Which Institutional Factors and Resources are Crucial to Foster High-Growth Entrepreneurship?

Abstract

We explore which institutional factors and resources are necessary to foster high-growth entrepreneurship and whether these factors differ between countries. Using the necessary condition analysis (NCA) method, this study advances the understanding regarding which institutional factors and resources are crucial for promoting high-growth entrepreneurship, according to the level of development of a country. The results show that labor regulation is a necessary condition for the establishment of high-growth ventures. Although business regulation is also a necessary condition, the large majority of the countries have already implemented less stringent entry and exit regulations. The necessary conditions do not have the same degree of importance when a different subset of countries is evaluated. While access to finance and human capital are necessary conditions to foster high-growth entrepreneurship in low-income countries, flexible labor regulations represent a crucial prerequisite for high-growth entrepreneurship in high-income countries. These findings can be used to optimize policy formulations and resource allocation, in particular when targeting factors that constitute bottlenecks.