Entrepreneurship in Emerging Economies: The Role of Innovation and Institutions

Abstract

Economists anticipate the future of the economy based on objective analysis, but for these forecasts to be taken into consideration by the economic environment, they must be founded on knowledge of the processes that drive rational expectations and opportunity decision-making. Due to these factors, the chapter we propose examines the emergence of these opportunities as a consequence of economic progress occurring primarily in innovation-based economies. Firstly, entrepreneurial opportunities are significantly influenced by innovation, as a result of both the numerous inventions produced by local entrepreneurs in developing economies and the entrepreneurial practices of those in advanced economies, where innovative concepts are generated and then exported to emerging economies to be implemented in particular local environments. Secondly, there are several different circumstances in which entrepreneurs innovate. A significant focus has been given to the SME sector over the last decade since it dominates emerging economies and contributes to development, but not to its maximum potential due to unique innovation challenges; lastly, strong institutional environments and efficient innovation systems are required to generate opportunities since they have a significant impact on entrepreneurs’ innovative behavior and assist in explaining why individuals with basically similar characteristics act differently in various contexts.