Fragile entrepreneurship in Latin America

Researchers from the Entrepreneurship Institute of the School of Business and Economics, Dr. José Ernesto Amorós and Dr. Vesna Mandakovic, have focused their research on the impact of country level formal institutions, on the individual’s entrepreneurial efforts.

Using multilevel data on 956,925 individuals from 51 countries for the period of 2005–2013, combining primary data from the Global Entrepreneurship Monitor (GEM), with country level secondary data from different sources, the authors contribute to the literature on the contextual determinants of entrepreneurship.

According to the researchers, state fragility provides a society with less-clear rules and enforcement mechanisms, which seems to direct them towards necessity based efforts. They find that state fragility hinders opportunity-based entrepreneurial efforts and fosters necessity-based entrepreneurial efforts.

They also show a “not-yet-discussed moderation effect—that economic development negatively moderates the relationship between state fragility and necessity efforts. Accordingly, state fragility increases individuals’ likelihood of engaging in necessity-driven entrepreneurial efforts, especially in less-developed economies. The relevance of these findings relies on the fact that all types of entrepreneurial engagement face constant uncertainty and environmental changes; state fragility reduction seems to be particularly important in enabling the transition from necessity to opportunity efforts”[1].

 

[1] Amorós, J. E., Ciravegna, L., Mandakovic, V., & Stenholm, P. (2017). Necessity or opportunity? the effects of State fragility and economic development on entrepreneurial efforts. Entrepreneurship Theory and Practice, 1042258717736857.