Entrepreneurial growth aspirations in challenging environment: The role of institutional quality, human and social capital (original) (raw)
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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.
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.
Most research on entrepreneurial activities and institutions focuses on identifying certain relationships between formal and informal institutions and entrepreneurship across economies. In this study, we advance entrepreneurship research by examining how social capital as a characteristic of the institutional environment affects the relationship between formal and informal institutions and entrepreneurial activities, differentially, in developing and developed economies. Supporting institutional theory and social capital theory, the results from our sample of 39 countries from 2001 to 2014, which contains over 30,000 identified individuals, indicate that social capital has a stronger influence in the relations between institutions and entrepreneurship. In developing countries, this influence is greater in the relationship between property rights, access to credit, subjective insecurity, and entrepreneurial activity. In developed countries, the greater effect of social capital is on the relationship between corruption and entrepreneurial activity.
International Entrepreneurship and Management Journal, 2019
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Which Institutions Encourage Entrepreneurial Growth Aspirations?
2013
This paper jointly examines the determinants of entrepreneurship and high-growth aspiration entrepreneurship in 42 countries. Using the Global Entrepreneurship Monitor (GEM) surveys for 1998-2003, we analyse how the institutional environment and the entrepreneurial characteristics affect both individual decisions to become entrepreneurs and aspirations to set up a high- growth venture. We find that institutions exert different effects on entrepreneurial entry
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...
Do interactions between formal and informal institutions matter for productive entrepreneurship?
Ekonomia i Prawo, 2019
Motivation: Institutional and Entrepreneurship theory pays attention to institutions and their influence on productive, unproductive and destructive entrepreneurship in transition economies. However, according to the literature, it is not only institutions that matter for productive entrepreneurship, but also the interaction between formal and informal institutions. Moreover, transition economies needs the productive entrepreneurship 'to catch-up' with world leaders. Aim: The aim of this paper is to advance institutional research through the development of a better understanding of the relation between formal and informal institutions and their influence on productive entrepreneurship in transition economies like CEECs. Results: The paper demonstrates that strong formal and informal institutions, the 'invisible hand' of the state, as well as the complementary and accommodating relations between formal and informal institutions are necessary for productive entrepreneurship in transition economies.
Institutions, Finance and the Level of Development: the Impact on Entrepreneurship in Transition
Review of Economics and Institutions, 2010
We investigate the impact of institutions on entrepreneurial entry, based on a large cross-country sample, combining working age population data generated by the GEM project with macro level indicators. Our four key findings indicate that: (a) institutional obstacles to entrepreneurship have different impact in rich countries compared to poor countries; (b) institutional obstacles have a stronger impact on 'opportunity entrepreneurship' than on 'necessity entrepreneurship'; (c) two institutional indicators -property right protection and access to finance -appear to have a dominant impact on entrepreneurship; (d) institutions have a long term impact. More than ten years after the Soviet system imploded in Central and Eastern Europe, these countries still experience significantly lower levels of entrepreneurship than economies coming from different legal traditions.