Entrepreneurship motivation and institutions: system dynamics and scenario planning

So far, few empirical studies have tried to investigate the relationship of bilateral causality between entrepreneurial motivations and institutions. Indeed, researchers have not paid due attention to complexities such as the subsystems of entrepreneurship, institutional factors, and feedbacks within and between them. Similarly, the dynamics, or the changes in the variables of the two subsystems in the long run, and the uncertainties of the entrepreneurial ecosystem have remained neglected. Considering these gaps, this research seeks to detect the institutional factors that influence the index of entrepreneurial motivation (i.e., opportunity/necessity-based entrepreneurship ratio) in possible futures through strategic scenarios derived from the key uncertainties in the Iranian entrepreneurial ecosystem. To achieve the goal, this study utilizes system dynamics as a method to provide a systemic model for the Iranian entrepreneurial ecosystem and its effects on the motivation index. The data required for the model are collected from various international reports in the period of 2008–2018. After the key uncertainties are identified through scenario planning, the causal relationships between the variables are designed and simulated by the Vensim DSS software. Once the model performance is ensured, it is simulated in four strategic scenarios obtained from a combination of corruption and country risk as two possible situations of uncertainty. Then, in more probable scenarios, the factors with long-term effects on the motivation index are identified. As the results suggest, institutional factors such as business freedom, technology transfer, competition quality, and government effectiveness can improve the index of entrepreneurial motivation. Moreover, this index is involved in the process of institutional changes.