Informal Institutions and Entrepreneurship: A review framework
SITE (Science, Innovation, Technology, and Entrepreneurship)
There are stable and persistent country differences in entrepreneurship. These cannot be explained by economic and formal institutions alone and are often attributed to informal institutions such as cultural values and norms, social capital, and religion. While research on informal institutions and entrepreneurship has rapidly expanded, relevant knowledge develops in a fragmented way. This prevents a fuller understanding of the role of informal institutions for entrepreneurship and also offers a confusing picture of conflicting findings when different types of informal institutions are treated interchangeably. This systematic evidence review of research on informal institutions and entrepreneurship integrates insights from over 150 studies in a novel multi-level framework that clarifies different types of informal institutions and highlights overlooked areas of convergence and complementarities. Our framework newly elaborates distinct causal mechanisms through which informal institutions influence entrepreneurship either directly through impacting the entrepreneur or through influencing others. These pertain to impacting entrepreneurial motivation, capability, legitimacy and enabling opportunity structures. We offer explanations for seemingly conflicting findings observed to date and propose an agenda for future research on informal institutions and entrepreneurship. Our review not only outlines what we know, what we don’t know and what we still need to know about informal institutions and entrepreneurship.