The role of entrepreneurial intention in the institution and entrepreneurial activity linkage: Cross-country evidence

Abstract

Objective: The objective of the article is to integrate the theory of planned behaviour (TPB) to argue that entrepreneurial intention plays a moderating role in the relationship between institutions and entrepreneurial activity.

Research Design & Methods: The article uses panel data analysis conducted on a sample of 112 countries from 2001 to 2021, using data from the Global Entrepreneurship Monitor. Various panel regression techniques estimate the total early-stage entrepreneurial activity (TEA) conditional upon institutions and entrepreneurial intention.

Findings: The study found evidence of moderating effects of entrepreneurial intention in the institution and entrepreneurial activity linkage. Results revealed a negative impact of institutions on total entrepreneurial activity, with pre-existing entrepreneurial intention at the country level mitigating this impact by 4% to 50%, depending on institution dimensions. Notably, the moderating effect of entrepreneurial intention weakens over time, lasting up to two years.

Implications & Recommendations: To promote entrepreneurship, policymakers should prioritize initiatives that nurture and shape entrepreneurial intention, recognizing that the moderating effect of entrepreneurial intention weakens over time.

Contribution & Value Added: This article is the first attempt to consider entrepreneurial intention as a key construct to examine the potential moderating mechanisms between institutions and entrepreneurship, drawing on the TPB. The study uncovers a new role of entrepreneurial intention in navigating the institutional context for entrepreneurial activity.

Keywords

institutions, entrepreneurship, entrepreneurial intention, theory of planned behaviour, GEM data

Author Biography

Thi Thu Tra Pham

Associate Professor at The Business School, RMIT Vietnam, Ho Chi Minh City, Vietnam.

Van Ha Thi Cam

Lecturer at Department of Economics and Finance, The Business School, RMIT Vietnam, Hanoi, Vietnam

Duy Nguyen

Assistant professor at Department of Business Administration, Mississippi Valley State University

References

1. Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(2), 179-211. https://doi.org/10.1016/0749-5978(91)90020-T
2. Andriopoulos, C. (2003). Six paradoxes in managing creativity: An embracing act. Long Range Planning, 36, 375-388. https://doi.org/10.1016/S0024-6301(03)00071-2
3. Anokhin, S., & Schulze, W.S. (2009). Entrepreneurship, innovation, and corruption. Journal of Business Ven-turing, 24(5), 465-476. https://doi.org/10.1016/j.jbusvent.2008.06.001
4. Audretsch, D.B., Belitski, M., & Desai, S. (2019). National business regulations and city entrepreneurship in Europe: A multilevel nested analysis. Entrepreneurship Theory and Practice, 43(6), 1148-1165. https://doi.org/10.1177/1042258718774916
5. Audretsch, D.B., & Fiedler, A. (2021). The Vietnamese entrepreneurship paradox: How can entre-preneurs thrive without political and economic freedom?. The Journal of Technology Transfer, 1-19. https://doi.org/10.1007/s10961-021-09873-2
6. Bandura, A. (2001). Social cognitive theory: An agentic perspective. Annual Review of Psychology, 52(1), 1-26. https://doi.org/10.1111/1467-839X.00024
7. Baumol, W.J. (1996). Entrepreneurship: Productive, unproductive, and destructive. Journal of Business Ven-turing, 11(1), 3-22. https://doi.org/10.1016/0883-9026(94)00014-X
8. Belitski, M., Chowdhury, F., & Desai, S. (2016). Taxes, corruption, and entry. Small Business Economics, 47, 201-216. https://doi.org/10.1007/s11187-016-9724-y
9. Bosma, N., Content, J., Sanders, M., & Stam, E. (2018). Institutions, entrepreneurship, and economic growth in Europe. Small Business Economics, 51, 483-499. https://doi.org/10.1007/s11187-018-0012-x
10. Bowen, H.P., & Clercq, D. (2008). Institutional context and the allocation of entrepreneurial effort. Journal of International Business Studies, 39(4), 747-767. https://doi.org/10.1057/palgrave.jibs.8400343
11. Busse, M., & Hefeker, C. (2007). Political risk, institutions and foreign direct investment. European Journal of Political Economy, 23(2), 397-415. https://doi.org/10.1016/j.ejpoleco.2006.02.003
12. Chambers, D., & Munemo, J. (2019). Regulations, institutional quality and entrepreneurship. Journal of Regulatory Economics, 55, 46-66. https://doi.org/10.1007/s11149-019-09377-w
13. Chowdhury, F., Audretsch, D.B., & Belitski, M. (2019). Institutions and entrepreneurship quality. Entrepre-neurship Theory and Practice, 43(1), 51-81. https://doi.org/10.1177/1042258718780431
14. Davila, T., Epstein, M.J., & Shelton, R.D. (2006). The creative enterprise: Managing innovative organizations and people. Greenwood Publishing Group. Connecticut, USA.
15. De Pillis, E., & Reardon, K.K. (2007). The influence of personality traits and persuasive messages on entre-preneurial intention: A cross‐cultural comparison. Career Development International, 12(4), 382-396. https://doi.org/10.1108/13620430710756762
16. Dean, T.J., & Brown, R.L. (1995). Pollution regulation as a barrier to new firm entry: Initial evidence and implications for future research. Academy of Management Journal, 38(1), 288-303. https://doi.org/10.5465/256737
17. Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2002). The regulation of entry. The Quarterly Journal of Economics, 117(1), 1-37. https://doi.org/10.1162/003355302753399436
18. Doanh, D.C. (2021). The role of contextual factors on predicting entrepreneurial intention among Vietnam-ese students. Entrepreneurial Business and Economics Review, 9(1), 169-188. https://doi.org/10.15678/EBER.2021.090111
19. Dutta, N., & Meierrieks, D. (2021). Financial development and entrepreneurship. International Review of Economics & Finance, 73, 114-126. https://doi.org/10.1016/j.iref.2021.01.002
20. Dutta, N., & Sobel, R. (2016). Does corruption ever help entrepreneurship?. Small Business Economics, 47, 179-199. https://doi.org/10.1007/s11187-016-9728-7
21. Dutta, N., & Sobel, R.S. (2018). Entrepreneurship and human capital: The role of financial development. International Review of Economics & Finance, 57, 319-332. https://doi.org/10.1016/j.iref.2018.01.020
22. Farashah, AD. (2015). The effects of demographic, cognitive and institutional factors on development of entrepreneurial intention: Toward a socio-cognitive model of entrepreneurial career. Journal of Interna-tional Entrepreneurship, 13, 452-476.
23. Feng, Y. (2001). Political freedom, political instability, and policy uncertainty: A study of political institutions and private investment in developing countries. International Studies Quarterly, 45(2), 271-294. https://doi.org/10.1111/0020-8833.00191
24. Fogel, K., Hawk, A., Morck, R., & Yeung, B. (2006). Oxford Handbook of Entrepreneurship. Oxford University Press. Oxford, UK.
25. Fredström, A., Peltonen, J., & Wincent, J. (2021). A country-level institutional perspective on entrepreneur-ship productivity: The effects of informal economy and regulation. Journal of Business Venturing, 36(5), 106002. https://doi.org/10.1016/j.jbusvent.2020.106002
26. Friedman, B.A. (2011). The relationship between governance effectiveness and entrepreneurship. Interna-tional Journal of Humanities and Social Science, 1(17), 221-225. Retrieved from https://www.academia.edu/66330156/ on December 6, 2023.
27. Fu, K., Wennberg, K., & Falkenhall, B. (2020). Productive entrepreneurship and the effectiveness of insolvency legislation: A cross-country study. Small Business Economics, 54, 383-404. https://doi.org/10.1007/s11187-018-0040-6
28. Fuentelsaz, L., González C., Maícas, JP., & Montero, J. (2015) How different formal institutions affect opportunity and necessity entrepreneurship. BRQ Business Research Quarterly 18(4), 246-258, https://doi.org/10.1016/j.brq.2015.02.001
29. Herrera-Echeverri, H., Haar, J., & Estévez-Bretón, J.B. (2014). Foreign direct investment, institutional quality, economic freedom and entrepreneurship in emerging markets. Journal of Business Research, 67(9), 1921-1932. https://doi.org/10.1016/j.jbusres.2013.11.020
30. Hanoteau, J., & Vial, V. (2020). Institutional quality, conforming and evasive entrepreneurship. Eurasian Business Review, 10(1), 97-121. https://doi.org/10.1007/s40821-020-00151-z
31. Kautonen, T., Gelderen, V.M., & Fink, M. (2013). Robustness of the Theory of Planned Behavior in Predicting Entrepreneurial Intentions and Actions. Entrepreneurship Theory and Practice, 39(3), 655-674. https://doi.org/10.1111/etap.12056
32. Kerr, W.R., & Nanda, R. (2011). Financing constraints and entrepreneurship. NBER working paper. https:/doi.org/10.3386/w15498h
33. Khalilov, L., & Yi, C.D. (2021). Institutions and entrepreneurship: Empirical evidence for OECD countries. Entrepreneurial Business and Economics Review, 9(2), 119-134. https://doi.org/10.15678/EBER.2021.090208
34. Khyareh, M.M. (2017). Institutions and entrepreneurship: The mediating role of corruption. World Journal of Entrepreneurship, Management and Sustainable Development, 13(3), 262-282. https://doi.org/10.1108/WJEMSD-09-2016-0045
35. Khyareh, M.M. (2023). Entrepreneurship and Economic Growth: The Moderating Role of Governance Quali-ty. FIIB Business Review, 23197145231154770. https://doi.org/10.1177/23197145231154767
36. Kinnunen, J., Georgescu, I., & Hosseini, Z. (2022). Drivers of entrepreneurial activity at micro and meso lev-els: a fuzzy time-series analysis. In Intelligent and Fuzzy Techniques for Emerging Conditions and Digital Transformation: Proceedings of the INFUS 2021 Conference, held August 24-26, 2021. Volume 2 (pp. 423-430). Springer International Publishing.
37. Kolvereid, L., & Isaksen, E. (2006). New business start-up and subsequent entry into self-employment. Jour-nal of Business Venturing, 21(6), 866-885. https://doi.org/10.1016/j.jbusvent.2005.06.008
38. Krueger Jr, N.F., Reilly, M.D., & Carsrud, A.L. (2000). Competing models of entrepreneurial intentions. Journal of Business Venturing, 15(5-6), 411-432. https://doi.org/10.1016/S0883-9026(98)00033-0
39. Krueger, N. (1993). The impact of prior entrepreneurial exposure on perceptions of new venture feasibility and desirability. Entrepreneurship Theory and Practice, 18(1), 5-21. https://doi.org/10.1177/104225879301800101
40. Leszczensky, L., & Wolbring, T. (2022). How to deal with reverse causality using panel data? Recommenda-tions for researchers based on a simulation study. Sociological Methods & Research, 51(2), 837-865. https://doi.org/10.1177/0049124119882473
41. Lv, Z., Rodríguez-García, M., & Sendra-García, J. (2021) Does institutional quality affect the level of entrepre-neurial success differently across the entrepreneurship distribution?. Review of Managerial Science, 15, 937-955. https://doi.org/10.1007/s11846-020-00383-3
42. Marvel, M.R., Davis, J.L., & Sproul, C.R. (2016). Human capital and entrepreneurship research: A critical re-view and future directions. Entrepreneurship Theory and Practice, 40(3), 599-626. https://doi.org/10.1111/etap.12136
43. Miao, C., Gast, J., Laouiti, R., & Nakara, W. (2022). Institutional factors, religiosity, and entre-preneurial activity: A quantitative examination across 85 countries. World Development, 149, 105695. https://doi.org/10.1016/j.worlddev.2021.105695
44. Munemo, J. (2012). Entrepreneurship in developing countries: Is Africa different?. Journal of Developmental Entrepreneurship, 17(01), 1250004. https://doi.org/10.1142/S1084946712500045
45. Nikolaev, B.N., Boudreaux, C.J., & Palich, L. (2018). Cross‐country determinants of early‐stage necessity and opportunity‐motivated entrepreneurship: Accounting for model uncertainty. Journal of Small Business Management, 56, 243-280. https://doi.org/10.1111/jsbm.12400
46. North, D.C. (1990). A transaction cost theory of politics. Journal of Theoretical Politics, 2(4), 355-367. https://doi.org/10.1177/0951692890002004001
47. Nyström, K. (2008). The institutions of economic freedom and entrepreneurship: Evidence from panel data. Public Choice, 136, 269-282. https://doi.org/10.1007/s11127-008-9295-9
48. Primo, D.M. (2008). Rules and restraint: Government spending and the design of institutions. University of Chicago Press.
49. Radipere, N.S., & Ladzani, W. (2014). The effects of entrepreneurial intention on business performance. Journal of Governance and Regulation, 3(4), 190-202. Retrieved from https://uir.unisa.ac.za/handle/10500/20091 on December 6, 2023.
50. Salimath, M.S., & Cullen, J.B. (2010). Formal and informal institutional effects on entrepreneurship: A synthesis of nation‐level research. International Journal of Organizational Analysis. https://doi.org/10.1108/19348831011062175
51. Sobel, R.S. (2008). Testing Baumol: Institutional quality and the productivity of entrepreneurship. Journal of Business Venturing, 23(6), 641-655. https://doi.org/10.1016/j.jbusvent.2008.01.004
52. Stigler, G.J. (2021). The theory of economic regulation. In The political economy: Readings in the politics and economics of American public policy (pp. 67-81). Routledge.
53. Tsai, K.H., Chang, H.C., & Peng, C.Y. (2016). Refining the linkage between perceived capability and entrepre-neurial intention: Roles of perceived opportunity, fear of failure, and gender. International Entrepre-neurship and Management Journal, 12(4), 1127-1145. https://doi.org/10.1007/s11365-016-0383-x
54. Urbano, D., Aparicio, S., & Audretsch, D. (2019). Twenty-five years of research on institutions, entrepreneurship, and economic growth: What has been learned?. Small Business Economics, 53, 21-49. https://doi.org/10.1007/s11187-018-0038-0
55. Wach, K., & Wojciechowski, L. (2016). Entrepreneurial Intentions of Students in Poland in the View of Ajzen’s Theory of Planned Behaviour. Entrepreneurial Business and Economics Review, 4(1), 83-94. https://doi.org/10.15678/EBER.2016.040106
56. Wood, M.S., Bylund, P., & Bradley, S. (2016). The influence of tax and regulatory policies on entrepreneurs’ opportunity evaluation decisions. Management Decision, 54(5), 1160-1182. https://doi.org/10.1108/MD-10-2015-0446
57. Xu, L.C. (2011). The effects of business environments on development: Surveying new firm-level evidence. The World Bank Research Observer, 26(2), 310-340. https://doi.org/10.1093/wbro/lkq012