The relationship among national institutional structures, economic factors, and domestic entrepreneurial activity: a multicountry study

Abstract

We draw on the construct of a country institutional profile to identify normative, cognitive, and regulatory institutional structures that may influence a country's entrepreneurial activity. Results show that these three dimensions of the institutional profile, as well as economic factors such as per capita GDP, play distinct roles in promoting entrepreneurial activity in a country. Normative institutions were marginally associated with the most basic form of entrepreneurship, self-employment, but not with more advanced forms of entrepreneurship. Cognitive institutions explained the prevalence of small firms in a country, as well as the number of new companies listed on the country's stock exchange. Regulatory institutions associated with new listings on the country's stock exchange. Per capita GDP explained basic forms of entrepreneurship but, contrary to expectations, the country's unemployment rate associated only with the most advanced form of entrepreneurship. Implications for entrepreneurs, researchers, and policymakers are discussed.