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The influence of formal institutions on the relationship between entrepreneurial readiness and entrepreneurial behaviour: A cross-country analysis

Raza, A.; Muffatto, M.; Saeed, S.

The influence of formal institutions on the relationship between entrepreneurial readiness and entrepreneurial behaviour: A cross-country analysis Thumbnail


A. Raza

M. Muffatto


Purpose: The purpose of this paper is to use a unique set of measures from Holmes et al. (2013) to clarify the relationship between entrepreneurial readiness and entrepreneurial behaviours across countries and determine whether formal institutions moderate this relationship. Design/methodology/approach: This paper uses data collected by the Global Entrepreneurship Monitor, the Index of Economic Freedom, Political Risk Services, and the Freedom House and Political Constraint Index to test a theoretical model. A multilevel analysis is performed based on set of 377,356 observations from 51 countries spanning eight years (2001-2008). Findings: The results suggest that entrepreneurial readiness has a strong relationship with entrepreneurial behaviour (as measured by entrepreneurial entry and opportunity-based entrepreneurship) and that this relationship strengthens with increases in political democracy (PD), government regulations (GR), financial capital availability (FCA) and market liquidity (ML). Research limitations/implications: The study is based on Holmes et al.’s (2013) institutions that are most important for society, uses satisfactory sample size and multi-level modelling. However, many more institutional conditions that remain to be considered might affect entrepreneurial activities. Practical implications: For policy-makers, the results show that PD, GR, FCA and ML correlate favourably with entrepreneurial behaviour when individuals have a high level of entrepreneurial readiness. Policy-makers should introduce policies that provide a secure environment to individuals to start their own ventures. Originality/value: The current study is among the first to examine the three dimensions of formal institutions—political, regulatory, and economic institutions—in a single study. Using the three dimensions, the study explains theoretically and examines empirically the effect of individual-level entrepreneurial readiness on entrepreneurial behaviour.

Journal Article Type Article
Acceptance Date May 14, 2018
Online Publication Date Feb 11, 2019
Publication Date Feb 11, 2019
Deposit Date May 23, 2018
Publicly Available Date May 23, 2018
Journal Journal of Small Business and Enterprise Development
Print ISSN 1462-6004
Publisher Emerald
Peer Reviewed Peer Reviewed
Volume 26
Issue 1
Pages 133-157
Keywords Entrepreneurial entry, Opportunity-based entrepreneurship, Entrepreneurial readiness, Formal institutions, Multilevel.
Public URL


Accepted Journal Article (847 Kb)

Copyright Statement
This article is © Emerald Group Publishing and permission has been granted for this version to appear here Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

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