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

Charles E. Eesley (), Robert N. Eberhart (), Bradley R. Skousen () and Joseph L. C. Cheng ()
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Charles E. Eesley: Stanford University, Stanford, California 94305
Robert N. Eberhart: Santa Clara University, Santa Clara, California
Bradley R. Skousen: The Ohio State University, Columbus, Ohio
Joseph L. C. Cheng: University of Illinois at Urbana-Champaign, Champaign, Illinois 61820

Strategy Science, 2018, vol. 3, issue 2, 393-407

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; international management; entry strategies (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:orstsc:v:3:y:2018:i:2:p:393-407

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