The influence of the regulatory,normative and cognitive institutions on entrepreneurial orientation in South Africa

Abstract

Understanding the impact that the institutional environment may have on entrepreneurial orientation (EO) in an under-explored African context is important, considering that researchers argue that firms can leverage entrepreneurship to respond to and take advantage of the institutional environment. Rather than merely use an EO aggregate, this article provides a more nuanced approach by analysing how the regulatory, normative and cognitive institutional environments influence each of the EO dimensions. The article hypotheses are confirmed where results highlight the importance of the institutional forces in shaping EO innovativeness, risk-taking and proactiveness. In particular, the cognitive institutional dimension plays a significant role in determining a firm’s EO levels, as educational attainments and other forms of human capital investments are in short supply in Africa, making them highly prized resources for firms engaged in EO. Implications suggest that firms in emerging market environments need to foster high levels of EO to effectively deal with the institution-specific conditions.