Difference Mechanisms of Formal Institutions in Entrepreneurship——A Comparative Analysis of Contracting and Property Rights
The phenomenon of regional differences in entrepreneurial activities has become a hot topic of common concern in academia and practice.Since institutions determine the relative benefits of different activities in society and determine wheth-er individuals are willing to allocate their efforts to productive entrepreneurial activities,it has been regarded as a key factor affecting individual entrepreneurial choices and regional entrepreneurial activity.However,the understanding of institutional influence in entrepreneurship is still relatively weak in existing research,which tends to focus on the development level of overall institution or specific single institution.Even though some studies recognize that the overall institutional environment is composed of different institutions,they are accustomed to viewing multiple institutions as homogeneous or interrelated,and assume the simple accumulation of multiple institutional effects,which lack in-depth analysis of the effects of different insti-tutions and their complex combinations.Based on the perspective of unbundling institutions,this article regards the contracting institutions and property rights institutions as two main dimensions of formal institutions.We use a sample of 355769 individuals from 54 countries between 2010-2015 applying a multilevel models to examine how different institutions affect entrepreneurship.Our results demon-strate that although both the improvement of contracting institutions and property rights institutions can help promote individ-ual entrepreneurial entry behavior.However,the contracting institutions determine the direct transaction costs that entrepre-neurial enterprises need to pay in business activities,which is mainly related to the short-term operating costs of entrepre-neurship.The property rights institutions are reflected in protecting the interests of property rights owners and preventing ex-ploitation by administrative agencies,which is mainly related to the guarantee of long-term benefits of entrepreneurship.Since these internal mechanisms differ,the contracting institutions will have a more significant effect in promoting individuals with low human capital and regions with low economic development levels.Oppositely,the property rights institutions will have a more significant effect in promoting individuals with high human capital and regions with high economic development levels.Further,such internal mechanisms differ will also lead to a potential offsetting effect between contracting institutions and property rights institutions.This article can provide theoretical contributions in the following aspects:First of all,by high-lighting the influence mechanism of different institutions,this article show that it is valuable and necessary to divide the diver-sified institutions.Existing research often explores a single or overall institutional effect from the assumptions of institutions homogeneity.However,the institutions are diverse.Secondly,by analyzing the complex impact of different institutions,this ar-ticle will help to transform the field discussions from a simple analysis to a complex analysis of multiple institutions.Existing research usually assumes that the simple accumulation of different institutions effects will build the overall effect.However,we show that the differences mechanisms of contracting institutions and property rights institutions will even lead to potential mutual offset effects.Third,through the integration of individual decision-making logic and macro situations constraints,this article establishes the theoretical framework for individual entrepreneurial decisions,which will help fully understand behav-ior patterns of entrepreneurs in complex environments.
Formal InstitutionsUnbundling InstitutionsContractingProperty Rights