Institutions and female entrepreneurship

This paper compares the impact of institutions on men and women’s decisions to establish new business start-ups between 2001 and 2006. We use data from the Global Entrepreneurship Monitor survey (GEM) which cover at least 2,000 individuals per year in each of up to 55 countries and have merged it with country-level data, from the World Bank, Economist Intelligence Unit, Polity IV and the Heritage Foundation. We find that women are less likely to undertake entrepreneurial activity in countries where the state sector is larger, but the rule of law is not generally found to have gender-specific effects. However, more detailed institutional components of discrimination against women, in particular, restrictions on freedom of movement away from home, make it less likely for women to have high entrepreneurial aspirations in terms of employment growth, even if their entry into entrepreneurial activities, including self-employment, is not affected by this.     

Socio-cognitive traits and entrepreneurship: The moderating role of economic institutions

We examine how country-level institutional context moderates the relationship between three socio-cognitive traits—entrepreneurial self-efficacy, alertness to new business opportunities, and fear of failure—and opportunity entrepreneurship. To do this, we blend social cognitive theory (SCT) with institutional theory to develop a multi-level model of entrepreneurial entry. We merge data from the Global Entrepreneurship Monitor (GEM) surveys and the Economic Freedom of the World (EFW) index for 45 countries from 2002 to 2012. Our results, which are based on a multi-level fixed-effects model, suggest that entrepreneurs' self-efficacy and alertness to new opportunities promote opportunity entrepreneurship while fear of failure discourages it. However, the strength of these relationships depends on the institutional context, with entrepreneurial self-efficacy and alertness substantially more likely to lead to new opportunity-driven ventures in countries with higher levels of economic freedom. These results provide suggestive evidence that economic freedom not only channels individual effort to productive entrepreneurial activities, but also affects the extent to which individuals' socio-cognitive resources are likely to mobilized and lead to high-growth entrepreneurship.     

Which institutions encourage entrepreneurial growth aspirations?

We develop entrepreneurship and institutional theory to explain entrepreneurial growth aspirations across individuals and institutional contexts. Our framework generates hypotheses at the national level about the negative impact of higher levels of corruption, weaker property rights and greater government activity on entrepreneurs' aspirations to increase employment. We further explore whether individual's social networks compensate for weaknesses in national institutions. We use the Global Entrepreneurship Monitor surveys in 42 countries for 2001–2006, applying a multilevel estimation framework to test our ideas. We find that the relationship between growth aspiring entrepreneurs and institutions is complex; they benefit simultaneously from strong government (in the sense of property rights enforcement), and smaller government, but are constrained by corruption. Social networks mediate some but not all institutional deficiencies.     

Values Versus Regulations: How Culture Plays Its Role

This study examines the impact of culture on regulation and corruption. Our empirical results suggest that cultural values have significant effects on countries’ regulatory policies, levels of corruption, and economic development. Contrary to the conclusions drawn by others, this study shows no significant relationship between the regulatory policies of countries and their perceived levels of corruption. Thus, evidence of the “public choice view” toward entry regulation derived in related studies seems to be at least attenuated. Dr. Runtian Jing is a Professor and Vice Dean of the School of Management, University of Electronic Science and Technology of China. John L. Graham is Professor of International Business, The Paul Merage School of Business, University of California, Irvine.     

Where Angels Fear to Tread: Internationalization of Emerging Country SMEs

Based on institutional theory and risk perspectives, this study examines how the entrepreneurial orientation of firms as determined by national cultural factors is related to the internationalization of small- and medium-sized enterprises (SMEs) from emerging and developing countries. We also suggest that institutional improvements can have a moderating effect on the relationship between culture and internationalization. We develop a unique measure of internationalization and test it on a sample of 7,212 SMEs from 36 developing countries using a multilevel linear hierarchical model that allows us to examine both firm- and country-level effects. We find that developed institutions support the internationalization of SMEs from more masculine and individualistic cultures.     

Entrepreneurial Aspirations: Another Form of Job Search?

We study the labour market behaviour of employed individuals that have entrepreneurial aspirations in addition to aspirations to switch job. We analyze empirically these two “search processes” side-by-side and find that entrepreneurial aspirations and aspirations to switch job are relatively common. However, most employees are not engaged in both search processes, nor are the two processes alike: It is more difficult to empirically explain entrepreneurial aspirations than aspirations to switch job. Only few observable characteristics of the employed are related to both processes. Varied experience and job dissatisfaction are directly related to the probability of having entrepreneurial aspirations and aspirations to switch job, while job tenure is inversely related to them. Our analysis also contributes to the understanding of the process of transition from work into entrpreneurship: Employees who can experiment with new things in their present job, regard the content of their work important, and are dissatisfied with their superiors have more often entrepreneurial aspirations than others.     

Government Intervention,Perceived Benefit,and Bribery of Firms in Transitional China

This article examines whether (1) government intervention causes bribery (or corruption) as rent-seeking theory suggested; (2) a firm’s perceived benefit partially mediates the relationship between government intervention and its bribing behavior, as rational choice/behavior theory suggested; and (3) other firms’ bribing behavior moderates the relationship between government intervention and a firm’s perceived benefit. Our study shows that government intervention causes bribery/corruption indeed, but it exerts its effect on bribery/corruption through the firm’s perceived benefit. In other words, a firm’s perceived benefit fully mediates the relationship between government intervention and its bribing behavior. We also find that other firms’ bribery positively moderates the relationship between government intervention and a given firm’s bribery. This study partly proves that firms are rational actors. Potential benefit encourages them to practice bribery. Besides, this research also supports the rent-seeking view of bribery/corruption, which argues that government intervention is a source of bribery/corruption. However, we have also identified that only those government interventions that will create “rent” can cause bribery/corruption.     

Entrepreneurship,job creation and wage growth

This paper analyses the importance of entrepreneurs in terms of job creation and wage growth. Relying on unique data that cover all establishments, firms and individuals in the Danish private sector, we are able to distil a number of different subsets from the total set of new establishments—subsets which allow us to more precisely capture the “truly new” or “entrepreneurial” establishments than has been possible in previous studies. Using these data, we find that while new establishments in general account for one-third of the gross job creation in the economy, entrepreneurial establishments are responsible for around 25% of this, and thus only account for about 8% of total gross job creation in the economy. However, entrepreneurial establishments seem to generate more additional jobs than other new establishments in the years following entry. Finally, the jobs generated by entrepreneurial establishments are to a large extent low-wage jobs, as they are not found to contribute to the growth in average wages.     

Economic creativity and innovation implementation: the entrepreneurial drivers of growth? Evidence from 63 countries

This paper examines the effect of culture on national innovation and prosperity. Because culture shapes the way people think about and behave in regard to risk, opportunities, and rewards, it should influence the nature of entrepreneurial activity and, by extension, economic outcomes. Using structural equation modeling on a sample of 63 countries, we propose and test a comprehensive explanation of how culture as an umbrella construct (as opposed to an analysis of its constituent parts) affects innovation and national prosperity. We propose a two-stage model of innovation, and find support for our hypothesized relationship that “economic creativity” influences “innovation implementation.” At the national level, we find that culture does indeed influence economic creativity. We also find that innovation implementation explained some of the variation in prosperity across countries. By establishing that “big picture” culture matters to innovation, the door has opened for researchers to evaluate this relationship using data from any one of a number of rival culture frameworks. Moreover, these empirical finding buttress the theoretical arguments that culture powerfully shapes the character of national innovation.     

Flexicurity – a European Approach to Labour Market Policy

Although linguistically somewhat strange, “flexicurity”, the combination of labour market flexibility and security for employees, has become a much praised cornerstone of European labour market policies. Obviously, in an environment with rapid technical progress and frequently changing market conditions, employers need to manage their labour force flexibly. In order to achieve this flexibility without creating an unbearable situation for employees, security is the second pillar of the concept. Security refers, however, to “employability” rather than safety from dismissal. As such, the concept looks like an innovative European way of consolidating economic and social interests, although some argue that much flexibility is gained while the security aspect is being neglected. The concept has been successfully adopted in some European countries, notably Denmark and the Netherlands. However, each country has to find its own concept of “flexicurity” using a distinct combination of instruments that fit the national institutional, social and civic context.     

Revisiting the impact of institutional quality on post-GFC bank risk-taking: Evidence from emerging countries

This is the first attempt to address the impact of institutional quality on post-GFC bank risk-taking behavior. This study is conducted on 730 banks from 19 emerging countries covering the period 2011–2016. We used six indicators of good governance as a proxy for institutional quality. Both static panel and Dynamic GMM estimation are used to identify the impact of these variables on bank risk-taking; measured by Z-score. We evidenced that increasing government effectiveness, controlling corruption, and improving agents' confidence and adherence to the rule of law reduce banks' risk exposure and improve banks' stability. Besides supporting the Z-score model, the robustness test using σ(NIM) also provides evidence of the impact of regulatory quality on reducing bank risk. Surprisingly, both models tend to indicate that improving voice and accountability increase bank risk-taking in emerging countries. Furthermore, our study provides an interesting reconciliation to the major debate on the impact of size on bank risk.     

Factors enhancing the choice of higher resource commitment entry modes in international new ventures

The choice of entry mode in foreign markets is an important strategic decision with major consequences for the success of international new ventures (INVs). It is generally accepted that these firms choose relatively low-resource commitment entry modes to operate in foreign markets. Nevertheless, some researchers have suggested that higher resource commitment entry modes in foreign markets also seem to be competitive strategies for INVs. In this study, from a marketing/international entrepreneurship interface perspective and focusing on organizational issues, we center our attention on international market orientation as a neglected yet important factor in INVs’ choice of higher resource commitment entry modes in foreign markets. We suggest that an entrepreneurial orientation and the timing of international entry are important correlates to an international market orientation. We also suggest that the international learning effort of INVs through their international market orientation has a direct, positive impact on the resources these companies commit to their foreign markets through the use of higher resource commitment entry modes. Accordingly, the model proposes a positive effect of entrepreneurial orientation and early international entry on international market orientation which, in turn, is positively related to higher resource commitment entry modes. The hypotheses were tested on country-level data from Spain, using a structural equation model to analyze relationships between the latent variables.This study extends previous international entrepreneurship research, including insights on antecedents of international new ventures’ choice of resource commitment entry modes in foreign markets. The paper also goes further than previous international entrepreneurship research, by addressing the strategic consequences of rapid entry into foreign markets. Additionally, the results of this work encourage international entrepreneurs to look beyond the explicit value of experiential market knowledge to realize the potential value of international market orientation as an antecedent to higher resource commitment entry modes.     

MNC Strategic Responses to Ethical Pressure: An Institutional Logic Perspective

In this study, we aim to investigate how multinational corporations (MNCs) balance ethical pressures from both the home and host countries. Drawing on theories from institutional theory, international business, and business ethics, we build a theoretical framework to explain the ethical behavior of MNCs. We apply the institutional logic concept to examine how MNCs with established logics and principles that have grown in the home country respond to local ethical expectations in the host country. We differentiate the core values from the peripheral components of a MNC’s institutional logic and propose that a MNC will pursue distinctive ethical strategies under different scenarios and choose the “right” configuration of core values and peripheral components that align with institutional environment in host countries.     

Firm Networking and Bribery in China: Assessing Some Potential Negative Consequences of Firm Openness

Economic openness, both in terms of increased international trade exposure and enhanced inter-firm networking, has been a key element of China’s economic emergence since the implementation of market reforms and the “opening-up policy” over 30 years ago. Unfortunately, these changes have also coincided with the increased incidence of bribery and corruption. Both in general, and in the specific context of China, research on the relationship between a firm’s tendency toward openness and its propensity to engage in bribery is scarce. This study seeks to fill this gap based on empirical evidence provided by a large sample of Chinese firms. The findings of the study reveal that firms’ increased networking and openness tend to occur contemporaneously with greater bribery and corruption. We suggest that this may be due to the misuse of guanxi-based networks that coincide with the presence of firms’ open network strategies, heightened by the potential loss of resource and capability heterogeneity (and hence reduced competitive advantages) in the context of openness. We further find that firms paying bribes do so as an attempt to overcome unnecessary bureaucratic processes and ineffective institutional support that might tend to hinder their development.     

中国资本市场融资顺序新证:可转债发行公告效应研究

This paper empirically shows that the announcements of the issue of convertible bonds (CBs) by Chinese firms have significant negative effects on shareholders’ wealth. We find that when the samples are partitioned by equity component negative market responses towards the announcements of issuing equity-like CBs are more than that of debt-like CBs. This finding is different from the “pecking order hypothesis” of Myers and Majluf (1984). By analyzing the firm characteristics of convertible bond issuers, we find that the wealth effects are negatively related to equity component, firm size and issue size of convertible bonds, and are positively related to financial leverage, liquidity structure of equity, book value of non-liquidity equity and market-to-book ratio. The underlying reason of equity finance taking precedence of bond finance in Chinese capital market can be attributed the to special “two-system-ownership structure” and corporate governance of Chinese listed companies. Translated from Guanli Shijie 管理世界 (Management World), 2006, (6): 19–27     

Entrepreneurship,economic development,and institutional environment: evidence from OECD countries

The purpose of this article is to establish a typology of entrepreneurship for OECD countries over the 1999–2012 period. Our aim is to draw a distinction between managerial and entrepreneurial economies, to identify groups of countries with similar economic and entrepreneurial activity variables, and to determine the economic and institutional drivers of entrepreneurial activities in each group. We show that the level of development, sectoral specialization, and institutional variables related to entrepreneurship, functioning of the labor market, and openness of the country are decisive to understand differences in entrepreneurship activity across countries. Results show that the pre-crisis period, from 1999 to 2008, is a period of growth favorable to entrepreneurship. The financial crisis involved a break in entrepreneurial dynamism, with agricultural economies withstanding the financial crisis better. The 2010–2012 period of recovery is a period of a sharp slowdown in entrepreneurial activity, during which the countries that are less dependent on the financial sector proved to be the most resilient in terms of entrepreneurial activity. Nevertheless, it is the advanced knowledge economies with developed financial markets, fewer institutional regulatory constraints, and greater scope for qualitative entrepreneurship that show lower unemployment rates. These findings have important implications for the implementation of public policy in order to promote entrepreneurial activity and reduce unemployment.     

Opportunity Identification and Pursuit: Does an Entrepreneur’s Human Capital Matter?

Extending human capital approaches to entrepreneurship, an entrepreneur’s “inputs” relating to their general (i.e. education and work experience) and entrepreneurship-specific human capital profile (i.e. business ownership experience, managerial capabilities, entrepreneurial capabilities and technical capabilities) are presumed to be related to entrepreneurial “outputs” in the form of business opportunity identification and pursuit. Valid and reliable independent variables were gathered from a stratified random sample of 588 owners of private firms. Ordered logit analysis was used to test several theoretically derived hypotheses. With regard to the number of business opportunities identified and pursued, entrepreneurship-specific rather than general human capital variables “explained” more of the variance. Entrepreneurs reporting higher information search intensity identified significantly more business opportunities, but they did not pursue markedly more or less opportunities. The use of publications as a source of information was positively associated with the probability of identifying more opportunities, while information emanating from personal, professional and business networks was not. Implications for practitioners and researchers are discussed.      

Institutional determinants of emerging market returns and flows

Investors commonly rely on macroeconomic variables to drive capital allocation decisions. But other institutional factors may alter investor returns as well, particularly in emerging market countries. Given these concerns, this paper examines the effects of institutional factors—specifically democracy, transparency and corruption—on emerging market equity returns and flows. We find that institutional quality impacts stock market returns and flows in emerging markets where corruption, transparency, and democracy levels are below average. We also find that government-owned or controlled industries are positively impacted by a deterioration in the corruption and democracy indexes, while highly concentrated sectors, like the financial industry, are negatively impacted by improving transparency.     

The Dynamics of Fair Trade as a Mixed-form Market

This article analyses the Fair Trade sector as a “mixed-form market,” i.e., a market in which different types of players (in this case, nonprofit, co-operative and for-profit organizations) coexist and compete. The purposes of this article are (1) to understand the factors that have led Fair Trade to become a mixed-form market and (2) to propose some trails to understand the market dynamics that result from the interactions between the different types of players. We start by defining briefly Fair Trade, its different dimensions (including the “fair” quality of the products) and its organizational landscape, focusing on the distinction between the pioneer “Alternative Trading Organizations” and the second-mover companies. Then, we recall the theoretical emergence factors for each type of organization (nonprofit, co-operative and for-profit) and apply these emergence factors to the context of Fair Trade. This analysis allows us to capture the specificities of each type of operator with regard to Fair Trade and, thus, to have a better understanding of the dynamics in the sector. Such dynamics includes competition, but also conflict and partnership. Our analysis includes elements on ethical imitation, consumers’ behaviors, effects on welfare and the role of the government.     

Corruption and FDI: Does the Use of Distinct Proxies for Corruption Matter?

Abstract

The relationship between FDI and corruption/institutional quality in host countries has been widely analyzed. However, the use of distinct samples and indicators for corruption tends to hinder the interpretation and outcomes of econometric assessments. The aims of this paper are to assess the extent to which the use of distinct proxies for corruption provides diverse evidence regarding the relationship between corruption and FDI, and to assess whether controlling for other indicators of institutional quality reinforces the effect of corruption indicators on FDI inflows. In order to accomplish these goals, we estimate a set of multivariate logistic models using 96 countries over the period 2000 to 2010. The results evidence that using distinct proxies for corruption variables, as well as controlling for other types of the countries’ institutional quality, generate distinct outcomes. In isolation, a country’s transparency and its citizens’ corruption perceptions fail to impact on FDI whereas a bribe-free environment is conducive to FDI inflows. When we control for the human, social and economic development of the countries, the impact of a transparent and bribe-free context on FDI attraction is enhanced. Overall, it is clear that in order to become a large recipient of FDI a country has to guarantee a transparent and bribe-free environment, characterized by low income taxes, high literacy rates and generalized economic freedom (own labor and property control by citizens).