Understanding the role of institutions and economic context on entrepreneurial value creation choice

Abstract

Research background: The observable discrepancies in entrepreneurship activity across countries have motivated both researchers and policymakers to comprehend the sources of these variations. Certain scholars have suggested that the answer to this empirical puzzle lies in the macrolevel processes that influence entrepreneurial endeavours. Purpose of the article: As the understanding of macrolevel processes that shape entrepreneurial behaviour is limited, this research aims to answer how institutions and the economic context influence entrepreneurial value creation choices (i.e., for-profit, non-profit, and mixed). Methods: Using a cross-country sample of 7,891 entrepreneurs in 58 countries, we employ a multilevel ordered probit to evaluate a novel conceptual framework. Our analysis models the direct impact of the regulative framework, the normative pillar, and the cultural pillar, alongside the moderating influence of income inequality and economic uncertainty on value creation choices. Findings & value added: Our findings show that the regulative framework has a positive marginal effect on for-profit and mixed-value creation, but a negative effect on non-profit value creation. Meanwhile, the normative pillar has a negative marginal effect on for-profit and mixed-value creation, but a positive effect on non-profit value creation. The cultural pillar has a negative marginal effect on for-profit and mixed-value creation, but a positive effect on non-profit value creation. Furthermore, income inequality moderates positive the relationship between normative pillar and for-profit and mixed-value creation, while economic uncertainty moderates negative the relationship between normative pillar and for-profit and mixed-value creation. Our research contributes to the literature by providing a nuanced understanding of how institutional pillars can act as drivers or barriers for different entrepreneurial forms, evidence of how uncertainty interacts with institutional forces to shape value creation decisions, and insights into the distinctive attributes of different entrepreneurial forms. Our findings have implications for public policy development.

Interaction of Islamic Economics and Government Transformation Technology in Indonesian Muslim Society

“…To enable greater transparency in managing public finances and forms of entrepreneurship. Our findings affect public policy development (Tautiva et al, 2023). It can help avoid corruption, which is against Islamic economics.…”

Sustainable growth rate, corporate value of US firms within capital and labor market distortions: The moderating effect of institutional quality

“…Institutional quality is our moderating variable. Institutional quality is multifaceted and challenging to define (Bernardelli et al, 2021;Diaz Tautiva et al, 2023;Němečková & Hayat, 2022). Some studies used the Institutional quality index based on five indicators from the International Country Risk Guide's Political Risk Service.…”