Abstract
The research on institutions’ role in entrepreneurship acknowledges that formal and informal institutions matter. However, previous research has stressed less the co-existence and interaction between individual- and country-level factors that shape entrepreneurial potential, population of skillful individuals with no entrepreneurial intentions, across countries. In this study, we investigate the multilevel influence of informal institutions on entrepreneurial potential. Drawing from institutional theory and multilevel approach in a sample of 880,576 individuals for the period 2006–2016, we find that the informal country-level institutional forces compensate the lack of individual-level factors among those with low entrepreneurial potential. For instance, media coverage on entrepreneurship or education can enhance the entrepreneurial potential in its lower end. Hence, our findings provide novel evidence on the relevance and interaction of the informal institutions, and how they increase the entrepreneurial potential across countries. Our findings suggest policy implications regarding educational programs to close the gap between entrepreneurially skilled non-potential and skilled potential individuals.
Highlights
Interest in the role of institutions in entrepreneurship has increased over recent years
A multicollinearity diagnostic test showed that all the variance inflation factor (VIF) scores are below 5.53, which is below 10, indicating that multicollinearity is not a problem in the analysis (Hsieh et al, 2003)
Sec ond, we perform a set of models that only considers the direct effect of informal institutions on entrepreneurial potential, which is conditioned by country-level informal institutions
Summary
Interest in the role of institutions in entrepreneurship has increased over recent years. Research documents the role that countrylevel institutional arrangements play in new venture creation (Aldrich and Fiol, 1994; Aparicio et al, 2016; Dilli et al, 2018; Stephan and Uhlaner, 2010), economic activity in general (De Soto, 1989; Easterly, 2009), and in various outcomes of entrepreneurial activities (Stenholm et al, 2013; Su et al, 2017; Terjesen et al, 2016). Individuals take into consideration different aspects to follow either an entrepreneurial or employee pathway (Millan et al, 2013), recent research implies that individuals with perceived skills for launching a business are more prone to engage in entrepreneurship (Kautonen et al, 2015; Kautonen et al, 2013) than individuals on average. The programs produce entrepreneurial po tential, but the question of how to bring out more of it remains unanswered
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