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Journal of International Business Studies

, Volume 39, Issue 4, pp 747–767 | Cite as

Institutional context and the allocation of entrepreneurial effort

  • Harry P Bowen
  • Dirk De Clercq
Article

Abstract

The type of activity in which entrepreneurs engage is likely to influence the potential contribution of entrepreneurship to economic growth and prosperity. Yet the entrepreneurship literature has focused largely on identifying the determinants of the level, rather than the type, of entrepreneurial activity. In this paper we hypothesize that a country's institutional environment will influence the allocation of entrepreneurial effort, and in particular will influence the extent to which entrepreneurial effort is directed toward high-growth activities. We test our hypotheses using data on 40 countries over the period 2002–2004. We find that the allocation of entrepreneurial effort toward high-growth activities is positively related to a country's financial and educational activities targeted at entrepreneurship, and is negatively related to a country's level of corruption. Our study is the first to provide empirical evidence that institutional characteristics significantly influence the allocation of entrepreneurial effort, and it is therefore the first to identify an empirically important channel through which a nation's institutions may contribute to economic growth.

Keywords

allocation entrepreneurship institutions national business systems 

Notes

Acknowledgements

We contributed equally to the development of the manuscript and are listed alphabetically. We thank Shaker Zahra and three anonymous referees for their comments, and acknowledge the support of the Global Entrepreneurship Monitor Research Consortium and Vlerick Leuven Gent Management School.

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© Academy of International Business 2007

Authors and Affiliations

  1. 1.McColl School of Business, Queens University of CharlotteCharlotteUSA
  2. 2.Brock University, St CatharinesOntarioCanada

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