Early-stage Entrepreneurial Activity Research Articles

The effect of regime change on entrepreneurship: A real options approach with evidence from US gubernatorial elections

Although political turnover is said to be a healthy component of the business environment, the literature is equivocal about the effects of regime change on early-stage entrepreneurial activity. I present incumbent displacement—the electoral defeat of an incumbent political party's candidate—as a source of regime change, and I analyze how this affects business formation through the lens of real options theory. I test my theory using US gubernatorial elections from 2004 to 2022, leveraging a Regression Discontinuity design to compare changes in business formation trends following elections where a challenger party candidate wins or loses by a close margin. I find that regime change reduces venture creation activity for growth-oriented ventures specifically. I also find evidence of a partial rebound in subsequent months—suggestive that some entrepreneurs delay entry while others permanently abandon their ventures.

The role of the financial system in entrepreneurship trends in the European Union

ABSTRACT The current study examines the effects of financial systems and instruments on entrepreneurship trends and activities in the European Union member states. Results from panel data econometric procedures exhibit that financial markets and instruments exert statistically significant effects on the volume of both male and female entrepreneurial activities in the union. Results show that financial system mainly impacts male and female entrepreneurial intentions rather than their early stage entrepreneurial activities; furthermore, entrepreneurial intentions and activities are negatively linked to the financial system, which might be due to the lack of access to finance and regulatory barriers among the others, which are outlined at the end of this study.

Quid pro quota: a cross-country study on the impacts of immigration quotas on early-stage entrepreneurship

AbstractWe study the impacts of immigration quotas and immigrant eligibility restrictions on destination countries’ early-stage entrepreneurial activity. Taking advantage of cross-country variation in immigration quotas and eligibility restrictions, we find that increases in the strictness of labor migration quotas and eligibility requirements are associated with significantly less early-stage entrepreneurship in the short run. Further, we find two important sources of heterogeneity that impact our results. First, these results are driven by a connection between quotas and early-stage necessity-driven entrepreneurship—our results lose significance when adding opportunity-driven entrepreneurship to the analysis. Second, the magnitude of the relationship between quotas and early-stage entrepreneurial activity is lower when analyzing female entrepreneurship. Overall, our results suggest that immigrants clearly influence entrepreneurship positively, but the overall welfare effects on the host country of marginal increases in entrepreneurial activity associated with a relaxation of labor market restrictions are more nuanced. At the same time, our results also suggest room for immigration policy to improve the welfare of immigrants and natives. Importantly, our estimates likely act as a lower bound given that we are not able to measure impacts in the long run. Because immigrants’ participation in the labor market is often delayed by labor market restrictions after entry, estimates of the impact of quotas and other restrictions that limit entry into the host country would likely yield more negative results given a longer time horizon.

The Implementation of Innovation-Driven Entrepreneurship for the Development of Small, Medium Enterprise

Abstract. This article discusses the innovation-driven entrepreneur while also highlighting the impact of technical innovation on early-stage entrepreneurial activity and how it can boost economic growth in emerging nations. In order to pinpoint the inventive initiatives of entrepreneurship, this article’s literature study focuses on innovation and entrepreneurship. The results show the maximum frequency of entrepreneurial activities among those initiatives that affirm that products and services offered are perceived as novel only by some customers and initiatives that use technologies between 1 and 5 years.

Globalization, entrepreneurial development and unemployment: a mediation analysis in the context of South Africa

PurposeThis study clarifies the intricate nature of globalization's impact on unemployment rates in South Africa. Given the heterogeneous views on globalization's effect on economic development, this study aims to offer a nuanced perspective. Furthermore, it aims to explore the mediating role of entrepreneurial development in shaping the complex relationship between globalization and unemployment.Design/methodology/approachThe study employs four key indicators to measure entrepreneurial development, globalization and unemployment rates in South Africa. Hierarchical regression is used to evaluate the relationship between globalization and unemployment rates, and how entrepreneurial development mediates this relationship. Additionally, both the Sobel test and bootstrapping analyses were employed to verify and validate the mediating relationship.FindingsThe study demonstrates that globalization constitutes a crucial determinant of (un)employment rates in South Africa. The study shows that entrepreneurial development, specifically in the context of established business ownership, but not total early-stage entrepreneurial activity, exhibits an inverse relationship with unemployment rates. Moreover, it was observed that the positive impact of globalization on entrepreneurial development in South Africa becomes evident as SMEs advance to the established stage.Research limitations/implicationsThe study's concentration on South Africa constrains the applicability of the results to other nations.Practical implicationsBased on the findings of this study, it is essential for emerging economies, such as South Africa, to take measures to foster a robust entrepreneurial ecosystem that can aid in the growth and international competitiveness of young SMEs.Originality/valueTo the best of the authors' knowledge, this study represents the first endeavor to analyze the potential impact of entrepreneurial development, as measured by both nascent and mature SMEs, on the correlation between globalization and unemployment.

Business environment reforms effect on entrepreneurial activities of high-income economies: panel data evidence

PurposeEntrepreneurship is an activity of recognised economic and social interest, leading scholars to examine contextual factors that justify variations between economies and governments to configure more favourable conditions to entrepreneurial activity. In this sequence, this study aims to analyse the effect of reforms produced in the business environment on entrepreneurial rates of a set of 18 high-income economies.Design/methodology/approachA panel data (2010–2019) methodology was adopted using 10 Doing Business indicators from World Bank and Total early-stage Entrepreneurial Activity (TEA) from Global Entrepreneurship Monitor (GEM).FindingsIn the light of institutional theory, the study shows that improving the business environment for entrepreneurs does not ensure an increase in TEA. Specifically, only the indicators Dealing with Construction, Registering Property and Enforcing Contracts positively impacted the TEA.Originality/valueThis is the first study that monitors and provides evidence regarding the effectiveness of business environment reforms towards entrepreneurship. The authors provide considerable theoretical-practical implications for scholars, entrepreneurs and policymakers to restructure public policies to support entrepreneurial activity.

Institutions and macroeconomic indicators: entrepreneurial activities across the world

PurposeEntrepreneurial activity is a phenomenon that increases the economic growth of countries and improves their social welfare. The economic development levels of countries have significant effects on these entrepreneurial activities. This research examines which institutional and macroeconomic variables explain early-stage entrepreneurship activities in developed and developing economies.Design/methodology/approachThe authors conducted panel data analysis on the data from the Global Entrepreneurship Monitor (GEM) and International Monetary Fund (IMF) surveys covering the years 2009–2018.FindingsFirst, the authors' results reveal that cognitive, normative and regulatory institutions and macroeconomic factors affect early-stage entrepreneurial activity in developed and developing countries differently. Second, the authors' findings indicate that cognitive, normative and regulatory institutions affect early-stage entrepreneurship more positively in developed than developing countries. Finally, the authors' results report that macroeconomic factors are more effective in early-stage entrepreneurial activity in developing countries than in developed countries.Originality/valueThis study provides a better understanding of the components that help explain the differences in entrepreneurship between developed and developing countries regarding institutions and macroeconomic factors. In this way, it contributes to developing entrepreneurship literature with the theoretical achievements of combining institutional theory and macroeconomic indicators with entrepreneurship literature.

Digital Entrepreneurship and growth-oriented performance: commercialisation narrative of SMEs in the ICT sector in China

ABSTRACT This article addresses the dynamics of Small and Medium Enterprises (SMEs) during the commercialization process in high-tech sectors, particularly in the Information and Communication Technology (ICT) field. Except for early-stage entrepreneurial activities in technology firms, SMEs in the commercialization stage have received limited attention. Employing the Construal-Level Theory (CLT) and a concrete-abstract dimensional narrative approach, the study explores the relationship between narrative construal levels and SMEs’ success in Chinese cities. Encompassing ICT firms with 6 to 1000 employees, the study utilizes a Multilevel Mixed Method approach. Findings reveal that concrete narratives play a moderating role in the relationship between specific business technology and firm performance, emphasizing the importance of aligning a firm's business with its target audience during commercialization. However, the competition level (ICT firms’ population) in the city reduces the firm’s success. The study extends our understanding of entrepreneurial activity in the ICT sector, CLT, and potential policy guidelines.

Empowering Women Entrepreneurs in Brazil: An Analysis of 2010-2019 Trends

This study undertakes a succinct literature review to delve into the importance of female entrepreneurship in Brazil, particularly focusing on the period from 2010 to 2019. By scrutinizing Brazilian Gross Domestic Product (GDP) data and referencing reports from the Global Entrepreneurship Monitor (GEM), the research effectively situates female entrepreneurship within the Brazilian economic context. Employing metrics such as Total Early-stage Entrepreneurial Activity (TEA) Rate, Established Business Ownership Rate (EBO), and Total Entrepreneurship Rate (TER), the study delves into the Total Early-stage Entrepreneurial Activity Rate across diverse demographics including age groups, income ranges, education levels, and sectors. Through correlation analysis and dispersion diagrams, intricate connections emerge between early-stage entrepreneurial rates and variables such as age, income, education, and sectors. This research unveils the profile and significance of Brazilian entrepreneurs, underscoring the pivotal role of women in nurturing economic and societal progress. Elevating women's participation in entrepreneurship emerges as a cornerstone for transformative societal change, embodying ideals of self-sufficiency and empowerment. This research is classified within the realms of bibliographic, documentary, descriptive, and exploratory methodologies. Notably, the study reveals that female entrepreneurship significantly contributes to Brazil's economic advancement, fostering both economic and social development.

The effect of high-growth and innovative entrepreneurship on economic growth

Scholars and policymakers have recognized the importance of entrepreneurship to enhance national development. Yet, it can be difficult to identify what type of entrepreneurship is relevant to promote. This article analyzes the contribution of high-growth and innovative entrepreneurship to country-level economic growth. The entrepreneurship variables used were derived from Global Entrepreneurship Monitor (GEM) microdata, enabling us to test alternative configurations of the indicators frequently used in the literature. We also construct an innovative entrepreneurship measure based on product innovation, new technology implementation, and export intensity. Our main findings reveal that innovative entrepreneurship is positively related to economic growth, while no relationship with high-growth entrepreneurship is suggested. Last, using Bayesian model averaging (BMA), we find innovative entrepreneurship and the total early-stage entrepreneurial activity to be robust determinants of economic growth.

An international study of early-stage entrepreneurship using global entrepreneurship monitor data

PurposeThe goal of this study is to identify and validate some selected determinants of early-stage entrepreneurial activity (ESEA) by assessing the impact of entrepreneurial knowledge and skills (EK&S), fear of failure (FoF), the social status of entrepreneurs (SSE) and entrepreneurial intentions (EI) on ESEA.Design/methodology/approachThe study utilised cross-sectional data gathered by the Global Entrepreneurship Monitor (GEM) team from 49 countries, with a total of 162,077 respondents. The data analyses involved correlation, simple regression and path analyses, with a specific focus on testing for mediated and moderated effects. To complement the statistical analyses, fuzzy-set qualitative comparative analysis was also employed.FindingsThe path analysis revealed EK&S as primary drivers of EI and ESEA. Also, EK&S moderated the effects of FoF on EI, and the inclusion of EI improved the model significantly. The fuzzy-set qualitative comparative analysis result showed that the presence of EI, EK&S, FoF and SSE were sufficient but not necessary conditions for ESEA.Practical implicationsThe tested model demonstrates the importance of EK&S and EI, as well as the need to mitigate the effects of the fear factor in promoting entrepreneurial activity. As such, the support of EK&S programmes seems justifiable.Originality/valueThe findings of this study provide a deeper insight into the intricate relationships that underlie entrepreneurial activity by utilising a combination of data analysis techniques.

The Impact of Psychological Capital on Entrepreneurship in Agriculture

The aim of this study is to identify the psychological capital characteristics of agricultural entrepreneurship. Different factors influencing entrepreneurial behaviour were gathered from the relevant literature and were formulated as hypotheses to be tested based on an analysis of data obtained from a survey of 516 respondents, directly involved in agricultural ventures. These psychological capital factors, considered to be important in early-stage entrepreneurial activity, were evaluated using Partial Least Squares (PLS). The results show that Hope, Self-efficacy and Resilience were significant factors influencing Entrepreneurship, although the influence of resilience was indirect rather than direct. To the researcher’s knowledge, no previous study has specifically adopted an integrated approach demonstrating the effects of psychological capital on agricultural entrepreneurship.

Do Tax Rates Matter for Entrepreneurial Motivations? An Empirical Approach

There are a number of factors that can hinder the path of entrepreneurship development and the literature highlighted the fact that taxes are one of the most important barriers for entrepreneurs. This paper aims at identifying the relationship between tax rates and entrepreneurship and to establish the impact of tax rates on entrepreneurs considering their motivations (necessity, opportunity or improvement-driven opportunity). The research focuses on a sample of 46 countries grouped according to their income level, for a period of eight years (2012-2019). In order to test our hypotheses, we use multiple linear regression based on balanced panel data and we consider, as dependent variables, indicators that measure entrepreneurship and entrepreneurial motivations (early-stage entrepreneurial activity, necessity-driven entrepreneurs, opportunity-driven entrepreneurs, improvement-driven opportunity entrepreneurs, and motivational index). As independent variables, we consider indicators that measure the tax rates supported by entrepreneurs (total tax and contribution rate, profit tax, labor tax and contributions, and other taxes payable by businesses). The results show that tax rates play a key role in fostering the creation of new companies. Moreover, the impact is different, depending on the entrepreneurs’ motivations. Entrepreneurs motivated by necessity are positively related to total tax and contribution rate, while those motivated by opportunity are negatively related with this indicator. Therefore, tax rates discourage the entrepreneurs that seek innovation, but they do not affect those that do not have other options to obtain the necessary income for living.

Perceived university support and environment as a factor of entrepreneurial intention: Evidence from Western Transdanubia Region.

The exploration of entrepreneurship has become a priority for scientific research in recent years. Understanding this phenomenon is particularly important for the transformation of entrepreneurship into action, which is a key factor in early-stage entrepreneurial activity. This gains particular relevance in the university environment, where, in addition to the conventional teaching and research functions, the entrepreneurial university operation based on open innovation, as well as the enhancement of entrepreneurial attitudes of researchers and students, are receiving increased attention. This study is based on a survey conducted among students attending a Hungarian university of applied science in Western Transdanubia Region who have demonstrated their existing entrepreneurial commitment by joining a national startup training and incubation programme. The main research question of the study is to what extent student entrepreneurship intention is influenced by the environment of the entrepreneurial university ecosystem and the support services available at the university. A further question is whether these factors are able to mitigate the negative effects of internal cognitive and external barriers by enhancing entrepreneurial attitudes and perceived behavioural control. The relatively large number of students involved in the programme allows the data to be analysed using SEM modelling. The results indicate a strong covariance between the perceived university support and environment among students. Another observation is the distinct effect of these institutional factors on perceived behavioural control of students.

Do refugee inflows contribute to the host countries’ entrepreneurial rates? A dynamic panel data analysis, 2000–2019

PurposeThis study aims to estimate the impact of refugee inflows on host countries’ entrepreneurial rates. The refugee crisis led to an increased scientific and public policy interest in the impact of refugee inflows on host countries. One important perspective of such an impact, which is still underexplored, is the impact of refugee inflows on host countries entrepreneurial rates. Given the high number of refugees that flow to some countries, it would be valuable to assess the extent to which such countries are likely to reap the benefits from increasing refugee inflows in terms of (native and non-native) entrepreneurial talent enhancement.Design/methodology/approachResorting to dynamic (two-step system generalized method of moments) panel data estimations, based on 186 countries over the period between 2000 and 2019, this study estimates the impact of refugee inflows on host countries’ entrepreneurial rates, measured by the total early-stage entrepreneurial activity (TEA) rate and the self-employment rate.FindingsIn general, higher refugee inflows are associated with lower host countries’ TEA rates. However, refugee inflows significantly foster self-employment rates of “medium-high” and “high” income host countries and host countries located in Africa. These results suggest that refugee inflows tend to enhance “necessity” related new ventures and/ or new ventures (from native and non-native population) operating in low value-added, low profit sectors.Originality/valueThis study constitutes a novel empirical contribution by providing a macroeconomic, quantitative assessment of the impact of refugee from distinct nationalities on a diverse set of host countries' entrepreneurship rates in the past two decades resorting to dynamic panel data models, which enable to address the heterogeneity of the countries and deal with the endogeneity of the variables of the model.

Does Trade Openness Affect Global Entrepreneurship Development? Evidence from BRICS Countries

Emerging nations focus more on new and innovative business activities across national borders for economic advancement. Further, trade openness has recently emerged in BRICS countries. Thus, global entrepreneurship development can be a great opportunity for the traded open countries. In line with this, the study aims to examine the impact of trade openness on global entrepreneurship development in BRICS countries. The study collected balanced-panel data from BRICS countries for 2001–2020 and applied random-effects estimation to analyze the data. The study drives a cross-sectional dependence test, unit root test, and model specification test before applying the estimated model. The study further checked the robustness of the findings by alternative estimation methods like FMOLS and DOLS and found similar results. The results revealed that trade openness positively influences global entrepreneurship development, but average tariffs can discourage entrepreneurs. Specifically, trade openness through trade spread, trade freedom, and average tariffs increase the total early-stage entrepreneurial activities and entrepreneurial intentions rate in BRICS countries. Through cross-country analysis, the study found that trade openness significantly enhances global entrepreneurship development in Brazil, India, China, and South Africa rather than in Russia. The study found similar results after checking the robustness of the findings by alternative estimation methods like FMOLS and DOLS. Thus, the findings could be a great insight for the policymakers of BRICS countries. Governments, academics, international entrepreneurs, etc., can use the findings in future decisions as a policy dialogue.

Impact of Entrepreneurial Activity and ICT Development on Sustainable Development: Evidence from High-Income Countries

Sustainable development has become a vital issue in the globalizing world given the food insecurity, climate change, significant degradation of the environment and depletion of natural resources, and biodiversity loss. Therefore, the identification of the key factors behind sustainable development is important for the planning and application of the proper policies by countries. In this context, the institutional, demographic, social, and economic determinants of overall sustainable development have been extensively explored, but the interplay among sustainable development, entrepreneurial activity, and ICT development has stayed relatively untouched. This article investigates the effect of entrepreneurial activity, proxied by total early-stage entrepreneurial activity and ICT development, on the overall sustainable development of 15 high-income countries over the 2002–2018 period; it uses the Westerlund and Edgerton cointegration test with a structural break, taking notice of the gap in the empirical literature regarding the determinants of sustainable development. The cointegration analysis shows that entrepreneurial activity and ICT development have a positive influence on sustainable development in the long run, but that the effect of ICT on overall sustainable development is shown to be stronger in comparison to entrepreneurial activity. ICT penetration and entrepreneurial activity should be encouraged through institutional, educational, and fiscal incentives to make progress in sustainable development.

One size fits all? The differential impact of federal regulation on early-stage entrepreneurial activity across US states

Numerous studies evaluate how a jurisdiction’s institutional and specifically regulatory environment impact firm formation and entrepreneurial activity. This study adds to this by employing a dataset measuring the differential impact that federal regulations have on industries across US states. Specifically, the paper addresses how such differences affect several facets of early-stage entrepreneurial activity, including an index measure of early-stage entrepreneurship, opportunity entrepreneurship, job creation at startup, and new firm survival rates all derived from the Kauffman Index of Entrepreneurial Activity. Overall, the results suggest that early-stage entrepreneurial activity tends to be negatively correlated with a relatively more burdensome federal regulatory environment. While the channels do not indicate an effect through new firm formation or firm survival rates, both opportunity entrepreneurship and job formation are negatively and significantly affected. Implications are discussed.

Unlocking the connection between education, entrepreneurial mindset, and social values in entrepreneurial activity development

The Entrepreneurial University constitutes a phenomenon that highlights the prominent roles played by academic organizations as aggregators of capabilities, enabling the establishing of bridges between innovation and Entrepreneurial Ecosystems. This research therefore sets out to analyze the relationship between the Total Early Stage Entrepreneurial Activities of individual graduates and their entrepreneurial attitudes and social values towards entrepreneurship. This applies data sourced from the Global Entrepreneurship Monitor report on innovation-driven countries. The main research findings stem from the regression models (Study 1) and fsQCA analysis (Study 2) returning evidence that the likelihood of adult graduates setting up firms or owning young companies rises whenever such individuals deem they hold the knowledge/skills required to start a business. The results also stress the importance of devoting high levels of media attention to entrepreneurship and fostering entrepreneurial cultures capable of fostering economic growth and prosperity. This research makes substantial theoretical contributions to the literature. Firstly, the findings reinforce the applicability and suitability of fsQCA analysis of Global Entrepreneurship Monitor data. Secondly, this study strengthens the credibility of the Institutional Theory and Theory of Planned Behavior theoretical frameworks, correspondingly lending support to the importance of institutional or organizational factors as determinants of entrepreneurship and the need to focus on the linkage between entrepreneurial attitudes, entrepreneurial intentions, and entrepreneurial behaviors.

Perceived obstacles to the early-stage entrepreneurial activity of youth

Purpose: The fundamental driving force of entrepreneurship is the individual with their ambitions and entrepreneurial spirit, but also with their obstacles that prevent them from following an entrepreneurial path. These obstacles can be of a personal nature, but also factors of the immediate living environment, the prevailing cultural values, the general attitude of society towards entrepreneurship, etc. The purpose of this paper is to discuss the known barriers to early-stage youth entrepreneurship compared to the total population based on the Global Entrepreneurship Monitor (GEM) data for the 34 countries studied.Methodology: The methodology includes frequency distribution, descriptive statistics and linear regression analysis. Data from GEM 2016-2020 on early-stage entrepreneurial activity, perceived skills, and fear of failure were used. Results: We showed that there are differences in perceived entrepreneurial skills between youth and the total population, namely that youth perceive lower levels of entrepreneurial knowledge, experience, and skills. We confirmed that perceived entrepreneurial skills have a positive, statistically significant impact on total early-stage entrepreneurial activity, which is true for both the total population and youth. The test of the influence of fear of failure on total early-stage entrepreneurial activity for a sample of the total population and youth indicates a negative influence, but it is not statistically significant.Conclusion: From the study, recommendations emerge for policymakers regarding entrepreneurship education as a key intervention to help youth acquire and develop relevant entrepreneurial skills that are thus beneficial for the youth to better overcome obstacles in the business environment as well as in various life situations.