Institutions and macroeconomic indicators: entrepreneurial activities across the world

Purpose: Entrepreneurial activity is a phenomenon that boosts the economic growth of countries and improves social welfare. The levels of economic development in countries have significant effects on these entrepreneurial activities. This research examines which institutional and macroeconomic variables explain early-stage entrepreneurial activities in developed and developing economies. Methodology: We conducted panel data analysis on data from the Global Entrepreneurship Monitor and International Monetary Fund surveys covering 2009–2018. Findings: To begin with, our results reveal that cognitive, normative, and regulatory institutions, as well as macroeconomic factors, have differential effects on early-stage entrepreneurial activity in developed and developing countries. Moreover, our findings indicate a stronger positive impact of cognitive, normative, and regulatory institutions on early-stage entrepreneurship in developed countries compared to developing countries. Finally, our results suggest that macroeconomic factors play a more significant role in early-stage entrepreneurial activity in developing countries than in developed countries. These findings have important implications for institutional theory, macroeconomics, and the entrepreneurship literature. Originality: This study provides a better understanding of the components that help explain the differences in entrepreneurship between developed and developing countries regarding institutions and macroeconomic factors. In this way, it contributes to developing entrepreneurship literature with the theoretical achievements of combining institutional theory and macroeconomic indicators with entrepreneurship literature.