The Effects of Country Characteristics on Entrepreneurial Activities

Today entrepreneurship and start-up companies are the most important source of innovation and economic growth. Thus, the ecosystems to foster entrepreneurship are emphasized more and more in almost all economies. Efforts for increasing the entrepreneurship can only be successful when the root causes and their relationship with the entrepreneurial actions are understood. This chapter is an investigation of the main factors of creating new businesses and a comparison between two main country groups. Countries with advanced economies and emerging and developing economies will be set side by side to understand whether the preindicated factors can be generalizable for these groups. In this study, we hypothesize the definition of entrepreneurship as a highly relatable indication to main factors. These are perceived behavioral control, business environment, human factors, and governmental factors. These main factors are investigated to form the basis of creating new ventures. A model with the interrelationships of these factors is proposed and then estimated using structural equation modeling to test our hypotheses. Partial least squares method is employed to provide accurate results. The model is put into bootstrapping and multigroup analysis to provide significance relationships of the model. Results show that perceived behavioral control is the most effective factor in the entrepreneurial intentions and actions for both advanced and emerging countries but slightly higher for emerging countries. Contrarily, the business environment has a negative effect on the entrepreneurial intentions and actions for emerging countries. Human factors also slightly affect both advanced and emerging countries’ entrepreneurial intentions and actions, where its effect is a little higher for the advanced economies. Moreover, a second-tier component is the “governmental factors” affecting the human factors and business environment significantly. When compared, the effect of governmental factors is stronger for emerging countries.