Academic journal article Entrepreneurship: Theory and Practice

Politico-Economic Factors Associated with Interest in Starting a Business: A Multicountry Study

Academic journal article Entrepreneurship: Theory and Practice

Politico-Economic Factors Associated with Interest in Starting a Business: A Multicountry Study

Article excerpt

In this article, we study the constructs of perceived environmental munificence and carrying capacity as they relate to potential for starting a business in samples taken from thirteen Anglo-Saxon, East Asian, and South Asian countries. Seven politico-economic dimensions represent perceived munificence and carrying capacity: financing available, supportive government regulation, market opportunities, access to support services, supply of skilled labor, connections needed, and competitive conditions. Perceived market opportunities, supply of skilled labor, and supportive government regulation (negatively) relate most consistently to start-up feasibility and desirability in the full sample. In regional sub-samples, the only dimensions to associate with both feasibility and desirability are market opportunities in Anglo-Saxon countries and supply of skilled labor in South Asia.


Reviewing the empirical literature on entrepreneurship, Wortman (1987) observed that "little research or even conceptualization of the environments for ... entrepreneurship has been completed" (p. 265). Despite progress since his review, questions remain about environments conducive to entrepreneurship. The importance of this topic extends beyond academic relevance. Government officials have attempted to spur interest in entrepreneurship as a key to invigorating capitalist economies (Drucker, 1985; Reynolds, Storey, & Westhead, 1994). Academics have been urged to advance policy makers' understanding by researching conditions and processes that encourage entrepreneurship (e.g., Hoy, 1997). A particular need exists for theory to conceptualize dimensions of this environment and hypothesize about significant predictors.

A further challenge is to identify environmental conditions that may vary in relevance across geographical boundaries. The first item on McDougall and Oviatt's (1997) list of seven important questions the literature on international entrepreneurship needs to address is: "Do the social, individual, and economic conditions and processes that encourage the formation of new ventures differ across regions of the world, nations, and sub national cultures?" (p. 301). In this article, we investigate whether perceptions of politico-economic resources impact interest in starting a business, and whether these perceptions vary by region of the world. We study these perceptions in East Asian, South Asian, and Anglo-Saxon countries.

Theoretical Perspectives on Features of the Politico-Economic Environment

Although country and regional rates of business formation have received extensive study (for a review, see Kirchhoff & Acs, 1997), politico-economic factors that influence interest in starting a business have received less attention. In the absence of an overarching theoretical framework, no widely accepted set of factors has emerged from the area's primary studies (Bruno & Tyebjee, 1982; Van de Ven, 1993; Birley & Westhead, 1993; Kolvereid & Obloj, 1994; Gnyawali & Fogel, 1994; and Kouriloff, 2000). Two theories with implications for this environment are resource dependence and population ecology. While objective environmental influences seem especially relevant when studying macro-level rates of start-up, we view perceptions as a mechanism that filters the impact of objective conditions on individual-level processes. We therefore apply a perceptual lens to connect these two theories of the politico-economic environment to interest in entrepreneurship.

Resource Dependence. The resource dependence approach (Pfeffer & Salancik, 1978; see also, Fligstein & Freeland, 1995) posits that organizations cannot generate sufficient internal resources to self-sustain, so they must look externally. In this approach, size is an important element of organizational power (Pfeffer & Salancik, 1978). While large firms control resources that permit them to resist external pressures, new, small, incipient organizations, with fewer resources, are more subject to environmental forces (Meznar & Nigh, 1995). …

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