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.
AcemogluD. (2005). Politics and economics in weak and strong states. Journal of Monetary Economics52(7): 1199–1226.
2.
AmorósJ. E. (2009). Entrepreneurship and quality of institutions: A developing-country approach (No. 2009.07. Research paper/UNU-WIDER) (Online).
3.
AnokhinS.SchulzeW. S. (2009). Entrepreneurship, innovation, and corruption. Journal of Business Venturing24(5): 465–476.
4.
AparicioS.UrbanoD.AudretschD. (2016). Institutional factors, opportunity entrepreneurship and economic growth: Panel data evidence. Technological Forecasting and Social Change102(1): 45–61.
5.
ArmourJ.CummingD. (2006). The legislative road to Silicon Valley. Oxford Economic Papers58(4): 596–635.
6.
ArmourJ.CummingD. (2008). Bankruptcy law and entrepreneurship. American Law and Economics Review10(2): 303–350.
7.
BaltagiB. (2008). Econometric analysis of panel data, Hoboken, NJ: John Wiley & Sons.
8.
BanerjeeA.IyerL. (2002). History, institutions and economic performance: The legacy of colonial land tenure systems in India, Cambridge, MA: Ms. Department of Economics, MIT.
9.
BarneyJ. (1991). Firm resources and sustained competitive advantage. Journal of Management17(1): 99–120.
10.
BaumolW. J. (1990). Entrepreneurship, productive, unproductive, and destructive. Journal of Political Economy98(5): 893–921.
11.
BelitskiM.ChowdhuryF.DesaiS. (2016). Taxes, corruption, and entry. Small Business Economics47(1): 201–216.
12.
BesleyT.PerssonT. (2014a). Why do developing countries tax so little?Journal of Economic Perspectives28(4): 99–120.
13.
BesleyT.PerssonT. (2014b). The causes and consequences of development clusters: State capacity, peace and income. Annual Review of Economics6: 927–49.
14.
BlackS. E.StrahanP. E. (2002). Entrepreneurship and bank credit availability. The Journal of Finance57(6): 2807–2833.
15.
BoucekkineR.De la CroixD.LicandroO. (2002). Vintage human capital, demographic trends, and endogenous growth. Journal of Economic Theory104(2): 340–375.
16.
BrautigamD.FjeldstadO. H.MooreM. (2008). Taxation and state-building in developing countries, Cambridge: Cambridge University Press.
17.
BroadmanH. G.RecanatiniF. (2001). Seeds of corruption–do market institutions matter?MOST: Economic Policy in Transitional Economies11(4): 359–392.
18.
CarreeM. A.ThurikA. R. (2003). The impact of entrepreneurship on economic growth. In: AcsZ. J.AudretschD. B. (eds) Handbook of entrepreneurship research, Boston, MA: Kluwer Academic Publishers, pp. 437–471.
CooperR. S. (2003). Purpose and performance of the Small Business Innovation Research (SBIR) program. Small Business Economics20(2): 137–151.
21.
CummingD. J.GrilliL.MurtinuS. (2017). Governmental and independent venture capital investments in Europe: A firm-level performance analysis. Journal of Corporate Finance42: 439–459.
22.
CummingD. J.JohanS. A. (2013). Venture capital and private equity contracting (2nd ed.). San Diego, CA: Elsevier Science Academic Press.
23.
CummingD. J.JohanS. A.ZhangM. (2014). The economic impact of entrepreneurship: Comparing international datasets. Corporate Governance: An International Review22(2): 162–178.
24.
CummingD. J.LiD. (2013). Public policy, entrepreneurship, and venture capital in the United States. Journal of Corporate Finance23: 345–367.
25.
CummingD. J.ZhangY. (2016). Alternative investments in emerging markets: A review and new trends. Emerging Markets Review29: 1–23.
26.
DavidssonP.HonigB. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing18(3): 301–331.
27.
DavidsonR.MacKinnonJ. G. (1993). Estimation and inference in econometrics, New York, NY: Oxford University Press.
28.
DiMaggioP. (1988). Interest and agency in institutional theory. In: ZukerL. G. (ed) Institutional patterns and organizations Cambridge, Cambridge, MA: Ballinger, pp. 1–21.
29.
DjankovS.CaraleeM.ShleiferA. (2007). Private credit in 129 countries. Journal of Financial Economics84(2): 299–329.
30.
DjankovS.La PortaR.Lopez-de-SilanesF.ShleiferA. (2002). The regulation of entry. The Quarterly Journal of Economics117(1): 1–37.
31.
DoradoS.VentrescaM. J. (2013). Crescive entrepreneurship in complex social problems: Institutional conditions for entrepreneurial engagement. Journal of Business Venturing28(1): 69–82.
32.
DouhanR.HenreksonM. (2010). Entrepreneurship and second-best institutions: Going beyond Baumol’s typology. Journal of Evolutionary Economics20(4): 629–643.
33.
DreherA.GassebnerM. (2013). Greasing the wheels? The impact of regulations and corruption on firm entry. Public Choice155(3–4): 413–432.
34.
EbekeC.EhrhartH. (2011). Tax Revenue Instability in Sub-Saharan Africa: Consequences and Remedies. Journal of African Economies21(1): 1–27.
35.
EstrinS.MickiewiczT. (2011). Entrepreneurship in transition economies: The role of institutions and generational change. The dynamics of entrepreneurship: Evidence from the global entrepreneurship monitor data, Oxford: Oxford University Press, pp. 181–208.
36.
FanW.WhiteM. J. (2003). Personal bankruptcy and the level of entrepreneurial activity. The Journal of Law and Economics46(2): 543–567.
37.
FestusN.BasseyG. E.UyangF. A. (2014). Entrepreneurship, corruption and the challenge of development in Nigeria. European Journal of Business and Social Sciences3(3): 104–112.
38.
GarudR.JainS.KumaraswamyA. (2002). Institutional entrepreneurship in the sponsorship of common technological standards: The case of Sun Microsystems and Java. Academy of Management Journal45(1): 196–214.
39.
GordonR.LiW. (2009). Tax structures in developing countries: Many puzzles and a possible explanation. Journal of Public Economics93(7): 855–866.
40.
GriloI.ThurikR. (2005). Latent and actual entrepreneurship in Europe and the US: Some recent developments. The International Entrepreneurship and Management Journal1(4): 441–459.
41.
GrossmanG. M.ShapiroC. (1982). A theory of factor mobility. Journal of Political Economy90(5): 1054–1069.
42.
HaselmannR.WachtelP. (2010). Institutions and bank behavior: Legal environment, legal perception, and the composition of bank lending. Journal of Money, Credit and Banking42(5): 965–984.
43.
HolcombeR. G. (2000). Entrepreneurship and economic growth. The Quarterly Journal of Austrian Economics1(2): 45–62.
44.
Holtz-EakinD.JoulfaianD.RosenH. S. (1994a). Entrepreneurial decisions and liquidity constraints. RAND Journal of Economics25(2): 334–347.
45.
Holtz-EakinD.JoulfaianD.RosenH. S. (1994b). Sticking it out: Entrepreneurial survival and liquidity constraints. Journal of Political Economy102(1): 53–75.
46.
HurstE.PugsleyB. W. (2012). What do small businesses do?Brookings Papers on Economic Activity42(2): 73–142.
47.
HwangH.PowellW. W. (2005). Institutions and entrepreneurship. In: AlvarezS.AgarwalR.SorensonO. (eds) Handbook of entrepreneurship research, New York, NY: Springer, pp. 201–232.
48.
KaufmannD.KraayA.MastruzziM. (2010). The worldwide governance indicators: Methodology and analytical issues (World Bank Policy Research Working Paper No. 5430). Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1682130
49.
KeuschniggC.Bo NielsenS. (2004). Progressive taxation, moral hazard, and entrepreneurship. Journal of Public Economic Theory6(3): 471–490.
50.
KlapperL.LaevenL.RajanR. (2006). Entry regulation as a barrier to entrepreneurship. Journal of Financial Economics82(3): 591–629.
KorostelevaJ.BelitskiM. (2017). Entrepreneurial dynamics and higher education institutions in the post-communist world. Regional Studies51(3): 439–453.
53.
KraaijenbrinkJ. (2011). Human capital in the resource-based view. In: SpenderJ. C.Burton-JonesA. (eds) The Oxford handbook of human capital, Oxford: Oxford University Press, pp. 218–237.
54.
KutnerM. H.NachtsheimC.NeterJ. (2004). Applied linear regression models, New York, NY: McGraw-Hill/Irwin.
55.
La PortaR.Lopez-de-SilanesF.ShleiferA. (2002). Government ownership of banks. The Journal of Finance57(1): 265–301.
56.
La PortaR.Lopez-de-SilanesF.ShleiferA. (2006). What works in securities laws?Journal of Finance61(1): 1–32.
57.
La PortaR.Lopez-de-SilanesF.ShleiferA.VishnyR. (1999). The quality of government. The Journal of Law, Economics, and Organization15(1): 222–279.
58.
La PortaR.ShleiferA. (2014). Informality and Development. Journal of Economic Perspectives28(3): 109–126.
59.
LeeS. H.YamakawaY.PengM. W.BarneyJ. B. (2011). How do bankruptcy laws affect entrepreneurship development around the world?Journal of Business Venturing26(5): 505–520.
60.
LernerJ.KeglerC. (2000). Evaluating the small business innovation research program: A literature Review. In: WessnerC. (ed) The small business innovation research program (SBIR), Washington, DC: National Academy Press, pp. 307–327.
61.
LevinthalD. A. (1997). Adaptation on rugged landscapes. Management Science43(7): 934–950.
62.
LuszczynskaA.Gutiérrez-DoñaB.SchwarzerR. (2005). General self-efficacy in various domains of human functioning: Evidence from five countries. International Journal of Psychology40(2): 80–89.
63.
MaguireS.HardyC.LawrenceT. B. (2004). Institutional entrepreneurship in emerging fields: HIV/AIDS treatment advocacy in Canada. Academy of Management Journal47(5): 657–679.
64.
McMullenJ. S.BagbyD.PalichL. E. (2008). Economic freedom and the motivation to engage in entrepreneurial action. Entrepreneurship Theory and Practice32(5): 875–895.
65.
MehlumH.MoeneK.TorvikR. (2006). Institutions and the resource curse. The Economic Journal116(508): 1–20.
66.
MéonP. G.WeillL. (2010). Is corruption an efficient grease?. World Development38(3): 244–259.
67.
Mohammadi KhyarehM. (2017). Institutions and entrepreneurship: The mediating role of corruption. World Journal of Entrepreneurship, Management and Sustainable Development13(3): 262–282.
68.
NorthD. C. (1990). Institutions, institutional change and economic performance, Cambridge. Cambridge University Press.
69.
NorthD. C. (1994). Economic performance through time. The American Economic Review84(3): 359–368.
70.
NorthD. C. (1997). Some fundamental puzzles in economic history/development. In: ArthurW. B.DurlaufS. N.LaneD. A. (eds) The Economy as an evolving complex system II, Reading. MA: Addison-Wesley.
71.
NorthD. C. (2006). Understanding the process of economic change, Princeton, NJ: Princeton University Press.
72.
PengM. W.YamakawaY.LeeS.-H. (2010). Bankruptcy laws and entrepreneur-friendliness. Entrepreneurship Theory and Practice34(3): 517–530.
73.
PigouA. C. (1938). Money wages in relation to unemployment. The Economic Journal48(189): 134–138.
74.
PloyhartR. E.MoliternoT. P. (2011). Emergence of the human capital resource: A multilevel model. Academy of Management Review36(1): 127–150.
75.
PrzeworskiA. (2004). The last instance: Are institutions the primary cause of economic development?European Journal of Sociology45(2): 165–188.
76.
ReynoldsP. D. (2010). New firm creation: A global assessment of national, contextual, and individual factors. Foundations and Trends in Entrepreneurship6(5–6): 315–496.
77.
ReynoldsP. D.CampS. M.BygraveW. D.AutioE.HayM. (2002). Global entrepreneurship monitor gem 2001 summary report. London: London Business School and Babson College.
78.
ReynoldsP. D.HayM.CampS. M. (1999). Global entrepreneurship monitor: 1999 executive report, Kansas City, KS: Kauffman Center for Entrepreneurial Leadership.
79.
RisingB. (2012). How to get an edge with margins and marginsplot. Presentation at the 2012 UK Stata Users Group Meeting, London. Retrieved from https://www.stata.com/meeting/uk12/abstracts/materials/uk12_rising.pdf
80.
RodrikD.SubramanianA.TrebbiF. (2004). Institutions rule: The primacy of institutions over geography and integration in economic development. Journal of Economic Growth9(2): 131–165.
81.
Rose-AckermanS. (1999). Corruption and government: Causes, consequences, and reform, Cambridge: Cambridge university press.
82.
Rose-AckermanS. (ed). (2007). International handbook on the economics of corruption, Cheltenham: Edward Elgar Publishing.
83.
SamilaS.SorensonO. (2011). Venture capital, entrepreneurship, and economic growth. The Review of Economics and Statistics93(1): 338–349.
84.
SchoarA. (2010). The divide between subsistence and transformational entrepreneurship. In: LernerJ.SternS. (eds) NBER innovation policy and the economy, Chicago: University of Chicago Press.
85.
SmallboneD.WelterF. (2012). Entrepreneurship and institutional change in transition economies: The Commonwealth of Independent States, Central and Eastern Europe and China compared. Entrepreneurship & Regional Development24(3–4): 215–233.
86.
SobelR. S. (2008). Testing Baumol: Institutional quality and the productivity of entrepreneurship. Journal of Business Venturing23(6): 641–655.
87.
SobelR. S.GarrettT. A. (2002). On the measurement of rent seeking and its social opportunity cost. Public Choice112(1–2): 115–136.
88.
SokoloffK. L.Kochendörfer-LuciusG.PleskovicB. (2000). The institutional foundations of a market economy (Villa Borsig Workshop Series).
89.
StenholmP.AcsZ. J.WuebkerR. (2013). Exploring country-level institutional arrangements on the rate and type of entrepreneurial activity. Journal of Business Venturing28(1): 176–193.
90.
SzyliowiczD.WadhwaniR. D. (2007). The effects of corruption on entrepreneurial activity: A cross-country study (Summary). Frontiers of Entrepreneurship Research27(20): 7.
91.
UhlenbruckK.RodriguezP.DohJ.EdenL. (2006). The impact of corruption on entry strategy: Evidence from telecommunication projects in emerging economies. Organization Science17(3): 402–414.
92.
van PraagC. M. (1999). Some classic views on entrepreneurship. De Economist147(3): 311–335.
93.
van StelA.CarreeM.ThurikR. (2005). The effect of entrepreneurial activity on national economic growth. Small Business Economics24(3): 311–321.
94.
van StelA.StoreyD. J.ThurikA. R. (2007). The effect of business regulations on nascent and young business entrepreneurship. Small Business Economics28(2–3): 171–186.
95.
VerheulI.WennekersS.AudretschD.ThurikR. (2002). An eclectic theory of entrepreneurship: Policies, institutions and culture. In: AudretschD. B.ThurikA. R.VerheulI.WennekersS. (eds) Entrepreneurship: Determinants and policy in a European-US comparison, Boston, MA: Kluwer Academic Publishers, pp. 11–81.
96.
WallaceT. D.HussainA. (1969). The use of error components models in combining cross-section and time-series data. Econometrica37: 55–72.
97.
WennekersS.van WennekersA.ThurikR.ReynoldsP. (2005). Nascent entrepreneurship and the level of economic development. Small Business Economics24(3): 293–309.
98.
WhitleyR. D. (1999). Divergent capitalisms: The social structuring and change of business systems, Oxford: Oxford University Press.
99.
WilliamsonO. (2000). New institutional economics. Journal of Economic Literature38: 595–613.
100.
WisemanT. (2015). Entrepreneurship, corruption, and the size of US underground economies. Journal of Entrepreneurship and Public Policy4(3): 313–330.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
