Institutional Profile and Types of Entrepreneurship: Role of National Innovation System Components

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ABSTRACT

This study advances scholarship on the institutions-entrepreneurship relationship. Previous studies propose that the dimensions of a country’s institutional profile (Kostova, 1997) directly impact entrepreneurial activities in general and regardless of the type (Valdez and Richardson, 2013; Stenholm, Acs and Wuebker, 2013). Furthermore, while there are several studies indicating that personal characteristics such as age, gender, employment status, household size, marital status may influence the type of entrepreneurship (Robichaud, LeBrasseur, & Nagarajan, 2010; Block & Wagner, 2010; Verheul & Van Mil, 2011? Ashourizadeh, Chavoushi & Schøtt, 2014? Jensen, Rezaei, & Wherry, 2014), there is a limited knowledge about the role of institutional structures.

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To address this gap, in this study, we cross level analyze 10776 individuals from 55 diverse countries to find out how countries institutional factors (e.g. countries’ institutional profile and national innovation system) encourage people to choose specific type of entrepreneurship. Using Hierarchical Linear Modeling, the findings indicate that neither institutional profile nor national innovation system factors solely determine the choice between opportunity motivated entrepreneurship (OME) and necessity motivated entrepreneurship (NME); however, OME tends to be higher in instances when supportive institutional arrangements (cognitive, normative and regulatory) get coupled with national innovation system factors. The study contributes to a more nuanced understanding of embedded agency within the institutional logics perspective. It bridges the literatures on individual entrepreneurship and the institutional logics perspective. Furthermore, the study provides context and evidence on the impact of entrepreneurial education, access to the latest technology and support from venture capitalists on individuals’ entrepreneurial choice.

Keywords:

Entrepreneurship; National Innovation System; Country Institutional Profile

INTRODCTION

Do institutions have equal impact on everyone in the society? Under what circumstances individuals will may act differently in terms of choosing entrepreneurial activity? Which individuals are more likely to start a business to exploit un-exploited or under-exploited opportunity rather than starting a business merely out of necessity? These are key issues in examining how social, economic, cultural, and technological change occur? Yet, the literature is yet to fully address them. Though some scholars have examined the role of institutions (e.g. cognitive, normative and regulatory) on the rate of entrepreneurship (Valdez and Richardson, 2013) no one has explored which institutional factors are responsible for individuals choosing specific type of entrepreneurship. Under the institutional logics perspective, such questions can begin to be answered.

The main focus of the institutional logics perspective (e.g. Thornton & Ocasio, 1999? Thornton, 2002? Seo & Creed, 2002? Thornton, Ocasio, & Lounsberry, 2012? Pache & Santos, 2012? Friedland, 2013) is in the way broader belief systems may shape the cognition, behavior, identity, and goals of economic actors. Under this view, entrepreneurs demonstrate individual agency subject to complex systems of institutional forces. While, usually individuals comply and agree with dominant institutional forces which shape their willingness and ability to act?

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