Abstract

There are various studies on the role of institutional and non-institutional factors in developing the level and nature (or types) of entrepreneurship. In these studies, there have been no attention to the causal relationship between these variables, and the direction of the causality are considered unidirectional and from institutions to the entrepreneurship. Furthermore, the current studies have only investigated the role of institutional factors in developing entrepreneurship for the short-run and there was no attention for a long-run. Moreover, it should be noted that, this relationship is studied disregarding the level of the economic development of countries. Therefore, the main aim of this article is to investigate the causality between institutions and entrepreneurship regarding to the level of economic development (Factor-driven, Efficiency-driven and Innovation-driven countries) in both short and long term. The results show that the bidirectional causality between institutions and entrepreneurship is confirmed only in the innovation-driven countries, and only in the long-run.

Highlights

  • The concept of entrepreneurship was introduced by Richard Cantilon in 1755

  • The findings of this paper shows that institutions only are linked with the opportunity-driven entrepreneurship at all levels of economic development, and this is consistent with the findings of Reddy (2012)

  • Concluding remarks There is a rich literature on the factors affecting entrepreneurship

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Summary

Introduction

The concept of entrepreneurship was introduced by Richard Cantilon in 1755. Since this term has been located at the center of academic analysis. This term has been located at the center of academic analysis Attention to this concept in the field of economics is related to the economists such as John S. Numerous studies have been done theoretically and empirically on the factors affecting the level and types (or nature) of entrepreneurship. One of these factors is institutional factors. For a long period of time, it was believed that the institutional environment has an important impact on entrepreneurship

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