Towards the Regional Aspects of Institutional Trust and Entrepreneurial Ecosystems

Abstract

Institutional trust is considered to be vital for social and economic activity and is also crucial in reducing uncertainty for entrepreneurs and society. To shed light on the role of institutional trust and determine the extent to which entrepreneurial activity is productive or destructive, this paper analyses the impact of six distinct urban EEs using the contexts of the transition economies of Eastern Europe, Caucasus, and Central Asia. This paper posits that the paucity of formal institutions and lack of institutional trust in the context of transition countries may inhibit productive entrepreneurship and affect entrepreneurs’ decision-making. Using a mixed-method approach, this study pursues the research question: what role does institutional trust play in the relationship between formal institutions and productive entrepreneurship in the entrepreneurial ecosystems of transition economies? Our dataset includes 657 respondents (ecosystem stakeholders) from six city-level entrepreneurial ecosystems in the transition economies of Georgia, Ukraine, and Kazakhstan, as well as 51 semi-structured interviews from EE representative stakeholders to examine the validity of our findings. Our results suggest that institutional trust and formal institutions should be considered as complementary for a better understanding of their impact on productive entrepreneurship.