The institutional approach to entrepreneurship research. Introduction

Editorial

Abstract

The main argument of the presentation of this special issue is that entrepreneurship research based on institutional theory is a promising field of research. After a brief explanation of the nature, scope and philosophical foundation of institutional theory and the distinction between old and new institutionalism, an attempt is made to justify why entrepreneurship research using the institutional approach is promising. A reference to some previous research in this field illustrates not only its potential but also the long tradition in institutional economics. A brief reference to the content of each of the articles included in this special issue closes this presentation.

Keywords

Institutional theory institutional economics entrepreneurship research. 

Problem statement and objective

Entrepreneurship research in the last twenty years has undergone a fundamental shift on focus. Whereas in the seventies and eighties the focus was on the characteristics of the entrepreneur and the attempt to explain entrepreneurship through the psychological traits of the entrepreneur, entrepreneurship research in the last 20 years has been more diversified. Anyhow, although most scholars emphasize the role of the environment and the environmental/institutional context, according to Veciana’s analysis of the papers presented at the RENT conference during the last 20 years research based on the socio-cultural/institutional approach has been low compared to the high percentage of papers under the managerial approach as Table 1 shows (Veciana 2006). A survey of the articles published in the leading entrepreneurship journals brought about similar results.
Table 1

Research trends based on RENT papers

Period (%)

Economic Approach (%)

Psychological approach (%)

Sociocultural/Institutional approach (%)

Managerial approach (%)

Other (%)

1987–1991

10.4

6.4

3.2

54.0

19.5

1991–1996

10.0

5.6

14.6

61.0

7.6

1997–2001

10.8

2.3

19.1

57.0

10.8

2002–2006

7.3

2.2

15.2

58.8

16.5

Source: Veciana (2006)

As environments become more complex and diversified and the countries more interconnected through the increasing globalization the differences in economic performance and development among the different countries increase. So does the level of entrepreneurship across the countries and continents as can be seen in Fig. 1.
Fig. 1

TEA (Total Entrepreneurship Activity) in OECD countries (source: Bosma et al. 2008)

Therefore it seems that the study of the environmental/institutional context of a country and its relationship to the several aspects of entrepreneurship should be of paramount importance. This special issue on The Institutional Approach to Entrepreneurship Research is devoted to it.

In this introduction we will first treat the nature, scope, and the philosophical foundations of Institutional theory.

In “Origins, developments and variations in institutional theory” we will briefly refer to the developments and variations in institutional theory.

Institutional theory and entrepreneurship research” will give some information on the entrepreneurship research that has been made on the grounds of institutional theory.

The last section presents the content of this special issue.

The nature, scope and the philosophical foundations of institutional theory

The study of institutions is one of the most enduring interests in the social sciences. All the major disciplines—anthropology, economics, political science, psychology, and sociology—have become engaged and each has given its particular thrust and contour to the current (Scott 1994:55). Needless to say that our focus here will mainly be on institutional economics.

In a broad sense institutions are clusters of moral beliefs that configure power. This broad concept can be derived from Ayers’s observations that institutions commonly share the attribute of designating authority, usually in a rank order or hierarchical system. Ayres also notes that this authority is not backed primarily by sheer force but most importantly by custom or a cluster of mores (Ayres 1952:43). Also Veblen writes that an institution is “a usage which has become axiomatic and indispensable by habituation and general acceptance” (Veblen 1967:101).

Institutions are according to North the humanly devised constraints that structure political, economic and social interaction. They consist of both informal constraints (values, norms, sanctions, taboos, customs, traditions, and codes of conduct), and formal rules (constitutions, laws, economic rules, property rights, and contracts). Through history, institutions have been devised by human beings to create order and reduce uncertainty in exchange. Together with standard constraints of economics they define the choice of set and therefore determine transaction and production cost and hence the profitability and feasibility of engaging in economic activity. They evolve incrementally, connecting the past with the present and the future; history in consequence is largely a story of institutional evolution in which the historical performance of economies can only be understood as a part of a sequential story. Institutions provide the incentive structure of an economy; as that structure evolves, it shapes the direction of economic change towards growth, stagnation, or decline (North 1991:97).

According to Scott (1994:56), institutions are viewed as made up of three component elements:
  1. 1.

    Meaning systems and related behaviour patterns, which contain

     
  2. 2.

    Symbolic elements, including representational, constitutive and normative elements, that are

     
  3. 3.

    Enforced by regulatory processes

     

Therefore Scott (1995:33) suggests that institutions consist of “cognitive, normative and regulative structures and activities that provide stability and meaning in social behaviour” and that “institutions are transported by various carriers—cultures, structures, and routines—and they operate at multiple levels of jurisdiction”.

The regulatory dimension or component of the institutional profile consists of laws, regulations, rules, and government policies in a particular national environment which promote certain types of behaviour and restrict others. The regulative processes consist of rule-setting, monitoring, and sanctioning activities. In this conception, regulative processes involve the capacity to establish rules, inspect or review others’ conformity to them, and as necessary, manipulate sanctions—reward and punishments- in a an attempt to influence future behaviour.

The normative dimension or component consists of social norms, values, beliefs, and assumptions about human nature and human behaviour that are socially shared and carried by individuals. It is also often called “culture”. Normative systems define goals or objectives (e.g. winning the game or making a profit) but also designate the appropriate ways to pursue them (e.g. conceptions of fair business practices).

The cognitive dimension or component reflects the cognitive structures and social knowledge shared by the people in a given country or region. The cognitive elements of institutions are the rules that constitute the nature of reality and the frames through which meaning is made. Cognitive structures affect the cognitive programs, i.e. schemata, frames, and inferential sets, which people use when selecting and interpreting information (Markus and Zajonc 1985).

The above mentioned three pillars elicit three related but distinguishable bases of legitimacy. The regulative emphasis is on conformity to rules. Legitimate organizations are those established by and operating in accordance with relevant legal or quasi-legal requirements. A normative conception stresses a deeper, moral base for assessing legitimacy. Normative controls are much more likely to be internalized than are regulative controls, and the incentives for conformity are hence likely to include intrinsic as well extrinsic rewards. The cognitive view stresses the legitimacy that comes from adopting a common frame of reference or definition of the situation (Scott 1995:47).

North makes a crucial distinction between institutions and organizations. The institutions set the rule and define the way the game is played whereas the organizations are the players. Organizations provide a structure for human interaction. Organizations include political bodies (political parties, government at the national, regional and municipal level, regulatory agency), economic bodies (firms, trade unions, cooperatives), social bodies (church, clubs, professional associations, and educational bodies (schools, universities, vocational training centres). They are groups of individuals bound by some common purpose to achieve objectives. If institutions are the rules of the game, organizations and their entrepreneurs are the players (North 1993:3–5).

The organizations that come into existence will reflect the opportunities provided by the institutional matrix. That is, if the institutional framework rewards piracy then piratical organizations will come into existence and if the institutional framework rewards productive activities then organizations—firms—will come into existence to engage in productive activities (North 1993:4). We can add if the institutional environment rewards technology based new firms and spin-offs then potential high growth new firms will be created.

There are three basic ideas in the core term institutions which are worth emphasizing in this context because they constitute the philosophical foundations of institutional theory. First, institutions are based on values. Second, the life process and therefore also the economy is a process of change and development. Third, man is a social product.

First, although for practical reasons, specially for research purposes, it is reasonable to distinguish between formal and informal institutions as North (1990) does, or the Scott’s three pillars, it is important to keep in mind that even formal institutions reflect the values of a society that have been reinforced by laws and regulatory norms. The difference between informal and formal institutions is one of degree and can be envisaged as a continuum from taboos, customs, and traditions at one end to written constitutions at the other (North 1990:46).

Second, life process is a process of change. Whereas conventional economics is concerned with equilibrium, institutional economics assume that human wants and technology change, but they do not change by virtue of some natural law working without human agency: they change by virtue of influences that are endogenous to the human social system. Since the human social system is fundamentally a system of power and habit these changes emerge from the exercise of power and habit (Stanfield 1999:234). Therefore, the main concern of institutional theory is the process of institutional adjustment. Human society is holistic and interdependent; changes ramify throughout the system, especially those involving the technology by which the human species necessarily reproduces itself as a set of new issues of individual behaviour, law, ethics, policy, education, and so on. The recent public clamour over suggestions of human cloning is an evident case in point (Stanfield 1999:235).

North’s theory of institutional change emphasizes entrepreneurial responses to changes in the economic situation as the causal forces for explaining changes in institutions. But North also recognizes that growth and improvement are not inevitable. Path dependence can also lead to stagnation or decline. This is because institutions are not established for their social efficiency. Instead they are established to serve the interests of those who are powerful enough to establish them (North 1990:74–78).

Third, man is a social product. Ayres’s theory of human nature stresses the fact that man is a social product. His beliefs, attitudes, and wants reflect the impact of the cultural environment and the social forces at work within the environment. Ayres observes that “A separate individual is a phenomenon unknown to experience” (Ayres 1962: 91). Man has no “inner original nature” untouched by cultural forces. On the contrary all human wants and values are social or cultural in origin. Man is an active, problem-solving individual who is endowed with a “creative intelligence”, but he is also a creature of custom and habit. He too frequently accepts the traditional beliefs and values passed on to him by the institutional complex of the social system. Human behaviour directed by inherited beliefs and attitude and not by the appeal to scientific evidence is frequently irrational behaviour. Since society’s institutional complex is resistant to change and backward looking in its beliefs, attitudes and values, it becomes an obstacle to behaviour that could enlarge individual and social well-being (Gruchy 1972: 97–98).

Veblen already pointed out that institutional patterns are seen as resistant to change, both because reversing the force of habit requires effort and because technologically mandated social change may threaten the existing power and status configuration. This push and pull brings in its wake problems of institutional maladjustment and this maladjustment or cultural lag can have dramatic consequences and restrict realization of the potential flow of real income (Stanfield 1999:235).

Origins, developments and variations in institutional theory

The institutional arguments arose in Germany in the late nineteenth century as one by product of the famous Methodenstreit on the debate about scientific method between the defenders of the historical school and the conventional economics. The historical school insisted that economic processes operated within a social framework that was in turn shaped by a set of cultural and historical forces (Scott 1995: 2).

The “founders” of institutionalism are considered to be Thorstein Veblen, Wesley Mitchell, and John R. Commons. Veblen provided much of the intellectual inspiration for institutionalism, Mitchell was deeply involved in the early development of institutionalism as a definite movement, and Commons came into the institutionalist picture a little later, after 1924 (Rutherford 2000). These authors are called the “old institutionalists”.

Veblen (1898/1961) was highly critical of the underlying economic assumptions regarding individual behaviour and the “homo economicus”. Veblen insisted that much behaviour was governed by habit and convention. “Not only is the individual’s conduct hedged about and directed by his habitual relations to his fellows in the group, but these relations, being of an institutional character, vary as the institutional scene varies”.

Veblen’s analytical scheme is one of “cumulative causation” in which each step in institutional evolution is shaped by what went before. Existing institutions and social norms mould behaviour, and the goals and incentives set up may lead either to “predatory” or productive types of activity (Veblen 1914). The prevailing habits of thought and the incentive system also affect the pace and direction of learning and it is new knowledge, in Veblen’s case particularly technological knowledge that brings about shifts in the basic pattern of life and, ultimately, alterations in institutions and cultural norms (Rutherford 1995: 447).

Commons also challenged the conventional emphasis on individual choice behaviour, suggesting that a more appropriate unit of economic analysis was the “transaction” a concept barrowed from legal analysis. “The transaction is two or more wills giving, taking, persuading, coercing, defrauding, commanding, obeying, competing, governing in a world of scarcity, mechanisms and rules of conduct” (Commons 1924: 7).

Jacoby (1990) argues that the approaches offered by the early institutionalists departed from those adopted by their mainstream, neoclassical colleagues in four important respects:

Indeterminacy versus determinacy

Whereas the orthodox economic model assumed “perfect competition and unique equilibria, the institutionalists pointed to pervasive market power and to indeterminacy even under competition.

Endogenous versus exogenous determination of preferences

Neoclassical theorists considered individual preferences or wants as given and exogenous to the realm of economic need satisfaction dominated by efficiency forces, whereas institutionalists argued that such preferences were shaped by social institutions, whose operation should be the subject of economic analysis.

Behavioral realism versus simplifying assumptions.

Institutional theorists argued that orthodox economists should use more pragmatic and psychologically realistic models of economic motivation and behaviour rather than subscribe to utilitarian assumptions.

Diachronic versus synchronic analysis

Rather than assuming the “timeless and placeless” assumptions of the neoclassical theorists, institutionalists insisted that economists should ascertain “how the economy acquired its features and the conditions that cause these features to vary over time and place” (Jacoby 1990: 318–320).

In old institutionalist discussions, the problem of reconciling the rational with the socially conditioned aspects of human behaviour occupies a central place.

The term of “new institutional economics” refers to the tradition of work stemming primarily from the transaction cost approach of Ronald Coase (1937), Oliver Williamson (1975), and Douglas North (1990, 2005).

The old and new institutionalisms are both programs of research that arose out of a concern with the almost complete lack of consideration given to institutions in conventional neoclassical economics. That institutions matter in shaping economic behaviour and economic performance is a central tenet of both the old and the new institutionalism, as is the recognition that institutions themselves change over time and often respond to economic factors. For old institutionalists the neoclassical approach with its emphasis on the rational economic actor is to be abandoned in favour of one that places economic behaviour in its cultural context. For most new insitutionalists the standard approach based on the rational choice model is to be extended and modified but not abandoned (Rutherford 1995:443).

New institutional economics consists in large part of transactions cost analysis of property rights, contracts and organizations. It is an attempt to extend the range of neoclassical theory by explaining the institutional factors traditionally taken as givens, such as property rights and governance structures, and, unlike the old institutionalism, not as an attempt to replace the standard theory (Eggertsson 1990; Furubotn and Richter 1991, 1997). In this literature, institutions and institutional change have generally been analyzed as ways of reducing transactions costs, reducing uncertainty, internalizing externalities, and producing collective benefits from coordinated or cooperative behaviour.

Anyhow, the work of North (1990) has gone beyond his original efficiency explanation of institutional change and has come to make extensive mention of the importance of “mental models”, norm-guided behaviour, and ideological convictions. North (1981:58) has argued that “the simple fact that the dynamic theory of institutional change limited to the strictly neoclassical constraint of individualistic, rational purposive activity would never allow us to explain most secular change ranging from the stubborn struggle of the Jews in antiquity to the passage of the Social Security Act in 1935”.

Therefore, the new institutionalism has worked to stimulate significant discussion not only of formal rules and governance structures, but also of informal norms and social networks, and the relationship between them. In this sense, there seems to be some degree of convergence with the ideas of the old institutionalists.

Institutional theory and entrepreneurship research

We now turn to the basic question in this context: how can institutional theory explain entrepreneurship? Based on the above considerations we can now better understand why institutional theory is an important tool to explain entrepreneurship and guide entrepreneurship research.

Environment is evolving and changing. This change produces opportunities. But opportunities are not out there as objective entities open to the eyes of all people. “Opportunities are situations in which a potentially profitable ends-means framework can be formed. They are therefore the potential subject of discovery by entrepreneurs having the necessary idiosyncratic knowledge” (Shane 2000). This includes a questioning of the idea of an independent physical reality, which our language refers to, and which determines the truth value of statements. It is the entrepreneur who identifies opportunities and redefines reality. As Kirzner has pointed out the entrepreneur is the person who is alert to business opportunities that have not been identified by others (Kirzner 1973).

The rejection of the idea that entrepreneurship is about attributes of particular people, the entrepreneur, what is referred to as the “psychological approach” has led to consider the institutional approach to entrepreneurship research as a much more promising approach to explain the phenomenon of entrepreneurship (Veciana 1999, 2007).

In the opportunity theory developed by Shane the objective component of opportunities means that the entrepreneurial process starts with the perception or discovery of an opportunity (Shane 2003). This makes individual cognition a key question in entrepreneurship research (Gaglio and Katz 2001). It also entails a specific anthropology of the actor. The anthropology of opportunity theory works from a classic scheme: the active subject acting on a passive object existing in an independent physical reality. “Moreover entrepreneurship requires a decision by a person to act upon an opportunity because opportunities themselves lack agency” (Shane 2003: 7). Agency is thus the privilege of individuals. However, if the opportunity does not posses the objectivity entailed by existing prior to discovery but rather an exteriority produced by the entrepreneurial process, then the modernist scheme begins to crack, and we might ask what kind of subjectivity we are talking about in the entrepreneurial process (Korsgaard 2007:10).

Poststructuralists have argued that we need a shift of focus from the subject as an entity to subjectivization of a process. Instead of taking the autonomous individual as a given, these writers seek to disclose the becoming of the subject. That is: the Cartesian subject is a construction of sorts, produced in a particular cultural context, and a taking a number of different forms through western history. This is illustrated in the works of Foucault (2005), Royle (2003) and Derrida (2001) among others. This approach would imply a shift from seeing the entrepreneur as an autonomous and given actor entering a series of transactions (with a given profile), which constitute entrepreneurship, to focusing on the process of becoming entrepreneur. This process of becoming entrepreneur can be explained through the institutional theory. The process of becoming entrepreneur is highly conditioned by the formal and informal institutions. According to North, “the agent of change is the individual entrepreneur responding to the incentives embodied in the institutional framework (North 1990:83).

In the field of entrepreneurship the concern should be how the institutional context affects—promote or inhibit—the emergence of entrepreneurs, the rate of new firms creation, and new firm growth and development.

In the domain of entrepreneurship we can distinguish between the older and the new research. The former focused mainly on the socio-cultural effects on entrepreneurship, took an historical perspective and used mainly a qualitative methodology. On the contrary, new research is much more diversified regarding both research topics and methodology and has two additional characteristics: (a) it refers mainly to developing, emerging or transition economies and (b) research on public policy and support programs prevails.

We will hereunder comment on some research. Our main purpose is to illustrate the type of research that has been done in this field and not to provide an exhaustive literature review on the research applying the institutional approach.

Among the older research undoubtedly the first author in pointing to and probing the entrepreneurial phenomenon from a socio-cultural perspective was Max Weber in his book “The Protestant Ethic and the Spirit of Capitalism” (Weber 1964). According to this author, the behaviour of the capitalist-entrepreneur is strongly conditioned by religious beliefs. M. Weber’s thesis has been empirically confirmed through investigations by Carroll (1965), Jeremy (1984) and Singh (1985). Another paradigmatic publication is the study by Cochran (1960) of the effect of cultural differences on the entrepreneurial behaviour in which he compared the USA with three Lain American countries (Mexico, Puerto Rico and Argentina).

Schmölders’ publication in 1971 on “Der Unternehmer im Ansehen der Welt” (Entrepeneur’s Prestige in the World) covering the main counties (USA, Germany, UK, France, Japan, India) showed how large the differences among the several countries were and how the entrepreneur’s image has been influenced by the intellectuals, educators and trade unionists.

Also research on university students’ attitudes toward entrepreneurship has been a favourite subject of research since the pioneering work by Genescà and Veciana (1984). It has been replicated several times in Spain (Rubio et al. 1999, Diaz 2003; Urbano 2003) and also probed in other countries (Autio et al. 1997; Veciana et al. 2005, etc.)

More recent international entrepreneurship researchers have brought additional evidence on the effect of informal constraints on venture creation and economic development (Dana 1987, 1990). Other authors have used the country institutional profile developed by Kostova (1997) consisting of the three Scott’s pillars to show the differences between the entrepreneurial orientation of several countries residents (Tiessen 1997; Busenitz et al. 2000; Dickson and Weaver in this issue).

The formal constraints or the regulatory dimension, as we have mentioned above, consists of laws, regulations, and government policies that can either enhance, support or inhibit entrepreneurship; they increase or reduce the risks for individuals starting a new firm, and facilitate entrepreneurs’ efforts to acquire resources. For instance, property rights, regulation on contracts or social security systems can make the creation or a new firm more attractive or more risky.

Research on the impact of the regulatory dimension or formal constraints has been scarce and, as mentioned above, refers mainly to developing, emerging or transition economics and on public policy and support programs. As a research that refers to the whole regulatory system is Nee’s research (1992) worth mentioning. He applies the new institutional perspective to analyse the interaction between government, enterprise and market forces to a dynamic model of market transition in China. Nee and Young (1991) analyse the effect of turbulence caused by bureaucratic mobilization on private enterprises in the “second economy” in China. By second economy they mean the entire range of economic activity outside of the formal, centrally planned economy, including private construction, manufacturing, commerce, transport, handicrafts, repairs, services, etc. whose off-hours work is for private gain and is predominantly rural in composition, and its basic units are the peasant household firms. Litwack (1993) analysed the creation of fiscal legality in the economies of the former USSR. Brautigam (1997) examines the dynamic industrialization experience in one town, Nnewi, part of the eastern Nigeria’s “industrial axis” showing how Nnewi industrialists successfully filled the gap left by failures of both the market and the state. Stephen et al. (2005) have analysed the influence of legal rules protecting creditors and investors on the size of financial markets which in turn which in turn influence economic development.

Public policy and support programs for developing entrepreneurship have been a favourite research subject. Aponte (2002) in her literature review on the formal aspects concluded that they account for about 40% of the literature on formal aspects.

In the European Doctoral Programme in Entrepreneurship and Small Business Management (Universitat Autònoma de Barcelona) several dissertations have been elaborated (Aponte 2002; Urbano 2003) and others are in progress trying to analyse the effect of the institutional framework, both formal and informal, on entrepreneurship. Aponte and Urbano analysed the institutional framework of Puerto Rico and Catalonia (Spain) respectively. Both analysed some aspects of the formal constraints, mainly the support agencies and programs, and specially the attitudes towards, and perceptions of, university students and the general population regarding desirability, feasibility, and intentionality of new firm formation. Diaz’s thesis analysed the institutional framework in Extremadura (Spain) using the same methodology and focus developed at the UAB.

The attitudes and obstacles to new firm formation has also been a favourite research subject that has showed the differences among different institutional contexts. The GEM (Global Entrepreneurship Monitor) provides annual information on these topics besides the measure of the level entrepreneurship activity in several countries (TEA). Also the cost and time to create a new firm in different institutional contexts (countries) have been a recurrent topic of research.

Most research in the field of entrepreneurship using the institutional approach has focused on the formal or informal constraints. But these are not the only environmental factors that affect entrepreneurship. Many others like basic economic system, general economic policy, financial system, labour regulations, educational system, entrepreneurial capabilities, etc. that also belong to the institutional environment have been less or seldom researched in a holistic framework.

The line of research on the relationship between entrepreneurship, or more precisely business ownership rates and economic development (Carree et al. 2002, 2007; Wennekers et al. 2005, and Amorós in this issue) is one of the most comprehensive and promising focus on the dilemma and discussion about the relationship between entrepreneurship and economic development or economic development and entrepreneurship mainly based on economic variables.

The cognitive dimension consists of the knowledge and skills possessed by the people in a country pertaining to establishing and operating a new business. Although this is a less researched field there are some pieces of research worth mentioning like Davidsson (1991), Takyi-Asiedu (1993). Also the annual GEM survey (Global Entrepreneurship Monitor) covers his topic based on the self-perceptions of the interviewed.

We have mentioned above that human society is holistic and interdependent and so is also the economic system. Therefore research based on the institutional approach should also be holistic, i.e. include all institutional factors. This is not easy but constitutes a promise and a challenge.

The content of this special issue

This special issue contains eight papers authored by scholars from nine countries (Chile, Germany, Italy, New Zealand, The Netherlands, Portugal, Spain, UK and USA) and the research covers countries from the five continents. These eight papers present research based on the broad institutional context, on specific formal institutions like the social security system, the Neuer Markt as well as on informal institutions like culture. They use a large range of research methods, from quantitative to qualitative analysis.

Amorós and Cristi’s paper refers to the controversial issue whether entrepreneurship fosters economic development or entrepreneurship depends on the level of economic development. They investigate the relationship between entrepreneurial dynamics in Latin-American countries and its level of competitiveness. Their research results support the U-shaped relationship between the country’s rate of entrepreneurship and its level of competitiveness and economic development and found that the Latin-American countries have a descending behaviour under the U-shaped curve approach, suggesting that region’s competitiveness and economic growth have not had an important effect on entrepreneurial dynamics.

Hessels, Gelderen and Thurik’s paper investigates whether start-up motivations and the level of social security can explain entrepreneurial aspirations. They look at entrepreneurial aspirations in terms of innovativeness, job growth expectations and export orientation. Regarding the relationship between the level of entrepreneurial activity and social security contributions, the results of their study complement previous findings in the sense that social security contributions have a negative influence on the supply of ambitious entrepreneurship in terms of new products or service introductions, job growth and export orientation.

The third paper provided by Audretsch and Lehman analyses the Neuer Markt—a special segment of the Frankfurt Stock Exchange in Germany—as an institution to foster the creation of new firms as well as the surviving and non-surviving firms on the Neuer Markt. Their research results indicate that surviving firms are significantly older, show a higher amount of equity hold by venture capitalists, own more or at least as many patents and in most cases CEOs possess an academic degree. Regarding the Neuer Markt as an institution they conclude that the Neuer Markt gave the young firms expanded access to equity capital, allowing them to emerge and grow. On the other hand, this stock market segment led to a destruction of firms and selected from the bulk of dotcom companies only those which were able to use their resources in an efficient way and thus allowing the surviving firms to grow on a natural basis.

The paper provided by Segarra-Blasco, Garcia-Quevedo and Teruel-Carrizosa analyses the link between firms’ decision to innovate and the barriers that prevent them to be innovative in Catalonia, one of the most industrial and prosperous regions of Spain. They analyse three groups of barriers to innovation: the cost of innovation projects, lack of knowledge and market conditions and the main steps taken by the Catalan Government to promote the creation of new firms and to reduce barriers to innovation. The empirical analysis reveals big differences regarding the propensity to innovate and its perceptions of barriers. The results of this paper have important implications for the design of future public policy to promote entrepreneurship and innovation.

Cassia and Colombelli’s paper explores the effect of universities as scientific institutions on firm’s growth, coupling regional science and entrepreneurship approaches. They focus on the role of universities, largely considered in the literature as the main source of knowledge spillovers, and the growth determinants of 231 listed companies on the UK Alternative Investment Market (AIM) which had gone public during the period going from 1995 to 2006. Their research results support the hypothesis that, controlling for firms’s idiosyncratic factors and external factors, both universities knowledge input and output are important determinants of the growth of entrepreneurial firms listed on the AIM.

Dickson and Weaver investigate the role of the institutional environment in determining firm orientations towards entrepreneurial behaviour. They test their assumption based on the prescriptions of institutional theory regarding strategic choices available to firms through the analysis of a survey of 1691 firms from seven countries and multiple manufacturing and service industries. The survey is composed of a wide range of measures reflecting the institutional environment of these firms. The findings of the research indicate significant differences in the entrepreneurial orientation of firms across differing institutional environments and in specific suggest that the choice of an entrepreneurial orientation may be significantly motivated by drives for legitimacy through alignment with the normative, regulative and cognitive forces in the institutional environment of the firm.

Raposo and Ferreira’s paper refers to the attitudes, motivations and entrepreneurial profile of university students in Portugal. Their research is based on a model that includes the following constructs: personal attributes, family, demographics, field of training, education, obstacles and propensity to start up a firm. They use structural equations to analyse the data. Their findings indicate that the first four constructs have a positive impact on the motivation and propensity to start up a firm.

The paper by Welter and Smallbone aims to make a contribution to our understanding of women entrepreneurship under “early stage” transition conditions, by researching the nature of it in Uzbekistan. Using institutional theory the empirical material based on qualitative research demonstrates that informal institutions dominating Uzbek society contribute to the prevailing forms of female entrepreneurship. Women-owned business in Uzbekistan share many barriers with men, e.g., tax laws, access to finance or corruption. However, informal institutions such a code of behaviour and cultural influences, affect the nature of women’s entrepreneurship in particular.

In sum, a diversified set of research that shows how useful the institutional approach to entrepreneurship research can be and, hopefully, will serve to stimulate further research in this field using institutional theory.

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© Springer Science + Business Media, LLC 2008

Authors and Affiliations

  1. 1.Business Economics DepartmentAutonomous University of BarcelonaBellaterra (Barcelona)Spain

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