Exploring the effects of institutional logics on entrepreneurial opportunity evaluations in emerging economies

Abstract

ABSTRACT It is becoming increasingly crucial to understand how institutional logics influence entrepreneurial behaviors and decisions as they impact job creation and startups globally. This research hypothesizes how two different logics—family and market—will influence entrepreneurial decision-making and action. To test our hypotheses, we conducted a two-wave study using an experimental approach to gather data from 326 aspiring entrepreneurs in India who made 630 opportunity evaluation decisions. We analyzed this dataset using subgroup regression analyses. We find significant effects of institutional logics on entrepreneurial decision-making. Particularly, we find that in contrast to extant theory from developed contexts, in emerging economies such as India, the family logic has a stronger influence on willingness to invest in entrepreneurial opportunities as compared to the market logic. We also identify critical boundary conditions of the decision context that make the effect of institutional logic more or less salient. Our findings highlight that financial stakes and support from close associates strengthen the relationship between the family logic and willingness to invest. However, reputational stakes were found to significantly weaken the relationship between the family logic and willingness to invest. Thus, our research contributes to the literature on entrepreneurship by exploring microprocesses of institutional logics and the impact of the family logic on entrepreneurial decisions in emerging markets. Moreover, we extend the institutional logics literature by highlighting that the logics act not only as a “lens” but also as a “mirror,” helping entrepreneurs predict how certain stakeholders will interpret and react to their decisions and actions.