Highlights

Abstract

Keywords

۱٫ Introduction

۲٫ Literature and hypotheses

۳٫ Data and method

۴٫ Results

۵٫ Discussion and conclusion

References

Vitae

Abstract

Drawing from perspectives on institutional hierarchy (Williamson) and social embeddedness (Granovetter), we examine the role of embeddedness, formal institutions and governance in shaping latent and emergent entrepreneurship. We examine the role of heterogeneous institutional conditions – corruption, social relationships, property rights and government size – matter across 66 countries between 2005 and 2015. Our findings demonstrate that heterogeneity of institutional conditions and heterogeneity of entrepreneurship outcome are important and not monolithic. Notably, we find that while corruption impedes both latent and emergent entrepreneurship, this effect lasts almost three times as long for latent entrepreneurship. We also find that entrepreneurs in countries with more corrupt contexts have lower aspirations to start and own a business.

۱٫ Introduction

A consensus has emerged in the research on institutions and entrepreneurship that institutions have an important role to play (Audretsch, Belitski, Chowdhury, and Desai, 2021; McMullen et al., 2008; Stenholm et al., 2013; Colombo et al., 2016). This raises “next generation” questions related to institutional heterogeneity, such as how, which and when institutions matter for entrepreneurs (Audretsch and Moog, 2020; Dutta and Sobel, 2016, 2018, 2020).

These questions sit at the intersection of three streams of research that are relevant to entrepreneurship. Firstly, the emergence of entrepreneurship is not strictly dichotomous (Mickiewicz et al., 2017), and there can be stages and activities that precede new business activities (Bennett & Chatterji, 2017). Related to this, not everybody who is interested in starting a business might ultimately do so.

Secondly, institutions are heterogeneous, as are their impacts on entrepreneurship (Granovetter, 1985; Aidis et al., 2012; Bennett, 2020). Some institutions may matter while others do not, and there may be nonlinearities or permutations of institutions that shape how entrepreneurs perceive and act on opportunity (Bergmann and Stephan, 2013; Braunerhjelm and Eklund, 2014; Elert, Henrekson, and Sanders, 2019; Audretsch et al., 2019, 2021; Amoros et al., 2019 ´ ).

Thirdly, the nature and type of entrepreneurship outcomes and activities themselves can differ across institutional contexts (Autio et al., 2014; Acs et al., 2014; Audretsch and Belitski, 2017). The body of research on the allocation of entrepreneurship is growing, including research on formal and informal (North, 1990; Thai and Turkina, 2014), productive, unproductive and destructive, (Desai, Weitzel, and Acs. 2014, Sanders and Weitzel, 2013; Baumol, 1990), high-impact (Stenholm et al., 2013), and necessity and opportunity (Amoros et al., 2017; Angulo-Guerrero et al., 2017; Audretsch et al., 2021) entrepreneurship.

There has been relatively less research at the intersection of these three streams: how do different institutions affect different forms of entrepreneurship? In particular, there is a need for more insight on engagement in potential or aspirational entrepreneurship (latent) and newly formed ventures (emergent) (Parker, 2004, 2018; Grilo and Irigoyen, 2006 (Caiazza et al., 2019,2020)).