Human Capital, Institutions, and Engagement in Entrepreneurship: A Multi-Level Study

Abstract

In this paper, we examine how institutional environment influences individuals in their discovery and exploitation of entrepreneurial opportunities. Specifically, we investigate the effect of an individual’s level of education on the two critical phases of entrepreneurial process: opportunity discovery and exploitation. Further, we build on previous comparative international entrepreneurship research that focuses on institutions and the logics of structuration theory, and posit that various dimensions of a country’s institutional environment may have differing moderation effects on these relationships. We test our hypotheses on a multi-source dataset from 42 countries using a multi-level modeling technique. We find that an individual’s level of education is positively related to the discovery and exploitation of opportunities. Further, our findings indicate that the cognitive dimension of a country’s institutional environment moderates the relationship between individual-level human capital and the discovery of entrepreneurial opportunities, whereas normative and regulatory institutions mainly affect the relationship between individual-level human capital and the exploitation of entrepreneurial opportunities.