Abstract

Our study examines a largely question in the literature: how does variance in institutional arrangements influence participation in formal or informal entrepreneurship? The size of the informal sector and its tradeoffs with the formal sector, particularly in developing economies, warrants study from the entrepreneurship context. We examine the role of regulatory, cognitive and normative institutional “pillars” across countries in driving the rate of formal and informal entrepreneurship across countries. We develop a set of hypotheses proposing a varied impact of regulatory, cognitive, and normative institutional “pillars” on formal and informal entrepreneurship. Moreover, we hypothesize that the effect of general and entrepreneurship-specific institutions differs.

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