The Impact of Institutional Dimensions on Entrepreneurial Intentions of Students—International Evidence

Yassine Bakkar,Wolfgang Gerstlberger,Susanne Durst

doi:10.3390/jrfm14040174

Abstract

Acknowledging the role of different forms of entrepreneurship to continued economic prosper-ity and the role of institutional dimensions on entrepreneurship, this paper investigates if and to what extent a selected number of institutional dimensions influence students’ intentions to ei-ther start a company or take over an existing one. Based on a Global University Entrepreneurial Spirit Students’ Survey (GUESS) dataset and international country-level databases, evidence shows that both entrepreneurship options are hampered by corruption and limited business freedom while promoted through favourable labour regulations and trade freedom. Property rights, fiscal freedom, government spending, monetary freedom, and investment freedom only affect start-ups, while financial freedom adversely affects both options. The study provides new insight into the impact of institutional dimensions on different types of entrepreneurship. Thus, in contrast to extant research in this area, it goes beyond the typical focus on start-ups. Evidence also suggests that male students prefer starting a new company, while female students seem to prefer a takeover. This improved understanding could help in not only designing more targeted entrepreneurship and entrepreneurial financing policies but also in improving entrepreneurship education.

Highlights

The study of the role of institutional dimensions in entrepreneurship has increased over the years (Hwang and Powell 2005; Estrin et al 2013; Herrera-Echeverri et al 2014; Walter and Block 2016)
As starting a company from scratch requires different resources and skills compared to taking over a company, the authors of the present paper argue that the institutional dimensions influence a decision in favour of a new venture creation or a takeover
We aim to find out if there is a particular type of institutional dimension that is more start-up or takeover friendly than others are

Summary

Introduction

The study of the role of institutional dimensions in entrepreneurship has increased over the years (Hwang and Powell 2005; Estrin et al 2013; Herrera-Echeverri et al 2014; Walter and Block 2016). Understanding how the institutional environment affects entrepreneurship is crucial, as the latter is viewed as one of the key factors enhancing economic growth (Urbano et al 2019), and micro and macro elements have been used to explain entrepreneurial activity (Chowdhury et al 2019). Extant research in this area shows that the study of entrepreneurial activity is typically focussing on start-ups (Lim et al 2010; Mergemeier et al 2018; Urbano et al 2019). As starting a company from scratch requires different resources and skills compared to taking over a company, the authors of the present paper argue that the institutional dimensions influence a decision in favour of a new venture creation or a takeover

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