Market-driven entrepreneurship and institutions

Abstract

This research seeks to explain how particular conditions in the external environment are associated with market-driven entrepreneurship—more specifically, startup or early-stage business activity that addresses opportunities in the market (opportunity-driven entrepreneurship), and that which offers unique and novel products or services to customers (innovative entrepreneurship). We further acknowledge that environmental conditions can also affect existing organizations, and thereby identify a third form of entrepreneurial activity: corporate entrepreneurship. Analyses of 44 economies show that economies with basic institutional conditions (structures and rules that govern business activity), and efficiently functioning markets, have high rates of both innovative entrepreneurship and corporate entrepreneurship. However, external contexts that foster innovation are negatively linked to both opportunity-driven and innovative entrepreneurship, while exhibiting a positive association with corporate entrepreneurship.