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Macro-level determinants of formal entrepreneurship versus informal entrepreneurship

Mai Thi Thanh Thai and Ekaterina Turkina

Journal of Business Venturing, 2014, vol. 29, issue 4, 490-510

Abstract: Based on the eclectic theory of entrepreneurship, this article analyzes macro-level determinants of national rates of formal versus informal entrepreneurship. Our evaluation of the factors identified in this theory reveals a set of empirically-testable, higher-order determinants: economic opportunities, quality of governance, macro-level resources and abilities, performance-based culture and socially-supportive culture. The results of our analysis obtained through the PLS (partial least squares) approach to structural equation modeling contribute to the entrepreneurship literature by providing an empirically-supported model that shows how formal and informal entrepreneurship are driven differently. This model clarifies the conflicting findings in previous research about the effects of socioeconomic, institutional, and cultural factors on entrepreneurship rates across countries. Finally, by showing the effect of each determinant on formal and informal entrepreneurship, this study has important implications for policymakers as well as businesses.

Keywords: National rates of entrepreneurship; Formal vs. informal; Eclectic theory of entrepreneurship; Macro-determinants (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (120)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbvent:v:29:y:2014:i:4:p:490-510

DOI: 10.1016/j.jbusvent.2013.07.005

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