Underlying Factors National Entrepreneurial Activity: A Cross-Country Study

Abstract

Entrepreneurship has gained considerable attention not only from the academics, but also from government and policy makers. Entrepreneurship has been regarded as one of the important factors that support growth and socioeconomic development of a country because it can provides so many jobs, which ultimately will improve the welfare state and compettive advantage (Zahra, 1999). In this study national entrepreneural activity are manifested by Total Entrepreneurial Activity (TEA) that reflect a individual who build new businesses. TEA includes two phases covering started a business (start-up phase) and phase in the initial period of business. Prior studies have been conducted with the view from various points of view, it's just that none of the comprehensive approach taken to explain the factors that encourage entrepreneurial activity that occurred in various countries around the world (Lee and Peterson, 2000). Therefore this study used a multidiscilpinary approach to understanding the phenomenon of entrepreneurship activity with a coherent paradigm that has not been widely explored as proposed by Aldrich and Baker (1997). Using data from entrepreneurial activity in the Doing Business Report 2008 and General Entrepreneurship Monitor 2008, this research was conducted using the environmental approach (contextual) and culture to see the entrepreneurial activity of countries. This study found that Individualism negatively significant influence TEA which means the higher level of individualism of a country the lower Entrepeneurial activity. Moreover, cost enforcing contracts significantly influence national entrepreneurial activity which means the higher level of cost enforcing contracts the higher level of TEA, it happened because entrepreneur will get certainty to doing business.