Explaining the rate of opportunity compared to necessity entrepreneurship in a cross-cultural context: Analysis and policy implications

Improving the quality of entrepreneurial activities has become a priority in policy debates globally. However, despite significant investment in resources, the outcome is disappointing, as the relative rate of opportunity compared to necessity entrepreneurship has not improved significantly across nations. Grounded in an institutional theory approach, we examine whether culture is the missing link in our understanding of the conditions that explain cross-national variance in this rate. Our analyses, based on a 10-year panel dataset comprising 58 nations, support our arguments, in that we find that the cultural dimensions of autonomy–embeddedness, egalitarianism–hierarchy, and mastery–harmony moderate the extent to which regulatory burden and cognitive infrastructure influence the relative rate of opportunity compared to necessity entrepreneurship across nations. Our findings advance the contextualized approach in entrepreneurship and illustrate that understanding the integrative effects of formal institutional environment and informal cultural framework is critical for improving the quality of entrepreneurial activities. We offer implications that will be useful for policymakers to consider as they advance programs to improve the economic growth of nations.