Skip to main content
Log in

Institutional context and the allocation of entrepreneurial effort

  • Article
  • Published:
Journal of International Business Studies Aims and scope Submit manuscript

Abstract

The type of activity in which entrepreneurs engage is likely to influence the potential contribution of entrepreneurship to economic growth and prosperity. Yet the entrepreneurship literature has focused largely on identifying the determinants of the level, rather than the type, of entrepreneurial activity. In this paper we hypothesize that a country's institutional environment will influence the allocation of entrepreneurial effort, and in particular will influence the extent to which entrepreneurial effort is directed toward high-growth activities. We test our hypotheses using data on 40 countries over the period 2002–2004. We find that the allocation of entrepreneurial effort toward high-growth activities is positively related to a country's financial and educational activities targeted at entrepreneurship, and is negatively related to a country's level of corruption. Our study is the first to provide empirical evidence that institutional characteristics significantly influence the allocation of entrepreneurial effort, and it is therefore the first to identify an empirically important channel through which a nation's institutions may contribute to economic growth.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. The “eclectic theory” of entrepreneurship (Noorderhaven et al., 2004; Verheul et al., 2002) synthesizes this body of research to identify economic and environmental conditions thought to shape an individual's decision to launch a new venture.

  2. Consistent with prior literature (e.g., Autio, 2005; Storey, 1994), we define “high-growth entrepreneurship” as any new business activity for which the entrepreneur expects to create 20 or more jobs within 5 years. As discussed later in the paper, this measure derives from responses on the Global Entrepreneurship Monitor survey. This choice of measure is also influenced by Birch's (1987) seminal finding that new firms accounted to a substantial extent for the creation of new jobs in the United States – a finding subsequently confirmed for other countries (e.g., Acs, 1998; Davidsson & Henrekson, 2002; Storey, 1994; Westhead & Cowling, 1995).

  3. The NBS approach complements a broader area of study known as institutional theory. Institutional theory argues that the institutional environment in which individuals and firms are embedded importantly influences their behavior (Bartholomew, 1997; North, 1990; Powell & DiMaggio, 1991; Scott, 1995), and that societal and state pressures are important in guiding behavior by providing criteria for organizational and individual conformity. For example, Scott and Meyer (1983: 40) noted that “institutional sectors are characterized by the elaboration of rules and requirements to which individual organizations must conform if they are to receive support and legitimacy from the environment.”

  4. A distinction can be made between informal venture capital (coming from private individuals) and formal venture capital (coming from professional investors, government bodies, banks, pension funds and insurance companies) (Gompers, 1999; Harrison & Dibben, 1997).

  5. The GEM project uses relatively small, but representative, samples per country (e.g., sometimes as low as 2,000 respondents per country per year), and hence its country-level indices of entrepreneurial activity are estimates, subject to a margin of error (Reynolds et al., 2005). Despite this potential disadvantage, empirical evidence supports the reliability and validity of the GEM measures (Reynolds et al., 2005).

  6. The total entrepreneurial activity (TEA) index is the most widely known and used GEM index (Reynolds et al., 2005). However, as Hindle (2006) notes, the TEA index captures only one aspect of entrepreneurship: a country's rate of start-up activity. Consequently, it was recently relabeled the “total early-stage entrepreneurial activity” index (Minniti et al., 2006).

  7. Individuals engaged in both activities in a given year are counted only once (Reynolds et al., 2005).

  8. Autio (2005) refers to the TEA high-growth index as “high-expectation entrepreneurship”.

  9. Data are from the World Bank EdStats database at (link currently inactive) http://devdata.worldbank.org/edstats/cd.asp.

  10. Kaufmann et al. (2005) describe this index as measuring “the quality of contract enforcement, the police, and the courts, as well as the likelihood of crime and violence”.

  11. Kaufmann et al. (2005) describe this index as measuring “the incidence of market-unfriendly policies”.

  12. The CPI data are available at http://www.transparency.org/policy_research/surveys_indices/cpi.

  13. Several control variables were considered for inclusion in our model (e.g., industrial structure, urbanization rate), and those excluded in our final model may to some extent color our results. However, with only 40 observations, we felt parsimony was preferable to over-fitting our model by including a plethora of control variables, many of which are highly correlated both among themselves and with the main institutional variables.

  14. In preliminary analysis the hypothesis of a quadratic relationship for income per capita was rejected in our sample.

  15. As explained in later in the “Data and Estimation” section, our sample is a single cross-section derived by averaging the data for each country over the period 2002–2004. Hence, to avoid overlapping time periods, we calculated the value of any lagged variable as the average of its values over the period 1999–2001. See also note 19.

  16. We use the stock of FDI rather than the flow of FDI, since the latter is more likely to be correlated with other macro-level control variables included in our analysis (e.g., growth rate of GDP).

  17. Wennekers et al. (2005) used a similar rationale to argue for including a “(former) centralized command economies” dummy variable when modeling a country's level of entrepreneurial activity.

  18. The countries are Argentina, Australia, Belgium, Brazil, Canada, Chile, China, Croatia, Denmark, Ecuador, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, India, Ireland, Israel, Italy, Japan, Korea, Mexico, Netherlands, New Zealand, Norway, Peru, Poland, Portugal, Singapore, Slovenia, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Uganda, United Kingdom, United States, and Venezuela.

  19. Lagged variables of Income per Capita and Economic Growth were computed as the average of their values over the period 1999–2001. Re-estimating our models using instead the average value of each variable over the period 2001–2003 produced qualitatively the same results.

  20. Having individual-level response data would allow for a richer and potentially more robust analysis, but would also require data on individual respondent characteristics, which were not the focus of this study.

  21. This method obtains model estimates using, for each country, the proportion of “yes” responses and total number of respondents to create a dataset of zero–one responses. For example, for a country with 100 respondents and a proportion of “yes” responses of 65% the procedure creates 100 observations on the dependent variable; 65 have the value “1” and 35 have the value “0.” Values of the independent and control variables are then replicated across the constructed observations. The process of replicating observations does not bias subsequent inference, since the statistic for testing coefficient significance is a z-statistic, not a t-statistic, and is hence independent of “degrees of freedom” (Greene, 2004).

  22. The four GEM-derived independent variables and the WEF-derived independent variable were first placed on a common scale by rescaling the values of each variable to lie in the 0–1 interval.

  23. Table 1 indicates relatively high bivariate correlations between some of our variables. Although a high bivariate correlation is often taken to be indicative of a potential “collinearity” problem, the literature notes that such an interpretation is often misleading or simply incorrect (Belsley, Kuh, & Welsch, 1980). Instead, an accepted approach to detecting a potential collinearity problem is to compute the “condition number” of the data matrix, with a condition number value above 30 suggesting that collinearity may be a problem (Belsley et al., 1980). The condition number of our data matrix was computed to be 17.7, suggesting that collinearity may be less of an issue than suggested by inspection of the simple bivariate correlations in Table 1.

  24. The marginal effect for each variable was also calculated, but is not reported, since our hypotheses concern only the directional influence of a variable and not the magnitude of its effect on the dependent variable (Bowen & Wiersema, 2004).

  25. We had no expectation for the specific influence of (lagged) Income per Capita.

  26. See note 14.

  27. This is effectively a test of Model 1 (which excludes these five variables) against Model 2 (which includes these five variables).

  28. “Goodness of fit” is a problematic concept for models estimated using maximum likelihood, since estimation is not based, unlike OLS, on minimizing any given quantity (Greene, 2004).

  29. Efron's original version uses individual response (ungrouped) data. For our grouped data model, we compute Efron's (1978) pseudo R 2 as

    where p i is the actual proportion of high-growth start-ups in country i and i is the predicted proportion for country i. This measure is similar to the R 2 in OLS regression, in that it measures one minus the ratio of an error sum of squares to a total sum of squares. However, the correspondence is not exact, since the expected mean function in the logit specification is a nonlinear function of the variables. Consequently, a linear decomposition of total variance is not possible, and the values of the pseudo R 2 can lie outside the 0–1 interval (Greene, 2004). Nonetheless, higher pseudo R 2 values are indicative of “better fit”, since they imply lower variance of the prediction errors.

  30. We remark that 14 (32.5%) of the countries in our sample are members of the European Union (EU). Since the institutional variables for these countries may be similar, we examined for a possible “EU effect” by conducting a supplementary analysis in which an EU dummy variable was added to our models. The inclusion of this dummy variable did not change the nature of our results, and its estimated coefficient was not statistically significant.

  31. We undertook two supplementary analyses in which either “regulatory protection” or “corruption” was dropped from Model 2. When “regulatory protection” was dropped from Model 2, we found a negative effect for “corruption”, which illustrates the robustness of our results with regard to the detrimental effect of corruption. When “corruption” was dropped from Model 2, we found a positive effect for “regulatory protection” (as hypothesized), which shows that the inclusion of both “regulatory protection” and “corruption” in Model 2 (Table 2) may be precluding detection of the separate effect of “regulatory protection” in Model 2.

  32. We divided our sample of 40 countries based on the sample median value of income per capita. Hence each subsample contained 20 countries.

References

  • Acs, Z. 1998. The new American evolution. Washington, DC: US Small Business Administration Office of Economic Research.

    Google Scholar 

  • Acs, Z., Arenius, P., Hay, M., & Minniti, M. 2005. 2004 Global entrepreneurship monitor. London: London Business School and Babson Park, MA: Babson College.

    Google Scholar 

  • Autio, E. 2005. Global entrepreneurship monitor: 2005 report on high-expectation entrepreneurship. London: London Business School and Babson Park, MA: Babson College.

    Google Scholar 

  • Bandura, A. 1978. Reflections on self-efficacy. Advances in Behavior Research and Therapy, 1 (4): 237–269.

    Article  Google Scholar 

  • Barth, J. R., Li, T., Malaiyandi, S., McCarthy, D., Phumiwasana, T., & Yago, G. 2005. Best markets for entrepreneurial finance: 2005 capital access index. Santa Monica, CA: Milken Institute Capital Studies.

    Google Scholar 

  • Bartholomew, S. 1997. National systems of biotechnology innovation: Complex interdependence in the global system. Journal of International Business Studies, 28 (2): 241–266.

    Article  Google Scholar 

  • Baumol, W. J. 1990. Entrepreneurship: Productive, unproductive and destructive. Journal of Political Economy, 98 (5): 893–921.

    Article  Google Scholar 

  • Beck, T., Demirgüç-Kunt, A., & Vojislav, M. 2005. Financial and legal constraints to firm growth: Does firm size matter? Journal of Finance, 60 (1): 137–177.

    Article  Google Scholar 

  • Becker, G. 1975. Human capital. New York: National Bureau of Economic Research.

    Google Scholar 

  • Beker, P. F. 2004. Are inefficient entrepreneurs driven out of the market? Journal of Economic Theory, 114 (2): 329–344.

    Article  Google Scholar 

  • Belsley, D. A., Kuh, E., & Welsch, R. E. 1980. Regression diagnostics: Identifying influential data and sources of collinearity. New York: Wiley.

    Book  Google Scholar 

  • Birch, D. 1987. Job generation in America. New York: The Free Press.

    Google Scholar 

  • Blanchflower, D. G., & Oswald, A. J. 1998. What makes an entrepreneur? Journal of Labor Economics, 16 (1): 26–60.

    Article  Google Scholar 

  • Bowen, H. P., & Wiersema, M. 2004. Modeling limited dependent variables: Guidelines for researchers of strategic management. In D. Ketchen & D. Bergh (Eds) Research methodology in strategy and management, Vol. 1: 87–143. Amsterdam: Elsevier.

    Google Scholar 

  • Caputo, R. K., & Dolinsky, A. 1998. Women's choice to pursue self-employment: The role of financial and human capital of household members. Journal of Small Business Management, 36 (3): 8–17.

    Google Scholar 

  • Carree, M., van Stel, A., Thurik, A. R., & Wennekers, A. R. M. 2002. Economic development and business ownership: An analysis using data of 23 OECD countries in the period 1976–1996. Small Business Economics, 19 (3): 271–290.

    Article  Google Scholar 

  • Chen, C. C., Greene, P. G., & Crick, A. 1998. Does entrepreneurial self-efficacy distinguish entrepreneurs from managers? Journal of Business Venturing, 13 (4): 295–316.

    Article  Google Scholar 

  • Choi, J. P., & Thum, M. 2005. Corruption and the shadow economy. International Economic Review, 46 (3): 817–836.

    Article  Google Scholar 

  • Claessens, S., & Laeven, L. 2003. Financial development, property rights, and growth. Journal of Finance, 58 (6): 2401–2436.

    Article  Google Scholar 

  • Dakhli, M., & De Clercq, D. 2004. Human capital, social capital and innovation: A multi-country study. Entrepreneurship and Regional Development, 16 (2): 107–128.

    Article  Google Scholar 

  • Davidsson, P., & Henrekson, M. 2002. Determinants of the prevalence of start-ups and high-growth firms. Small Business Economics, 19 (2): 81–104.

    Article  Google Scholar 

  • De Backer, K., & Sleuwaegen, L. 2003. Does foreign direct investment crowd out domestic entrepreneurship? Review of Industrial Organization, 22 (1): 67–84.

    Article  Google Scholar 

  • De Wit, G. 1993. Models of self-employment in a competitive market. Journal of Economic Surveys, 7 (4): 367–397.

    Article  Google Scholar 

  • Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. 2001. The regulation of entry. World Bank Policy Research Working Paper No. 2661, World Bank, Washington, DC.

  • Efron, B. 1978. Regression and ANOVA with zero-one data: Measures of residual variation. Journal of the American Statistical Association, 73 (1): 113–212.

    Article  Google Scholar 

  • Ericson, R., & Pakes, A. 1995. Markov-perfect industry dynamics: A framework for empirical work. Review of Economic Studies, 62 (1): 53–82.

    Article  Google Scholar 

  • Evans, D. S., & Jovanovic, B. 1989. An estimated model of entrepreneurial choice under liquidity constraints. Journal of Political Economy, 97 (4): 808–827.

    Article  Google Scholar 

  • Gaston, R. J. 1989. The scale of informal capital markets. Small Business Economics, 1 (3): 223–230.

    Article  Google Scholar 

  • Gompers, P. 1999. The venture capital cycle. Cambridge, MA: MIT Press.

    Google Scholar 

  • Greene, W. 2004. Econometric analysis (5th ed.) New York: Prentice-Hall.

    Google Scholar 

  • Grilo, I., & Irigoyen, J. M. 2006. Entrepreneurship in the EU: To wish and not to be. Small Business Economics, 26 (4): 305–318.

    Article  Google Scholar 

  • Grilo, I., & Thurik, R. 2005. Latent and actual entrepreneurship in Europe and the US: Some recent developments. International Entrepreneurship and Management Journal, 1 (4): 441–459.

    Article  Google Scholar 

  • Hall, R. E., & Jones, C. I. 1999. Why do some countries produce so much more output per worker than others? Quarterly Journal of Economics, 114 (1): 83–116.

    Article  Google Scholar 

  • Harrison, R. T., & Dibben, M. R. 1997. The role of trust in the informal investment decision: An exploratory analysis. Entrepreneurship Theory and Practice, 20 (2): 63–81.

    Google Scholar 

  • Himmelberg, C. P., & Petersen, B. P. 1994. R&D and internal finance: A panel study of small firms in high-tech industries. Review of Economics and Statistics, 76 (1): 38–51.

    Article  Google Scholar 

  • Hindle, K. 2006. A measurement framework for international entrepreneurship policy research: From impossible index to malleable matrix. International Journal of Entrepreneurship and Small Business, 3 (2): 139–182.

    Article  Google Scholar 

  • Hofstede, G. 2001. Culture's consequences: Comparing values, behaviors, institutions and organizations across nations, (2nd ed.). Thousand Oaks, CA: Sage.

    Google Scholar 

  • Hopenhayn, H. A. 1992. Entry, exit and firm dynamics in long run equilibrium. Econometrica, 60 (5): 1127–1150.

    Article  Google Scholar 

  • Huang, H., & Xu, C. 1999. Institutions, innovations, and growth. American Economic Review, 89 (2): 438–443.

    Article  Google Scholar 

  • Hubbard, G. 1998. Capital-market imperfections and investment. Journal of Economic Literature, 36 (1): 193–225.

    Google Scholar 

  • Johnson, S., Kaufmann, D., & Shleifer, A. 1997. The unofficial economy in transition. Brookings Papers on Economic Activity, 2: 159–221.

    Article  Google Scholar 

  • Johnson, S., Kaufmann, D., & Zoido-Lobaton, P. 1998. Government in transition: Regulatory discretion and the unofficial economy. The American Economic Review, 88 (2): 387–392.

    Google Scholar 

  • Johnson, S., McMillan, J., & Woodruff, C. 2002. Property rights and finance. American Economic Review, 92 (5): 1335–1356.

    Article  Google Scholar 

  • Kaufmann, D., Kraay, A., & Mastruzzi, M. 2005. Governance matters IV: Governance indicators for 1996–2004. World Bank Policy Research Working Paper Series No. 3630, World Bank, Washington, DC.

  • Kihlstrom, R. E., & Laffont, J. J. 1979. A general equilibrium entrepreneurial theory of firm formation based on risk aversion. Journal of Political Economy, 87 (4): 719–748.

    Article  Google Scholar 

  • Kirzner, I. M. 1973. Competition and entrepreneurship. Chicago: University of Chicago Press.

    Google Scholar 

  • Klepper, S. 1996. Entry, exit, growth and innovation over the product life cycle. American Economic Review, 86 (3): 562–583.

    Google Scholar 

  • Knack, S., & Keefer, P. 1995. Institutions and economic performance: cross country tests using alternative institutional measures. Economics and Politics, 7 (3): 207–228.

    Article  Google Scholar 

  • Knutsen, S. 2004. Financial systems and economic growth: A critical view on the “business systems” literature. Paper presented at the DaNeNo Workshop, Utrecht.

  • Krauss, G., & Stahlecker, T. 2001. New biotechnology firms in Germany: Heidelberg and the BioRegion Rhine-Neckar Triangle. Small Business Economics, 17 (1–2): 143–153.

    Article  Google Scholar 

  • Kumar, K., Rajan, R., & Zingales, L. 2002. What determines firm size?, Working Paper No. W7208, National Bureau of Economic Research, Cambridge, MA.

  • Kwok, C., & Tadesse, S. 2006. National culture and financial systems. Journal of International Business Studies, 37 (2): 227–247.

    Article  Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. 1999. Corporate ownership around the world. Journal of Finance, 54 (2): 471–517.

    Article  Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. 2006. What works in securities laws? Journal of Finance, 61 (1): 1–32.

    Article  Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. 1997a. Legal determinants of external finance. The Journal of Finance, 52 (6): 1131–1150.

    Article  Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. 1997b. Trust in large organizations. The American Economic Review, 87 (2): 333–338.

    Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. 2000. Investor protection and corporate governance. Journal of Financial Economics, 58 (1–2): 3–27.

    Article  Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. 2002. Investor protection and corporate valuation. Journal of Finance, 57 (3): 1147–1170.

    Article  Google Scholar 

  • Leff, N. 1979. Entrepreneurship and economic development: The problem revisited. Journal of Economic Literature, 17 (1): 46–64.

    Google Scholar 

  • Lundvall, B. A. 1999. National business systems and national systems of innovation. International Studies of Management and Organization, 29 (2): 60–77.

    Article  Google Scholar 

  • Miles, M. A., O'Grady, M., & Holmes, K. R. 2006. 2006 Index of Economic Freedom. Washington, DC: The Heritage Foundation.

    Google Scholar 

  • Minniti, M., Bygrave, W., & Autio, E. 2006. Global Entrepreneurship Monitor: 2005 Executive Report. London: London Business School and Babson Park, MA: Babson College.

    Google Scholar 

  • Mokyr, J. 1990. The lever of riches: Technological creativity and economic progress. New York: Oxford University Press.

    Google Scholar 

  • Noorderhaven, N., Thurik, A. R., Wennekers, A. R. M., & van Stel, A. 2004. The role of dissatisfaction and per capita income in explaining self-employment across 15 European countries. Entrepreneurship Theory and Practice, 28 (5): 447–466.

    Article  Google Scholar 

  • North, D. C. 1986. The new institutional economics. Journal of Institutional and Theoretical Economics, 142 (1): 230–237.

    Google Scholar 

  • North, D. C. 1990. Institutions, institutional change and economic preference. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • OECD 1998. Fostering entrepreneurship: The OECD jobs strategy. Paris: OECD.

  • OECD 2001. Regulatory policies in OECD countries: From intervention to regulatory governance. Paris: OECD.

  • OECD 2005. OECD Economic Outlook: December No. 78 – Volume 2005 Issue 2. Paris: OECD.

  • Parker, S. 2004. The economics of self-employment and entrepreneurship. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • Parker, S. C., & van Praag, C. M. 2004. Schooling, capital constraints and entrepreneurial performance: The endogenous triangle. Tinbergen Institute Discussion Paper No. TI 2004–106/3, Amsterdam.

  • Powell, W. W., & DiMaggio, P. J. 1991. The new institutionalism in organizational analysis. Chicago: University of Chicago Press.

    Google Scholar 

  • Qian, Y., & Xu, C. 1998. Innovation and bureaucracy under soft and hard budget constraints. Review of Economic Studies, 65 (1): 151–164.

    Article  Google Scholar 

  • Reynolds, P., Hay, M., & Camp, S. M. 1999. Global entrepreneurship monitor: 1999 executive report. Babson Park, MA: Babson College, London: London Business School and Kansas City, MO: Kauffman Center for Entrepreneurial Leadership.

    Google Scholar 

  • Reynolds, P., Bygrave, W. D., & Autio, E. 2004. GEM 2003 global report. Babson Park, MA: Babson College.

    Google Scholar 

  • Reynolds, P., Bosma, N., Autio, E., Hunt, S., De Bono, N., Servais, I., Lopez-Garcia, P., & Chin, N. 2005. Global Entrepreneurship Monitor: Data collection design and implementation 1998–2003. Small Business Economics, 24 (3): 205–231.

    Article  Google Scholar 

  • Sachs, J. D., & Warner, A. 1995. Economic reform and the process of global integration. Brookings Papers on Economics Activity, 1 (1): 1–95.

    Article  Google Scholar 

  • Sahlman, W. A. 1990. The structure and governance of venture capital organizations. Journal of Financial Economics, 27 (2): 473–521.

    Article  Google Scholar 

  • Schumpeter, J. A. 1961. The theory of economic development. New York: Oxford University Press.

    Google Scholar 

  • Scott, W. R. 1995. Institutions and organizations. Newbury Park, CA: Sage.

    Google Scholar 

  • Scott, W. R., & Meyer, J. W. 1983. The organization of societal sectors. In J. W. Meyer & W. R. Scott (Eds) Organizational environments: Ritual and rationality: 129–155. Newbury Park, CA: Sage.

    Google Scholar 

  • Solomon, G. T., Weaver, K. M., & Fernald, L. W. 1994. A historical examination of small business management and entrepreneurship pedagogy. Simulation and Gaming, 25 (3): 338–352.

    Article  Google Scholar 

  • Sternberg, R., & Wennekers, A. R. M. 2005. Determinants and effects of new business creation using Global Entrepreneurship Monitor data. Small Business Economics, 24 (3): 205–231.

    Article  Google Scholar 

  • Stevenson, L., & Lundstrom, A. 2001. Patterns and trends in entrepreneurship/SME policy and practice in ten economies, Entrepreneurship Policy for the Future Series, vol. 3. Örebro: The Swedish Foundation for Small Business Research.

  • Storey, D. 1994. Understanding the small business sector. London: Routledge.

    Google Scholar 

  • Thomas, A. S., & Mueller, S. L. 2000. A case for comparative entrepreneurship: Assessing the relevance of culture. Journal of International Business Studies, 31 (2): 287–301.

    Article  Google Scholar 

  • Thurik, A. R., & Wennekers, A. R. M. 2004. Entrepreneurship, small business and economic growth. Journal of Small Business and Enterprise Development, 11 (1): 140–149.

    Article  Google Scholar 

  • United Nations 2004. World population prospects: The 2004 revision, Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. http://esa.un.org/unpp.

  • van Praag, C. M. 1999. Some classic views on entrepreneurship. De Economist, 147 (3): 311–335.

    Article  Google Scholar 

  • van Stel, A., Carree, M., & Thurik, A. R. 2005. The effect of entrepreneurial activity on national economic growth. Small Business Economics, 24 (3): 311–321.

    Article  Google Scholar 

  • Verheul, I., Wennekers, A. R. M., Audretsch, D. B., & Thurik, A. R. 2002. An eclectic theory of entrepreneurship. In D. B. Audretsch, A. R. Thurik, I. Verheul, & A. R. M. Wennekers (Eds) Entrepreneurship: Determinants and policy in a European–US comparison: 11–81. Boston/Dordrecht: Kluwer Academic Publishers.

    Chapter  Google Scholar 

  • Wennekers, A. R. M., & Thurik, A. R. 1999. Linking entrepreneurship and economic growth. Small Business Economics, 13 (1): 27–55.

    Article  Google Scholar 

  • Wennekers, A. R. M., Noorderhaven, N., Hofstede, G., & Thurik, A. R. 2002. Cultural and economic determinants of business ownership across countries. In W. D. Bygrave, E. Autio, C. G. Brush, P. Davidsson, P. G. Green, P. D. Reynolds, & H. J. Sapienza (Eds) Frontiers of entrepreneurship research: 179–190. Wellesley, MA: Babson College.

    Google Scholar 

  • Wennekers, A. R. M., van Stel, A., Thurik, A. R., & Reynolds, P. D. 2005. Nascent entrepreneurship and the level of economic development. Small Business Economics, 24 (3): 293–309.

    Article  Google Scholar 

  • Westhead, P., & Cowling, M. 1995. Employment change in independent owner-managed high technology firms in Great Britain. Small Business Economics, 7 (2): 111–140.

    Article  Google Scholar 

  • Whitley, R. D. 1991. The social construction of business systems in East Asia. Organization Studies, 12 (1): 1–18.

    Article  Google Scholar 

  • Whitley, R. D. 1992a. European business systems: Firms and markets in their national context. London: Sage Publications.

    Google Scholar 

  • Whitley, R. D. 1992b. Business systems in East Asia: Firms, markets and societies. London: Sage Publications.

    Google Scholar 

  • Whitley, R. D. 1994. Dominant forms of economic organization in market economies. Organization Studies, 15 (2): 153–182.

    Article  Google Scholar 

  • Whitley, R. D. 1996. The social construction of economic actors: Institutions and types of firms in Europe and other market economies. In R. Whitley (Ed.) The changing European firm: 39–66. London: Routledge.

    Google Scholar 

  • Whitley, R. D. 1999. Divergent capitalisms: The social structuring and change of business systems. Oxford: Oxford University Press.

    Google Scholar 

  • Whitley, R. D. 2003. Changing transnational institutions and management of international business. In M.-L. Djelic & S. Quack (Eds) Globalization and institutions: 108–133. Cheltenham: Edward Elgar.

    Google Scholar 

  • Wiklund, J., Davidsson, P., & Delmar, F. 2003. What do they think and feel about growth? An expectancy-value approach to small business managers' attitudes toward growth. Entrepreneurship Theory and Practice, 27 (3): 247–270.

    Article  Google Scholar 

  • World Economic Forum 2005. World competitiveness report. London: Palgrave Macmillan.

  • Yeung, H. W. -C. 2002. Entrepreneurship in international business: An institutional perspective. Asia Pacific Journal of Management, 19 (1): 29–61.

    Article  Google Scholar 

Download references

Acknowledgements

We contributed equally to the development of the manuscript and are listed alphabetically. We thank Shaker Zahra and three anonymous referees for their comments, and acknowledge the support of the Global Entrepreneurship Monitor Research Consortium and Vlerick Leuven Gent Management School.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Harry P Bowen.

Additional information

Accepted by Arie Y Lewin, Editor-in-Chief, 9 May 2007. This paper has been with the authors for two revisions.

Appendix

Appendix

See Table A1.

Table 3 Table a1

Rights and permissions

Reprints and permissions

About this article

Cite this article

Bowen, H., De Clercq, D. Institutional context and the allocation of entrepreneurial effort. J Int Bus Stud 39, 747–767 (2008). https://doi.org/10.1057/palgrave.jibs.8400343

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/palgrave.jibs.8400343

Keywords

Navigation