When Skills Meet Structure: A Moderated Mediation Model of Entrepreneurial Performance in a Developing Economy

This study investigates how entrepreneurial human capital influences firm performance in institutionally fragile settings. Drawing on Human Capital and Institutional Theories, we propose a moderated mediation model in which access to finance mediates the effect of human capital on firm performance, and tax policy moderates this mediation. Using survey data from 1,443 entrepreneurs in Burkina Faso and structural equation modeling, we find that while human capital enhances firm survival, it exhibits a mixed effect on employment growth: general education negatively influences growth, while entrepreneurial education and experience show no significant effects. Surprisingly, both internal and external finance negatively mediate this relationship. Notably, favorable tax policy moderates the negative effect of internal finance on survival, but does not significantly mitigate the adverse effects of external finance. Our findings challenge the assumption that finance is universally beneficial and emphasize the importance of institutional alignment for entrepreneurial success in resource-constrained environments, specifically where multiple institutional voids coexist (finance, infrastructure, taxation, and legal systems).