The Influence of Institutional and Conductive Aspects on Entrepreneurial Innovation: Evidence from GEM Data

Abstract

Purpose – The main purpose of this study is to improve the understanding of how different aspects of the national institutional environment may influence the level of innovative entrepreneurial activity across countries. Several institutional and conductive factors affecting a country’s capacity to support innovative entrepreneurship is explored. Design/methodology/approach – Institutional theory is used to examine the national regulatory, normative, cognitive, and conducive aspects that measure a country's ability to support innovative entrepreneurship. A cross-national institutional profile is constructed to validate an entrepreneurial innovation model. The impact of country-level national institutions on innovative entrepreneurial activity as measured by Global Entrepreneurship Monitor (GEM) data is assessed through structural equation modeling (SEM). Findings – Knowledge about the influence of specific institutional aspects on innovative entrepreneurship, and hence of institutional structures within and across countries, is enhanced. For new innovative enterprises, conductive and regulatory aspects seem to matter most. All conductive factors have a significant and positive impact on entrepreneurial activity rates. Research limitations/implications – Results could support policy makers and practitioners in evaluating government policies’ effect on innovative entrepreneurship. Interventions should target both individual attributes and context. Future research could include longitudinal designs to measure the direction of causality. Practical implications – Aspects such as regulatory institutions, and conductive factors such as ICT use and technology adoption, are important for innovation entrepreneurship development.