Entrepreneurial Growth Aspirations Research Articles

The moderating role of individual and social resources in gender effect on entrepreneurial growth aspirations

PurposeThis study aims to examine how the effect of gender on entrepreneurial growth aspirations is moderated differently by individual resources (human and financial capital) compared to those within the social environment (availability of entrepreneurial knowledge and role models).Design/methodology/approachA multilevel estimator is used to investigate the determinants of growth aspirations of owners-managers of nascent start-ups. The Global Entrepreneurship Monitor database is employed, covering the period 2007–2019, with 99,000 useable cases drawn from 95 countries.FindingsThe results suggest that individual financial resources and human capital have positive effects on entrepreneurial growth aspirations; yet these effects are weaker for female entrepreneurs relative to males. In contrast, the impact of the availability of entrepreneurial social knowledge and role models on their growth aspirations is more positive than for male entrepreneurs.Originality/valueThis study offers a novel insight into entrepreneurial growth ambition, as it utilises a global perspective to scrutinise whether individual and social resources contribute differently to male versus female growth-aspirations, employing a multilevel approach. It also integrates insights from the resource-based view and from the relevant business literature on entrepreneurs’ gender to develop theoretical explanations.

Human capital, institutions, and ambitious entrepreneurship during good times and two crises

AbstractResearch SummaryWe argue that the positive relationship between pro‐market institutions and entrepreneurial growth aspirations is dampened for individuals with general human capital (higher education), but augmented for those with specific human capital (experience in the marketplace). However, during a crisis, the differential effect of pro‐market institutions on growth aspirations manifests only for entrepreneurs with specific human capital, with stronger effects than in good economic times. We run our empirical analysis on a dataset of individual‐ and country‐level characteristics during 2005–2020, thus exploiting variation from the Global Financial Crisis and the COVID‐19 pandemic. We confirm our predictions and show stronger results for early stage (compared to nascent) entrepreneurs, and potential complementarities between human capital types. Altogether, our work paves the way to institutional adaptive policymaking.Managerial SummaryPro‐market institutions facilitate business activity. We analyze a continuum of institutional arrangements and show asymmetric joint effects of the business context and human capital on entrepreneurial growth aspirations. General, education‐based human capital can collide with pro‐market contexts, weakening their positive effect on growth aspirations. In contrast, the interaction between pro‐market contexts and specific, market‐based human capital acts as a catalyst of growth aspirations. The (mis)alignment between pro‐market institutions and specific human capital from start‐up or investment experience gains an increased importance during the Global Financial Crisis and the COVID‐19 pandemic. Our findings are stronger for early stage business owners beyond the nascent phase, and complementarities can appear between education and market experience. We discuss policy implications for entrepreneurship education and regional development.

Entrepreneurial growth aspirations during the COVID-19 pandemic: the role of ICT infrastructure quality versus policy response

ABSTRACT We posit that the quality of information and communication technology (ICT) infrastructure and the effectiveness of crisis-specific policy response are essential for entrepreneurial growth aspirations during major external shocks. Enhancing the quality of ICT infrastructure is a relevant strategy for building ecosystems that are resilient to multiple types of crises. It enhances entrepreneurs’ growth ambitions during the crisis, and makes them less reliant on crisis-specific response policies adopted by governments. We provide empirical support for this, utilizing Global Entrepreneurship Monitor (GEM) data from the pandemic period in Chile.

The growth aspirations of underdog entrepreneurs

A growing number of studies suggest that underdogs have a propensity for entrepreneurship. However, the underdog entrepreneur’s propensity for firm growth after launching their ventures remains largely unknown. In this paper, we advance our understanding of underdog entrepreneurs by focusing on their entrepreneurial growth aspirations. More specifically, we leverage insights from the underdog theory of entrepreneurship, entrepreneurial growth aspirations, and prospect theory as a first step in uncovering the relationship between underdog attributes and firm growth. To test our model, we leverage a portfolio of loan applications from entrepreneurs based in the United States. Our findings suggest that underdog attributes are associated with growth aspirations, and higher business incomes negatively moderate this relationship.

Does fear of failure affect entrepreneurial growth aspirations? The moderating role of institutional collectivism in emerging and developed countries

PurposeBased on social cognitive theory, this study aims to analyze the impact of fear of failure on entrepreneurs’ growth aspirations, the moderating role of collectivist institutional culture and the differences between emerging and developed countries.Design/methodology/approachUsing the Global Entrepreneurship Monitor and the Global Leadership and Organizational Behavior Effectiveness databases for 27 developed and 15 emerging countries, and Global Leadership and Organizational Behavior Effectiveness, the authors apply multilevel model with individual-level and country-level variables.FindingsThe fear of failure has a negative impact on growth aspirations and that impact differs between developed and emerging countries. One of the main conclusions is that collectivist culture mitigates the negative impact of fear of failure on growth aspirations, and that this result is significant only in emerging countries.Originality/valueThe authors introduce a boundary condition for this study’s predictions, showing that in emerging countries, contrary to developed countries, the moderator effect of cultural context contributes to growth aspirations, despite the entrepreneur’s fear of failure.

Does climate risk affect entrepreneurial growth aspirations? The moderating effects of gender and solo-founded ventures

Does climate risk affect entrepreneurial growth aspirations? The moderating effects of gender and solo-founded ventures

Entrepreneurial growth aspirations at re-entry after failure

PurposeUtilising the Theory of Planned Behaviour as the conceptual framework, the authors argue that entrepreneurial financial failure enhances entrepreneurial growth aspirations for the subsequent start-up projects. Furthermore, this effect is particularly strong for individuals rich in human capital, both general and specific; for them, financial failure of an entrepreneurial business is likely to be subsequently transformed into higher entrepreneurial growth aspirations.Design/methodology/approachThe authors employ multilevel estimation techniques applied to Global Entrepreneurship Monitor data consisting of annual subsamples, each with at least 2,000 observations drawn from the working age population of 95 countries, for the period 2007–2019.FindingsThe results confirm that the experience of financial failure, both individual and societal, leads to higher growth aspirations for subsequent ventures, while exit for opportunity reasons has an even stronger positive effect on growth aspirations. Furthermore, higher education and entrepreneurial experience enhance the positive impact of financial failure on the growth aspirations of subsequent start-ups.Originality/valueThe authors demonstrate that the Theory of Planned Behaviour, which centres on intentions, can be successfully utilised to understand why entrepreneurial failure may be transformed into high growth aspirations for subsequent projects and why this effect may be enhanced by the human capital of the entrepreneur. Furthermore, the authors apply multilevel methods to a large international dataset from Global Entrepreneurship Monitor and produce novel empirical evidence supporting their theoretical predictions.

Go Green and Entrepreneurial Growth Aspirations: Evidence from Multi-country Small Businesses

To account for the changing nature of entrepreneurial growth aspiration (EGA), we shift our focus from individual-level factors (e.g., human, and social capital) to firm-level strategic factors. We theorise that go green, as one of the emerging strategic orientations, can positively influence EGA for small businesses. The positive association between go green and EGA is positively mediated by strategic engagements in (a) innovation and (b) signalling (i.e., environmental certification). In addition, we establish that such positive association is stronger in economies where there are lower levels of environmental institutional pressures. The empirical analysis of 28,000 small businesses in 41 economies is largely consistent with our predictions. We further report that the indirect mechanism of environmental certification is more important than that of innovation in go green-EGA link.

Innovation affecting growth aspirations of early stage entrepreneurs: culture and economic freedom matter

PurposeEarlier research confirms the positive effect of innovation in shaping growth ambitions of entrepreneurs. The aim of this paper is to investigate whether the effect of innovation on growth ambitions of entrepreneurs is contingent on the role of institutions, namely, culture and economic freedom. In other words, the authors’ objective is to provide an institutionally contingent understanding of the role of innovation in shaping growth ambitions of early-stage entrepreneurs.Design/methodology/approachThe authors applied hierarchical linear modeling technique on the data of 100,566 early-stage entrepreneurs in 109 countries that participated in annual surveys of Global Entrepreneurship Monitor.FindingsThe authors find that the effect of innovation on shaping growth ambitions of early stage entrepreneurs is contingent on the role of culture such that, in secular cultures, innovation benefits growth ambitions more than traditional cultures. Further, the authors found that the effect of innovation on growth expectations is dependent on the level of economic freedom in the country in which the firms operate so that in the countries with higher level of economic freedom, early-stage entrepreneurs expect more growth out of their innovation as compared to their counterparts in the depressed economies.Originality/valueThe results contribute to our understanding of entrepreneurial growth aspirations as a result of the interplay of entrepreneur–firm–environment nexus.

Explicating How Institutions Connect the Dots Between Human Capital and Entrepreneurial Aspirations

Drawing from institutional economics and theories on human capital, we study how institutions moderate the relationship between human capital and entrepreneurial growth aspirations (EGA). We propose a multi-level model in which a high regulatory burden and a cultural pressure against failing negatively moderate the relationship between the entrepreneur’s human capital and EGA. We test our predictions on a combined dataset of individual- and country-level characteristics, which we obtain from the Global Entrepreneurship Monitor and World Development Indicators for the period 2006–13. We find that informal institutions strongly condition the human capital-EGA relationship in developing countries. However, in developed countries this relationship is highly influenced by formal institutions.

The tangled historical roots of entrepreneurial growth aspirations

AbstractResearch SummaryWe consider what configurations of historical and geographic dimensions influence entrepreneurial growth aspirations (EGA). Our theoretical framework combines geography (coastal location, resource dependence), long‐term colonial history (ethnic heterogeneity, legal origins), and postcolonial history (low levels of conflict and population displacement; not having “bad neighbors”). We employ abductive reasoning to link the social science and historical literatures via analytically structured histories of Ghana, Nigeria, and Angola. Next, we undertake a fuzzy set qualitative comparative analysis on sub‐Saharan Africa countries to investigate which particular configurations of these dimensions are important for EGA. We demonstrate the importance of configurations over individual variables and add context‐bound dimensions to the study of entrepreneurship in developing countries, through historical analysis.Managerial SummaryOur analysis may offer entrepreneurs a template for identifying potential opportunities and threats in order to calibrate their strategies for scaling up their venture in sub‐Saharan Africa. We argue that environments rich in entrepreneurial growth opportunities are associated with configurations where negative aspects are more than compensated by positive ones. For Botswana, the low levels of internal conflict compensate for unfavorable location. For Angola, the positive impact of coastal location and relatively low ethnic heterogeneity counterbalance the negative effect of resource rents. Resource‐driven economies are more entrepreneurial: better economic opportunities can sometimes result from having extractive industries. For African entrepreneurs it is not only relevant what happens in their own countries, as their opportunities are directly affected by economic or political turmoil in neighboring countries.

Opportunity Motivation and Growth Aspirations of Mexican Entrepreneurs: The Moderating Role of the Household Income

Framed in the Theory of Planned Behavior, this work analyzes the entrepreneurial growth aspirations in efficiency-driven economies and examines the interaction effect of household income on the relationship between opportunity entrepreneurship and entrepreneurial growth aspirations. We propose a growth aspirations model using GEM (Global Entrepreneurship Monitor) data, with two explanatory variables: increased wealth and independence, and a moderating variable (household income). Hypotheses were validated with the use of hierarchical regression, and we find that that opportunity motivation is positively related to the entrepreneurial intention to expand entrepreneurial business activities. A second interesting finding of this study is that the independent effects model infers that growth aspirations are significantly related to household income.

Product Newness, Low Competition, Recent Technology, and Export Orientation as Predictors for Entrepreneurial Growth Aspirations

This study examines the contribution of how product newness, low competition, recent technology, and export orientation affect entrepreneurial growth aspirations moderated by financial capital. Based on a Global Entrepreneurship Monitor (GEM) sample of 512 Mexican new entrepreneurs, we use a hierarchical regression model to study the independent and interaction effects between these variables, and we apply a Chow breakpoint test and a CUSUMSQ (cumulative sum of squares of recursive residuals) test to analyze structural change and robustness. Our results suggest that achieving higher educational levels, acquiring recent technology, and product newness slightly increase the entrepreneurial growth ambition of the firm, and that financial capital positively moderates the impact of product newness and recent technology on growth aspirations. Besides this, we show that the interaction effect of financial capital with low competition and export activity on their growth aspirations is not crucial, and business angles tend to finance, primarily when the firm exports new products and services are facing a reduced number of competitors.

Understanding the Informal Economy in Practice – Evidence from Bosnia and Herzegovina

Abstract This paper provides insights into the informal economy of Bosnia and Herzegovina (BiH), a post--conflict transition economy in the Western Balkan region aspiring to became part of the European Union. After the introductory section and literature review, we introduce the economic outlook of BiH and then provide evidence estimating the size of the informal economy, which is identified to be around 30% over the last couple of years. As the size of the informal economy is high and persistent, this implies that current policy approaches are not efficient in tackling this economic challenge. To understand how the informal economy operates in practice, we use data from two different surveys to assess tax morality, undeclared work and the structure of the participants in the informal economy. In the next section, we supplement the study with ethnographic insights. In particular, we identify how participants in the informal economy use it for different purposes and with different motives. This includes reliance on the informal economy as a survival strategy for households, as a way to supplement insufficient formal income, to compensate for economic insecurity, or to decrease costs of formal business by using “envelope wage” practices, but equally importantly to overcome formal institutional rigidities linked to current contradictory laws. Still, we find indications that the growth of informal business is converging to formalisation, as informality at some stages of business development becomes a burden to higher entrepreneurial growth aspirations.

Entrepreneurial growth aspirations and the role of institutions: A multilevel approach

We apply institutional economics and human capital perspectives to advance research on the influence of institutional factors predicting entrepreneurial growth aspirations. We use data that combine...

How institutions and gender differences in education shape entrepreneurial activity: a cross-national perspective

Previous studies offer evidence that human capital obtained through education is a crucial explanation for cross-national differences in entrepreneurial activity. Recently, scholar attention has focused on the importance of education in subjects such as science, technology, engineering, and math (STEM) for the promotion of entrepreneurial activity. To our knowledge, empirical evidence for this link is scarce, despite the emphasis made in the literature and by policy makers on the choice of study at the tertiary level. Given that differences in STEM education are particularly large between men and women, we utilize data from the Global Entrepreneurship Monitor for 19 European countries and the USA. We study the role of these differences in STEM education at the national level for three stages of the entrepreneurial process: entrepreneurial awareness, the choice of sector for entrepreneurial activity, and entrepreneurial growth aspirations. We also test whether the effects of gender differences in education is moderated by the nature of the institutional environment in which entrepreneurs operate. Our findings show that individual-level explanations including education account for the gender differences during all three stages of early-stage entrepreneurial activity. Moreover, countries with greater gender equality in science education are characterized by higher entrepreneurial activity in knowledge-intensive sectors and high-growth aspirations. Thus, next to individual-level education, closing the gender gap in science at the national level can benefit a country as a whole by stimulating innovative entrepreneurial activity.

Regional and individual determinants of entrepreneurial growth aspirations

This paper investigates the unique and joint effects of population density and early-stage entrepreneurs’ human capital endowments (higher education, entrepreneurship training and owner-manager experience) on entrepreneurial growth aspirations. We test a number of hypotheses using data that combine individual and province level information in Spain over the period 2008-2010. We argue that growth aspirations of early-stage entrepreneurs are higher in more densely populated regions, but that such environmental influence is stronger for individuals with greater human capital. This is because they will be more aware that denser regions offer more favorable conditions for new businesses and also requires greater firm growth to compensate for a higher risk of business failure. Consistent with our view, we find that the growth aspirations of entrepreneurs with higher education are higher in densely populated provinces.

Entrepreneurial growth aspirations in challenging environment: The role of institutional quality, human and social capital

AbstractThe role of formal and informal institutions is crucial in forming growth aspirations. Firms use their resources and personal network, trusting to overcome or compensate for inadequate informal institutions. Transition countries can unlock their growth potential by targeting entrepreneurs with high growth aspiration through policy measures (increasing their level of human capital through a higher quality of educational system, aligning formal and informal institutions, promoting well‐functioning and impartial courts). Entrepreneurs use the informal institutions to complement deficient or inadequate formal institutions. Firm size as an indicator of better access to resources moderates positively the effects of informal institution barriers by having a positive influence on growth aspiration. Training, networking, and trust have a positive effect on growth aspiration and entrepreneurs use these practices in response to institutional deficiencies (inadequate educational systems, inefficient courts and other formal institutions). Policy initiatives should consider small firms as being affected by formal institutions.

Population density and individual human capital influences on entrepreneurial growth aspirations

We build on multiple theoretical perspectives to investigate the unique and joint effects of population density and nascent entrepreneurs’ human capital endowment (higher education, entrepreneurshi...

Entrepreneurial Growth Aspirations and Familiarity with Economic Development Organizations: Evidence from Canadian Firms

The purpose of this paper is to investigate the relationship between the entrepreneurship ecosystem and the entrepreneur’s willingness to grow. This study is particularly interested in exploring the relationship between entrepreneur’s familiarity with the key economic development organizations in the entrepreneurship ecosystem and the willingness to grow. Several studies have investigated the growth process in small and medium sized enterprises (SMEs) since the case has been made that high growth SMEs contribute to economic growth through job creation. To date, these studies have identified multiple internal and external determinants including their effects on small business growth. There is evidence in the literature that characteristics of the entrepreneurs such as the willingness to grow and the entrepreneur’s network are important factors in growth process. However, the relationship between growth process and the entrepreneur’s networking behavior is yet to be fully understood. Drawing from the entrepreneurship ecosystem literature, the growth process literature and the resource dependence theory, this study uses the business confidence survey from 2011 to 2013, which targeted all businesses across all of Halifax Regional Municipality (HRM) in Nova Scotia, Canada, to explore the relationship between the entrepreneur willingness to grow and the propensity to network with key economic development organizations of the entrepreneurial ecosystem. The findings support the assumption that the proportion of businesses that are willing to grow (i.e. hire additional staff and enter new markets within the next twelve months) is higher for the group of businesses that are familiar with the key economic development organizations than for the group of businesses that are not familiar with them. However, the results are not homogeneous across all populations. Our findings also indicate that the higher the expectation to enter new markets over the next twelve months, the higher the odds to be familiar with the key economic development organizations. Our findings contribute to the literature around the association between networking and small business growth.