Resumo

Researchers generally agree that institutions are important to entrepreneurship and determine the set of payoffs that society offers to these activities, therefore, scholars have been focusing on how to increase entrepreneurship prevalence and allocate it productively. To this extent, the Country Institutional Profile has been used for empirical studies comparing institutional impact on entrepreneurship among countries (Arabiyat et al., 2019; Urban, 2019).

The research problem is about understanding how differently does the institutional environment affects the prevalence, as well as some qualitative aspects, that indicate productive entrepreneurship, in developed and developing economies. The specific objectives are analyzing the relationship between cognitive, normative, and regulatory institutions and entrepreneurial activity; and comparing the impact of institutions associated with entrepreneurship between developing and developed countries.

The hypothesis of this study were built upon the theoretical background of the restraining impact of institutions (North, 1991) on each country’s entrepreneurial activity, which impacts both the prevalence of entrepreneurship and its type. All the three baseline hypotheses are anchored on the pillars of the CIP. Also, hypothesis on level a considers that institutions impacts productive entrepreneurship (Burns & Fuller, 2020). On level b, hypothesis state that institutional impacts are heterogeneous between developed and developing countries.

The methodological approach consisted in fixed-effects panel data regressions being applied on the Global Entrepreneurship Monitor Data, from 2003 to 2019, comprising 112 countries, on an integrative and longitudinal approach, that allowed studying the entrepreneurship institutional determinants and outcomes at the same time. Countries were classified into developing and developed economies according to the criteria of the World Economic Forum (WEF).

Findings support that cognitive institutions impact positively on total entrepreneurship, whereas the impact of normative and regulatory dimensions could not be supported. Results also indicate that a better institutional environment does not maximize productive entrepreneurship. Moreover, institutional effects among developing and developed countries are partially heterogeneous, since the impact of informal institutions in developing countries was found to be higher.

Our results indicate that the cognitive dimension influences positively on total entrepreneurship, and therefore an education that enhances individuals’ cognition towards productive entrepreneurship should be enhanced. Another contribution is our empirical evidence that institutional quality does not maximize productive entrepreneurship, drawing attention to the fact that macroeconomic policies for this matter are mostly inefficient, and policymakers should be looking only to specific effects, such as lowering taxation for innovative and high-growth SMEs.

Arabiyat, T. S., Mdanat, M., Haffar, M., Ghoneim, A., & Arabiyat, O. (2019). The influence of institutional and conductive aspects on entrepreneurial innovation: Evidence from GEM data. Journal of Enterprise Information Management, 32(3), 366–389. Burns, S., & Fuller, C. S. (2020). Institutions and entrepreneurship: Pushing the boundaries. Quarterly Journal of Austrian Economics, 23(3–4), 568–612. North, D. C. (1991). Institutions Douglass. Journal of Economic Perspectiv, 5(1), 97–112.