The role of macro institutional factors in determining types of entrepreneurial start-ups: a longitudinal panel study

Purpose- What shapes entrepreneurs’ intention to allocate entrepreneurial effort towards different types of entrepreneurial start-ups? Grounded in a 'national business systems' (NBS) approach, the purpose of this research is to examine the impacts of institutional dimensions on Schumpeterian and Kirznerian entrepreneurship.

Design/methodology/approach- Drawing upon a global context comprising 82 countries over the period between 2007 and 2018, this research applies a dynamic panel modelling approach, namely, the dynamic panel Generalised Method of Moments (GMM) estimator. This estimator allows us to take into account the unobserved county-specific heterogeneity and to deal with endogeneity constraints that might occur between institutions and entrepreneurship.

Findings- The findings reveal that there are positive relationships between financial capital and both Schumpeterian and Kirznerian entrepreneurship. Educational capital positively affects the allocation of entrepreneurial efforts towards opportunity-based entrepreneurial activities. Moreover, institutional regulatory conditions could hinder the allocation of entrepreneurs’ resources into a Schumpeterian while facilitating the allocation of resources into a Kirznerian type of venture. Finally, a higher level of corruption promotes innovative entrepreneurial activities (i.e. a Schumpeterian type of venture) and leads to constraints on Kirznerian entrepreneurship.

Practical implications- The research findings demonstrate the significance of the macro environment for enacting and implementing policies to reap the benefits of different types of start-ups. It suggests different political actions are needed in order to motivate highly qualified individuals to engage in Schumpeterian and Kirznerian entrepreneurship, rather than focusing purely on enhancing a country’s overall start-up rates.

Originality/value- By acknowledging the multidimensional nature of entrepreneurship, this research provides greater theoretical exposition and empirical support for the role played by macro-level institutions in determining types of entrepreneurship. It reveals the important role played by macro institutional conditions in influencing choices about different types of start-ups and gives rise to the multidimensional nature of entrepreneurship.