the last few decades to aid the policymakers to get the institutional policies right.
Reassessing the linkages among entrepreneurship, institutions and growth
Revista Brasileira de Economia, 2024
This article examines the role of institutions and entrepreneurship to foster economic development under increasing complex economic structures caused by structural changes. The empirical work utilizes data from several sources including the Penn World Table 9.1, The Global Entrepreneurship and Development Institute, the Observatory of Economic Complexity (OEC) at the MIT, and The International Country Risk Guide (ICRG). The empirical work circumvents the endogeneity and heterogeneity problem that plague crosscountry regressions by using the Arellano and Bover (1995) and Blundell and Bond (1998) system GMM estimator. The results show that while entrepreneurship is positively correlated to economic development, this correlation disappears when controlling for heterogeneity and/or for differences in quality of institutions. There is also evidence that the importance of institutional quality for economic development increases when an economy become more complex. Overall, findings of this research suggest that quality of institutions is not only important to foster entrepreneurship, but also very important to mediate complex economic structures that emerge as part of the development process and structural changes. The main policy implication of this work is that economies in transition must take steps to improve the quality of their institutions, particularly of institutions that enable productive entrepreneurship and mediate the increased complexity resulting from the inherent structural transformation associated with economic development.
Institutions and entrepreneurship: Empirical evidence for OECD countries
Entrepreneurial Business and Economics Review, 2021
The objective of the article is to test the bidirectional association of institutions and entrepreneurship in 19 OECD countries over the period of 2014-2016. Research Design & Methods: Most of the previous studies emphasise the role of institutions in entrepreneurial activity, while ignoring the role of entrepreneurship in the building of institutions. We estimate how institutions and entrepreneurship relate to each other and contribute to economic growth. For the estimation, we apply the structural equation modelling (SEM) with panel data. Findings: Estimated results show that the regulatory dimension of institutions and entrepreneurship have a strong bidirectional relationship-as we expected-while the normative dimension of institutions and entrepreneurship have a unidirectional association. These two interrelated factors stimulate economic growth. Implications & Recommendations: Policymakers should create a more friendly regulatory environment for entrepreneurship to flourish. In this process, institutional entrepreneurs also play an important role. Contribution & Value Added: There is a need for research on the bilateral relationship between institutions and entrepreneurship. Most previous articles consider the effect that is transmitted from institutions to entrepreneurship. However, there exists a two-way causal relationship between institutions and entrepreneurship that is worth exploring. In this regard, the greatest contribution of this article is that it is one of the first empirical works devoted to testing the two-way causal relationship between institutions and entrepreneurship. Article type: research article
An Empirical Investigation into Institutions Unlocking Entrepreneurial Activity
Entrepreneurship scholars tend to agree that institutional factors influence entrepreneurship; however, empirical studies have led to different conclusions with regard to the relative importance of each driver. This study empirically investigates the influence that the regulatory, cognitive, normative and conducive institutional factors have on different types of entrepreneurial activity (EA) in South Africa. Following a survey of 163 ventures, regression results reveal that it is the cognitive and conducive institutional environments, which have a significant impact on EA. These results highlight the importance of institutional environmental factors in relation to opportunity-based EA. Additionally, the findings provide key insights to scholars and policymakers where institutional factors in an emerging market context serve as a catalyst for EA.
Institutions and Entrepreneurship Quality
Entrepreneurship Theory and Practice, 2018
Entrepreneurship contributes importantly to the economy. However, differences in the quality and quantity of entrepreneurship vary significantly across developing and developed countries. We use a sample of 70 countries over the period of 2005–2015 to examine how formal and informal institutional dimensions (availability of debt and venture capital, regulatory business environment, entrepreneurial cognition and human capital, corruption, government size, government support) affect the quality and quantity of entrepreneurship between developed and developing countries. Our results demonstrate that institutions are important for both the quality and quantity of entrepreneurship. However, not all institutions play a similar role; rather, there is a dynamic relationship between institutions and economic development.
Which Institutions Encourage Entrepreneurs to Create Larger Firms?
SSRN Electronic Journal, 2011
Which Institutions Encourage Entrepreneurs to Create Larger Firms? * We develop entrepreneurship and institutional theory to explain variation in different types of entrepreneurship across individuals and institutional contexts. Our framework generates hypotheses about the negative impact of higher levels of corruption, weaker property rights and especially intellectual property rights, and a larger state on entrepreneurs who plan to grow faster. We test these hypotheses using the Global Entrepreneurship Monitor surveys in 55 countries for 2001-2006, applying a multilevel estimation framework. We confirm our main hypotheses but we find no significant impact from intellectual property rights.