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

Abstract

We apply institutional economics and human capital perspectives to advance research on the influence of institutional factors predicting entrepreneurial growth aspirations. Particularly, the moderation effect of institutions on the relationship between human capital and growth aspirations is analyzed. Building on a comprehensive dataset that combines individual-and country-level observations, obtained from the Global Entrepreneurship Monitor and World Development Indicators, for the period 2006-13, we develop a multilevel framework to test our hypotheses. The main findings show that some institutions represent a barrier to new ventures' development (cost of property registration and fear of failure) while others may enhance it (access to credit and role models). We also find that those entrepreneurs with higher levels of human capital would attenuate their growth aspirations when regulation, access to credit, and fear of failure, will not be favorable. However, the influence of role models would strengthen that relationship. Theoretical and policy implications are discussed, based on our findings.