Asia Pacific Journal of Management

, Volume 32, Issue 1, pp 67-94

First online:

Economic and political institutions and entry into formal and informal entrepreneurship

  • Erkko AutioAffiliated withImperial College Business SchoolDepartment of Industrial Engineering and Management, Aalto University Email author 
  • , Kun FuAffiliated withImperial College Business School

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We investigated the influence of economic and political institutions on the prevalence rate of formal and informal entrepreneurship across 18 countries in the Asia-Pacific region during the period 2001–2010. We found the quality of institutions to exercise a substantial influence on both formal and informal entrepreneurship. One standard-deviation increase in the quality of economic and political institutions could double the rates of formal entrepreneurship and halve the rates of informal entrepreneurship. The two types of institutions had a complementary effect on driving entry into formal entrepreneurship, whereas only direct effects were observed for informal entry.


Informal entrepreneurship Economic and political institutions Formal entrepreneurship Poverty Economic development