Institutions and Entrepreneurial Activity: The Interactive Influence of Misaligned Formal and Informal Institutions
Eesley, Charles E., et al. "Institutions and Entrepreneurial Activity: The Interactive Influence of Misaligned Formal and Informal Institutions." Strategy Science 3.2 (2018): 393-407.
36 Pages Posted: 23 May 2015 Last revised: 10 Aug 2018
Date Written: November 29, 2017
We contribute to the institutions and entrepreneurship literature by examining the interactive influence of formal and informal institutions on new business creation, survival, and growth. Prior literature demonstrates how formal and informal institutions shape the level of entrepreneurship. This paper extends this to examine the cases when formal and informal institutions conflict with one another to cast an analytic eye on why countries differ in the type of entrepreneurial activity in terms of entry, survival, and growth. We argue that national and regional differences can be better explained by the interactive influence of formal and informal institutions. Moreover, we argue that informal institutions dominate formal institutions due to the former’s characteristics of deep embeddedness and resistance to change over time. These ideas are presented and summarized into a typology of institutional effects on entrepreneurship activity depending on the combination of formal and informal institutions. The paper concludes with implications for future theory and research on the joint influence of different institutional effects and particularly on the intersection between institutions and entrepreneurship.
Keywords: Entrepreneurship, Institutional Theory, Regulatory Change, International Environments
JEL Classification: O57, L51
Suggested Citation: Suggested Citation