Institutional environment, entrepreneurial self-efficacy and entrepreneurial intention

Abstract

Abstract: Entrepreneurship is an effective means to create employment opportunities and prevent unemployment, which plays an important role in promoting technological innovation and social and economic development. Entrepreneurship is affected by multiple-level factors, and the factors of individual perception that influence the exploitation of new opportunities cannot be considered separately from the broader institutional environment that providing opportunities (De Clercq et al., 2013). The complex interaction between individual and institutional environment affects entrepreneurship. However, few studies have considered how the interaction of individual-level and country-level factors affects entrepreneurship in a single framework (Davidsson and Wiklund, 2001). Social cognition theory points out that entrepreneurial self-efficacy is a key factor affecting entrepreneurship and can well predict entrepreneurial behavior (Boyd and Vozikis, 1994). Entrepreneurs′ self-efficacy and behaviors are affected by rules and norms in the environment, and the relationship between entrepreneurial self-efficacy and behaviors changes with different environmental rules (Bandura, 1986).
In order to fully understand the formation mechanism of entrepreneurial intention, we use the multilevel model to comprehensively analyze the impact of the interaction between entrepreneurial self-efficacy and institutional environment on entrepreneurial intention. Therefore, this study investigates the impact of formal institutions (entrepreneur-friendly regulations, financial capital availability, and educational capital availability) and informal institutions (social cultural values and control of corruption) on the relationship between entrepreneurial self-efficacy and entrepreneurial intention.
Based on the sample of 89202 individuals from 28 countries, this paper reveals how the institutional environment influences the relationship between entrepreneurial self-efficacy and entrepreneurial intention in a cross-cultural context. Individual-level data comes from the 2013 Global Entrepreneurship Monitor Report. The survey is representative of the general population aged from 18 to 64 years old. Country-level data comes from various, commonly-accepted sources, including the Doing Business Database, Global Entrepreneurship Monitor Database, United Nations Development Programme Human Development Reports, and the World Governance Indicators. To avoid bias due to extreme observations (e.g., recession periods), we used a 5-year average (2009–2013) where possible.
This study constructs a multilevel model using the HML software to verify the relationship between entrepreneurial self-efficacy and entrepreneurial intention, and the moderating effect of institutional environment on the relationship. The results show that entrepreneurial self-efficacy positively affects entrepreneurial intention, and the relationship is moderated by institutional environment. Entrepreneur-friendly regulations, financial capital availability, educational capital availability and control of corruption positively moderated the positive relationship between entrepreneurial self-efficacy and entrepreneurial intention, while social cultural values negatively moderated the relationship. One possible explanation for this phenomenon is that entrepreneurial activity will be more complex in the countries with entrepreneurship-hostile culture. Entrepreneurs would be more cautious and fully prepared to start new ventures. Entrepreneurial self-efficacy, as the internal motivation, is more strongly related to entrepreneurial intention in the countries with entrepreneurship-hostile culture. Individuals can acquire the support of the society in countries with entrepreneurship-friendly values, which can motivate entrepreneurs to start businesses without a sufficient sense of entrepreneurial self-efficacy. Therefore, the expectation of social appreciation is likely to become an important motivation for entrepreneurial activities, and the relationship between entrepreneurial self-efficacy and entrepreneurial intention is likely to be weakened.
The theoretical contribution to the existing literature includes three points. First, it highlights the key role of the interaction between institutional environment and entrepreneurial self-efficacy in promoting entrepreneurial intention. This paper argues that it needs to consider the interaction between entrepreneurial self-efficacy and institutional environment in a single framework in order to fully understand the formation mechanism of entrepreneurial intention. Second, this study analyzes the impact of formal and informal institutions, and contributes to understanding the relationship between entrepreneurial self-efficacy and entrepreneurial intention. Third, this study contributes to the comparative study of international entrepreneurship by analyzing the transnational data. This paper verified the impact of institutional environment on relationship between entrepreneurial self-efficacy and entrepreneurial intention by the analyzing transnational data. Therefore, this study is an important supplement to the literature of institutional theory and entrepreneurship.
This study also has two important practical implications. First, for entrepreneurs, it is necessary to constantly improve their entrepreneurial ability and self- efficacy. Entrepreneurship has become an important force to promote employment and socio-economic development. Entrepreneurial ability and self-efficacy can be cultivated and improved by entrepreneurial education and practice. Therefore, improving the education system for entrepreneurship and encouraging entrepreneurs to keep learning will be conducive to the development of entrepreneurship.
Second, for policy makers, this study suggests that governments can use multiple measures to promote entrepreneurship. (1) The start-up regulations, bankruptcy regulations, and intellectual property rights protection regulations should be improved to motivate social entities to start businesses. (2) The financial environment should be improved to provide financial support for entrepreneurship, which is conducive to promoting the further development of entrepreneurship. (3) The national education should be vigorously strengthened to improve the overall national quality and provide high-quality labor force for economic development. (4) The national supervision should be strengthened to promote fair competition and the survival of the fittest. (5) To create an entrepreneurship-friendly social and cultural environment could have contributed to encouraging entrepreneurship and innovation.
This study also has some limitations, which provides some potential directions for further research in the future. First, this study lacks the support of the data from Africa and Oceania. Future research should explore the entrepreneurship of the countries in African and Oceania, and improve the applicability and universality of research conclusions. Second, the immigration effects cannot be controlled. The immigrants′ cultural values are likely to be different from those of native residents. The relationship between their entrepreneurial self-efficacy and entrepreneurial intention is likely to be influenced by the differences in the institutional environment between the country they immigrate to and their home countries. Therefore, the issue of immigrants′ entrepreneurship will be an interesting direction for future research.

Key words: institutional environment, entrepreneurial self-efficacy, entrepreneurial intention, hierarchical model

Zhang Xiu′e, Wang Chao, Li Shuai. Institutional environment, entrepreneurial self-efficacy and entrepreneurial intention[J]. Science Research Management, 2022, 43(5): 59-66.

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