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

See all articles by Charles E. Eesley

Charles E. Eesley

Stanford University - Management Science & Engineering

Robert Eberhart

Santa Clara University - Department of Management

Brad Skousen

University of Illinois at Urbana-Champaign

Joseph L.C. Cheng

University of Illinois at Urbana-Champaign - Department of Business Administration

Date Written: November 29, 2017

Abstract

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

Eesley, Charles E. and Eberhart, Robert and Skousen, Brad and Cheng, Joseph L.C., Institutions and Entrepreneurial Activity: The Interactive Influence of Misaligned Formal and Informal Institutions (November 29, 2017). 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.. Available at SSRN: https://ssrn.com/abstract=2608793 or http://dx.doi.org/10.2139/ssrn.2608793

Charles E. Eesley

Stanford University - Management Science & Engineering ( email )

473 Via Ortega
Stanford, CA 94305-9025
United States

HOME PAGE: http://chuckeesley.com

Robert Eberhart (Contact Author)

Santa Clara University - Department of Management ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States
408-554-4574 (Phone)

HOME PAGE: http://www.scu.edu/business/management/faculty/eberhart.cfm

Brad Skousen

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

Joseph L.C. Cheng

University of Illinois at Urbana-Champaign - Department of Business Administration ( email )

1206 South Sixth Street
339 Commerce West
Champaign, IL 61820
United States
(217) 333-2963 (Phone)

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