The role of macro institutional factors in determining types of entrepreneurial start-ups: a longitudinal panel study

Abstract

Purpose What shapes entrepreneurs’ intention to allocate entrepreneurial effort towards different types of entrepreneurial start-ups? Grounded in a “national business systems” approach, the purpose of this paper is to examine the impacts of institutional dimensions on Schumpeterian and Kirznerian entrepreneurship. Design/methodology/approach Drawing upon a global context comprising 82 countries over the period between 2007 and 2018, this research applies a dynamic panel modelling approach, namely, the dynamic panel generalised method of moments estimator. This estimator allows to account for unobserved country-specific heterogeneity and to address endogeneity constraints that might occur between institutions and entrepreneurship. Findings The findings reveal that there are positive relationships between financial capital and both Schumpeterian and Kirznerian entrepreneurship. Educational capital positively affects the allocation of entrepreneurial efforts towards opportunity-based entrepreneurial activities. Moreover, institutional regulatory conditions could hinder the allocation of entrepreneurs’ resources into a Schumpeterian while facilitating the allocation of resources into a Kirznerian type of venture. Finally, a higher level of corruption promotes innovative entrepreneurial activities (i.e. a Schumpeterian type of venture) and leads to constraints on Kirznerian entrepreneurship. Practical implications The research findings demonstrate the significance of the macro environment for enacting and implementing policies to reap the benefits of different types of start-ups. It suggests different political actions are needed to motivate highly qualified individuals to engage in Schumpeterian and Kirznerian entrepreneurship, rather than focusing purely on enhancing a country’s overall start-up rates. Originality/value By acknowledging the multidimensional nature of entrepreneurship, this research provides greater theoretical exposition and empirical support for the role played by macro-level institutions in determining types of entrepreneurship. It reveals the important role played by macro institutional conditions in influencing choices about different types of start-ups and gives rise to the multidimensional nature of entrepreneurship.