 The institutional-ideological matrix: how freedom and ideology shape opportunity-to-necessity entrepreneurshipDiana M. Hechavarría () and
Siri Terjesen ()
Small Business Economics, 2025, vol. 65, issue 4, No 5, 2179-2215 Abstract: Abstract Why do some nations exhibit opportunity-driven entrepreneurship while others show necessity-driven ventures? This study introduces the institutional-ideological matrix framework examining how economic, political, and legal freedoms interact with cultural ideologies of authority and well-being to shape entrepreneurial motivations. Using panel fixed-effects regression on 721 observations from 109 countries (2006–2018), combining Global Entrepreneurship Monitor, Atlantic Council Freedom Index, World Values Survey, and World Bank data, we identify four distinct contexts: Progressive Modern, Progressive Traditional, Conservative Developing, and Pragmatic Transitional societies. Contrary to prevailing assumptions, increased freedoms can decrease opportunity entrepreneurship in Progressive Modern contexts, and surprisingly increasing opportunity entrepreneurship in Conservative Developing contexts. Our findings demonstrate that cultural ideologies function as interpretive frameworks that amplify, neutralize, or reverse institutional effects on entrepreneurial behavior. This challenges universal institutional theory, showing that freedom-entrepreneurship relationships are contingent on cultural contexts, with important implications for context-specific entrepreneurship policies. Plain English Summary. Freedom does not automatically lead to more opportunity-driven entrepreneurship in a country, it depends on a country’s ideologies. This study of 109 countries reveals that the relationship between freedoms (economic, political, and legal) and the ratio of opportunity-to-necessity entrepreneurship varies dramatically based on cultural ideologies about authority (traditional vs. secular-rational values) and well-being (survival vs. self-expression values). Surprisingly, in highly developed societies with secular-rational and self-expression values, increased economic freedom actually decreases opportunity entrepreneurship, while in traditional developing societies, it has the opposite effect. Political freedom shows the strongest and most consistent positive effects across different cultural contexts. These findings challenge the widespread assumption that “more freedom is always better” for entrepreneurship and suggest that successful entrepreneurship policies must be tailored to specific cultural contexts. Thus, the principal implication is that policymakers should design freedom-enhancing reforms that align with their society’s cultural ideologies rather than adopting one-size-fits-all approaches to promoting opportunity entrepreneurship. Keywords: Entrepreneurship; Institutional theory; Cultural ideology; Opportunity entrepreneurship; Necessity entrepreneurship; Economic freedom; Political freedom; Legal freedom; Cross-cultural entrepreneurship (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:65:y:2025:i:4:d:10.1007_s11187-025-01083-6 Ordering information: This journal article can be ordered from DOI: 10.1007/s11187-025-01083-6 Access Statistics for this article Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch More articles in Small Business Economics from Springer |
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