Motivation of Entrepreneurial Activity: The Role of Institutional Environment

Abstract

This article presents the results of a research which purpose was to investigate the link between institutional features and the motivation of entrepreneurial activity on the country level. We evaluate the level of total early-stage entrepreneurial activity, and, more specifically, the share of necessity-driven entrepreneurship. Taking into account Scott’s institutional theory, we established the main factors of the institutional environment — the regulatory, normative, and cognitive pillars. The empirical analysis was conducted using the Global Entrepreneurship Monitor Survey for the period between 2009 and 2014; information for every country that participated in the project in that period was used in the article. Using data from various sources, such as Global Competitiveness Report, World Bank, Doing Business, Economic Freedom of the world, Hofstede’s Cultural Indicators, we identified proxy-variables for every institutional dimension of Scott’s theory. The results of our econometric analysis indicate that the regulatory, normative, and cognitive factors influence not only the level of total early-stage entrepreneurial activity, but also the share of necessity-driven entrepreneurs.