The Influence of Formal and Informal Institutional Voids on Entrepreneurship

2019 ◽  
Vol 44 (3) ◽  
pp. 504-526 ◽  
Author(s):  
Justin W. Webb ◽  
Theodore A. Khoury ◽  
Michael A. Hitt
Keyword(s):  
Institutional Theory ◽  
Informal Institutions ◽  
Entrepreneurial Activity ◽  
Institutional Voids ◽  
Entrepreneurial Behavior ◽  
Formal And Informal Institutions ◽  
New Space ◽  
Entrepreneurial Activities

Building new space for institutional theory, we propose how the severity of formal and informal institutional voids shapes the productivity of entrepreneurial activities within society. Our theory makes the key assumptions that voids can exist in both formal and informal institutions and that they are capable of hindering entrepreneurial behavior that is favorable to development progress. We extend new theoretical domains by conceptualizing informal institutional voids and proposing how both formal and informal institutional voids and their interaction influence two qualitative outcomes within localities: (1) the unique forms of entrepreneurial activity, and (2) the objectives underlying this entrepreneurial activity.

scholarly journals Exploring the Relationship between Formal and Informal Institutions, Social Capital, and Entrepreneurial Activity in Developing and Developed Countries

2019 ◽  
Vol 11 (2) ◽  
pp. 550 ◽  
Author(s):  
Diana Escandon-Barbosa ◽  
David Urbano-Pulido ◽  
Andrea Hurtado-Ayala
Keyword(s):  
Social Capital ◽  
Institutional Environment ◽  
Developed Countries ◽  
Informal Institutions ◽  
Social Capital Theory ◽  
Entrepreneurial Activity ◽  
Access To Credit ◽  
Formal And Informal Institutions ◽  
Entrepreneurial Activities ◽  
The Relationship

Most research on entrepreneurial activities and institutions focuses on identifying certain relationships between formal and informal institutions and entrepreneurship across economies. In this study, we advance entrepreneurship research by examining how social capital as a characteristic of the institutional environment affects the relationship between formal and informal institutions and entrepreneurial activities, differentially, in developing and developed economies. Supporting institutional theory and social capital theory, the results from our sample of 39 countries from 2001 to 2014, which contains over 30,000 identified individuals, indicate that social capital has a stronger influence in the relations between institutions and entrepreneurship. In developing countries, this influence is greater in the relationship between property rights, access to credit, subjective insecurity, and entrepreneurial activity. In developed countries, the greater effect of social capital is on the relationship between corruption and entrepreneurial activity.

scholarly journals Formal institutions and the development of entrepreneurial activity – the contingent role of corruption in emerging economies

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Arezou Harraf ◽  
Hasan Ghura ◽  
Allam Hamdan ◽  
Xiaoqing Li
Keyword(s):  
Emerging Economies ◽  
Corporate Entrepreneurship ◽  
Informal Institutions ◽  
Entrepreneurial Activity ◽  
Future Research ◽  
Formal Institutions ◽  
Business World ◽  
Content Type ◽  
Formal And Informal Institutions ◽  
Control Of Corruption

PurposeThe paper aims to analyse the interplay between formal and informal institutions' and their impact on entrepreneurship rates in emerging economies.Design/methodology/approachThis study expands previous research in examining the moderating effect of control of corruption on the relationship between formal institutions and the development of the entrepreneurial activity. The study utilizes longitudinal analyses of a dataset from 41 emerging economies over 11 years (2006–2016).FindingsFindings provided robust support for the study's hypotheses. The results suggested lower levels of corruption positively moderate the effects of a country's number of procedures and education and training on the rates of entrepreneurial activity, while negatively moderating the effects of firm-level technology absorption on the rates of entrepreneurial activity.Research limitations/implicationsThe study has considered only one particular aspect of high-growth entrepreneurship, which is newly registered firms with limited liability. Although newly registered firms are recognized as one of the critical drivers of entrepreneurial activity. Future research should seek to examine other aspects of growth-oriented entrepreneurship such as activities involving a high level of innovation, corporate entrepreneurship or technology developments.Practical implicationsThis study advanced the existing theories in the field of entrepreneurship and institutional economics as it merged the two theories as a driving framework in the design of the study in the context of emerging economies.Social implicationsThe study tested a theoretical model by expanding the number of emerging economies in the study and found comparable findings that explain factors that may influence the likelihood of individuals entering entrepreneurship.Originality/valueThis article adds to the current literature as it highlights the importance of the interplay of formal and informal institutions in determining their impact on entrepreneurship rates in emerging economies. This is of particular importance to policy-makers, and the business world as the empirical results of this study show the benefits of control of corruption in boosting entrepreneurial rates in these economies, which strive for economic diversification in their developmental endeavours.

The influence of institutional and conductive aspects on entrepreneurial innovation

2019 ◽  
Vol 32 (3) ◽  
pp. 366-389 ◽  
Author(s):  
Talah S. Arabiyat ◽  
Metri Mdanat ◽  
Mohamed Haffar ◽  
Ahmad Ghoneim ◽  
Omar Arabiyat
Keyword(s):  
Institutional Theory ◽  
Technology Use ◽  
Empirical Work ◽  
Entrepreneurial Activity ◽  
Equation Modeling ◽  
Future Research ◽  
Content Type ◽  
National Institutions ◽  
Entrepreneurial Innovation ◽  
Entrepreneurial Activities

Purpose The purpose of this paper is to improve understanding of how different aspects of the national institutional environment may influence the extent of innovative entrepreneurial activities across countries. Several institutional and conductive factors affecting a country’s capacity to support innovative entrepreneurship are 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 impacts of country-level national institutions on innovative entrepreneurial activity as measured by Global Entrepreneurship Monitor data are assessed through structural equation modeling. 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’ effects 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 information communication technology use and technology adoption, are important for innovation entrepreneurship development. Originality/value The literature on institutional theory and innovative entrepreneurship is highly limited. This study complements growing interest in empirical analysis of the effects of national institutions on innovative entrepreneurial activities and substantiates previous empirical work.

scholarly journals Tax morale and institutional theory: a systematic review

2018 ◽  
Vol 38 (9/10) ◽  
pp. 868-886 ◽  
Author(s):  
Ioana Alexandra Horodnic
Keyword(s):  
Systematic Review ◽  
Institutional Theory ◽  
Informal Institutions ◽  
Tax Morale ◽  
Content Type ◽  
Explanatory Variables ◽  
Formal And Informal Institutions ◽  
Nuanced Understanding ◽  
Salient Factor ◽  
Library Catalogue

PurposeThe purpose of this paper is to conduct a systematic review of the factors that shape tax morale. A large range of random explanatory variables identified in the literature as determinants of tax morale are synthesised and structured by drawing inspiration from the institutional theory.Design/methodology/approachTo do this, a systematic search has been conducted using a library catalogue which provides access to more than 400 databases.FindingsThe finding is that the institutional theory provides a suitable theoretical basis to explore tax morale. Indeed, all the factors until now identified as determinants of tax morale (except the control variables/socio-demographic characteristics) can be categorised either as belonging to formal institutions or to informal institutions. The most salient factor is trust, with both vertical and horizontal trust positively related to tax morale.Research limitations/implicationsThe outcome is a call for a more nuanced understanding of not only the effect of formal and informal institutions on tax morale but also how formal and informal institutions interact and alter each other and, consequently, affect tax morale.Practical implicationsThe paper seeks to encourage governments to start recognising that as low tax morale arises when a gap exists between formal and informal institutions, they need to design policy measures aimed to reduce this gap, rather than persisting with deterrence measures.Originality/valueThis is the first systematic review of the factors that influence tax morale using an institutionalist lens.

scholarly journals Institutions and Entrepreneurial Activity: The Interactive Influence of Misaligned Formal and Informal Institutions

2018 ◽  
Vol 3 (2) ◽  
pp. 393-407 ◽  
Author(s):  
Charles E. Eesley ◽  
Robert N. Eberhart ◽  
Bradley R. Skousen ◽  
Joseph L. C. Cheng
Keyword(s):  
Informal Institutions ◽  
Entrepreneurial Activity ◽  
Formal And Informal Institutions

Institutional outlook of the entrepreneurial climate in Ghana

2015 ◽  
Vol 42 (6) ◽  
pp. 566-582 ◽  
Author(s):  
Samuel Adomako ◽  
Albert Danso ◽  
Ernest Ampadu
Keyword(s):  
Conceptual Framework ◽  
Empirical Studies ◽  
Informal Institutions ◽  
Cultural Factors ◽  
Entrepreneurial Activity ◽  
Major Influence ◽  
Content Type ◽  
Formal And Informal Institutions ◽  
Entrepreneurial Climate

Purpose – Previous scholarly studies on institutions tend to create a sombre picture of institutions by ignoring to examine the antecedents of formal and informal institutions. The purpose of this paper is to overcome this limitation by proposing a conceptual framework of the antecedents of formal and informal institutions of entrepreneurial climate in a less developed market setting. Design/methodology/approach – This study builds on a comprehensive survey of the literature on institutions by using a synthesis thematic methodology to identified key scholarly studies which have been published in previous theoretical and empirical studies and proposes a conceptual framework of the role of formal and informal institutions in defining entrepreneurial climate in a developing economy’s context. Findings – The findings of the paper suggest that political factors and economic factors define formal institutions whilst socio-cultural factors define informal institutions. These factors rooted in political, economic and socio-cultural factors have a major influence on the rate and nature of entrepreneurial activity in a developing country setting. Practical implications – This paper contributes to the literature on entrepreneurship and intuitional theory by focusing on the antecedents of formal and informal institutional factors that shape entrepreneurial climate in Ghana. Originality/value – To the authors’ knowledge, this is the first review that explores the nature of entrepreneurial climate and proposes a conceptual framework of the role of formal and informal institutions in defining entrepreneurial climate in Ghana.

scholarly journals Searching for a new perspective on institutional voids, networks and the internationalisation of SMEs in emerging economies: a systematic literature review

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ofer Dekel-Dachs ◽  
Marta Najda-Janoszka ◽  
Peter Stokes ◽  
Amon Simba ◽  
Shlomo Tarba
Keyword(s):  
Institutional Theory ◽  
International Marketing ◽  
Informal Institutions ◽  
Business Networks ◽  
Institutional Voids ◽  
Content Type ◽  
New Perspective ◽  
New Research ◽  
The Impact

PurposeThis study, a systematic review, focuses on the internationalisation of small and medium-sized enterprises (SMEs) originating in developing countries. It critically analyses, evaluates and synthesises studies featuring formal and informal institutions, embedded in social and business networks, as a marketing solution for institutional voids. The review shows that current international marketing studies downplay the role of informal institutions in the internationalisation of SMEs. Thus, the authors set a new research agenda for advancing the institutional theory to account for the impact of informal institutions and networks on firm internationalisation.Design/methodology/approachThis review followed five structured stages, including framing the research questions, identifying relevant studies, assessing their quality, summarising the evidence and interpreting the findings. Based on the systematic approach, 434 papers (374 from Web of Science, 60 from Scopus) were generated. Following that, the authors applied the qualitative inclusion/exclusion criteria, which yielded 63 papers. Their analysis involved three authors, with the fourth author focusing on ensuring quality in the analysis.FindingsThe study findings invite a different line of theorising market structures and processes focusing on the role of networks as an alternative to formal institutional systems. The outcome of our review suggests that there is scope for developing the institutional theory that account for the role of informal institutions and networks.Originality/valueBased on the analysis, we call for new theorisation, in the international marketing literature, which accounts for informal networking amongst internationalising SMEs in the light of institutional voids. Thus, the authors promote novel participatory, bottom to top understanding of relationship between institutions and enterprises.

scholarly journals Cross-country start-up rates and formal incentives: a moderated mediation model of economic development and societal legitimacy

2019 ◽  
Vol 17 (1) ◽  
pp. 297-312
Author(s):  
Colin D. Reddy
Keyword(s):  
Economic Development ◽  
New Technology ◽  
Informal Institutions ◽  
Entrepreneurial Activity ◽  
World Bank Group ◽  
Moderated Mediation Model ◽  
Start Up ◽  
Formal And Informal Institutions ◽  
Market Opportunities ◽  
Bank Group

Though current research identifies which institutions are important as boundary conditions for entrepreneurship, questions remain about how they actually influence national entrepreneurial activity, particularly through start-ups. Specifically, the authors attempt to answer the following question: How do formal incentives influence the start-up rates across countries? Through a conceptual framework where formal incentives and societal legitimacy represent formal and informal institutions, respectively, the authors contribute to existing knowledge about national start-up activity by showing both the mechanism and conditions under which formal incentives increase the start-up rate. First, it is argued that formal incentives influence the start-up rate indirectly through the market opportunities available through economic development. Second, it is argued that these formal and informal institutions substitute for one another. The arguments are confirmed with a panel dataset on 57 countries from the World Bank Group Entrepreneurship Surveys and Global Entrepreneurship Monitor. A key implication of the findings is that early efforts at stimulating economic development, for example, by incentivizing foreign investments in new technology, can also kickstart the entrepreneurial activity as much as entrepreneurial activity also contributes to economic development in return.

scholarly journals Tax Morale Depreciation And Entrepreneurship Practice Outside The Formal Economy Framework: which relation?: Exploratory Study In Sidi-AMMAR Algeria

2017 ◽  
Vol 1 (1) ◽  
Author(s):  
Abderrahime Abdellaoui ◽  
Tarek DJEDDI
Keyword(s):  
Public Sector ◽  
Informal Economy ◽  
Informal Institutions ◽  
Added Value ◽  
Entrepreneurial Activity ◽  
Formal Institutions ◽  
Tax Morale ◽  
Formal Economy ◽  
The Asymmetry ◽  
Entrepreneurial Activities

This paper aims to explore the nature of the relationship between the tax morale of Algerian entrepreneurs and their practice of entrepreneurship outside the framework of the formal economy. Given the difficulty of identifying the community of the study accurately and the absence of its database, the researchers relied on non-random sampling - the purposive sample- because they allow the selection of sample members to serve the purposes of the research. Thus, face-to-face interviews were conducted with 22 micro-enterprise owners in Sidi Ameur city in the Wilaya of M'Sila. The study concluded that the asymmetry between formal institutions (the codified laws and regulations) and informal institutions (Community norms, values) in Algeria has caused a decline in the tax morale of entrepreneurs. This contradiction is due to the increase of corruption in the public sector coincided with the bureaucratic weight, as well as deterioration in the risk of detection and punishment as a result of the corruption of public sector employees. The added value of this research paper is mainly to highlight the importance of analysis based on institutional theory in explaining the phenomenon of the informal economy, in particular the clarification of the inverse relationship between tax morals and the volume of entrepreneurial activity practiced outside the framework of the formal economy. It has also contributed to providing a modern vision based on analysis of the phenomenon at several levels, rather than relying on traditional bilateral analysis (a formal economy and an informal economy). As for the recommendations, the study has produced a number of recommendations aimed at reducing the asymmetry between the formal institutions and the informal institutions, which will enhance the tax morale, which in turn will contribute to the integration of entrepreneurial activities outside the framework of the formal economy.

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