Drawing on institutional theory, we synthesize previous literature that examined the impact of the regulatory, normative, and cognitive dimension of local institutional environment on entrepreneurship. We then test and replicate the link between the institutional environment and two types of entrepreneurial activities—opportunity-driven and necessity-driven entrepreneurship—using recent data on 43 countries. Consistent with prior literature, we find that countries characterized by less market openness, greater power distance, and collectivism tend to have higher levels of necessity-driven entrepreneurship and regulatory quality, and uncertainty avoidance do not seem to have a profound impact on this type of activity. On the other hand, countries with less market openness and regulatory quality, and smaller power distance are associated with opportunity-driven entrepreneurship.
All Science Journal Classification (ASJC) codes
- Business, Management and Accounting (miscellaneous)
- Institutional environment
- Market openness
- Necessity-driven entrepreneurship
- Opportunity-driven entrepreneurship