The motivation index of entrepreneurial activity and institutional environment

Abstract

The article investigates the institutional factors that affect the motivation index wich is measured as the proportion between the share of Improvement-Driven entrepreneurs and necessity-driven entrepreneurs. The difference between entrepreneurs with necessity and opportunity motivation figures the difference in entrepreneurial behavior. Those of them who consider an income increase and anindependence desire as the motives of their activities (Improvement-Driven Entrepreneurs) are ready for large investments in business creation, for the production of new products and for the usage of new technologies, providing a greater contribution to economic development. We test few hypotheses using data of Global Entrepreneurship Monitor Survey for the period 2007–2016. The results confirm the existence of positive relationship between the level of economic development and the motivation index, an increase in the share of Improvement-Driven entrepreneurs is typical for developed countries. Despite the necessity to develop all types of entrepreneurship, which are widely discussed in policy and programs for small and medium businesses, the promotion of Improvement-Driven Entrepreneurship entrepreneurs can contribute to GDP growth by creating new, including innovative, products and technologies, as well as increasing the scale of business. We found confirmation of the hypothesis that the protection of property rights, the regulation of corruption and the quality of education have a positive effect on the motivation index. The confidence that income and property are protected increases the likelihood of opting for voluntary entrepreneurship. Protection of rights affects not so much the general level of entrepreneurial activity, but rather the change in its “quality”. The perception of society as corrupt also reduces the level of forced entrepreneurship, but restricting corruption more strongly stimulates highly competitive entrepreneurs than forced ones.