The role of institutions in latent and emergent entrepreneurship

Drawing from perspectives on institutional hierarchy (Williamson) and social embeddedness (Granovetter), we examine the role of embeddedness, formal institutions and governance in shaping latent and emergent entrepreneurship. We examine the role of heterogeneous institutional conditions - corruption, social relationships, property rights and government size - matter across 66 countries between 2005 and 2015. Our findings demonstrate that heterogeneity of institutional conditions and heterogeneity of entrepreneurship outcome are important and not monolithic. Notably, we find that while corruption impedes both latent and emergent entrepreneurship, this effect lasts almost three times as long for latent entrepreneurship. We also find that entrepreneurs in countries with more corrupt contexts have lower aspirations to start and own a business.

Automated summary

The study shows that the heterogeneity of institutional conditions plays a significant role in shaping entrepreneurial activities, with corruption hindering both latent and emergent entrepreneurship, and having a longer-lasting impact on latent entrepreneurship. Entrepreneurs in countries with more corrupt contexts also exhibit lower aspirations to start and own a business.