The Impact of Institutional Environment and Innovativeness on Early-Stage Entrepreneurial Activities: The Moderating Effects of Reciprocity

Abstract

This study investigates the moderating effects of positive and negative reciprocity on the relationship between institutional environment dimensions—cognitive and normative institutions—and innovativeness on early-stage entrepreneurial activities. Utilizing logistic regression models and data from the Global Entrepreneurship Monitor (GEM) Adult Population Survey (APS) and the Global Preferences Survey (GPS) across 21 countries, which contains over 22,000 identified individuals, the findings reveal significant insights into how these institutional factors, innovativeness and reciprocity influence entrepreneurial activities globally. As a result of the analysis, (1) contrary to the predominant view that innovativeness universally promotes entrepreneurial success, this study identifies a significant negative relationship between innovativeness and early-stage entrepreneurial activities. (2) Positive reciprocity moderates the effects of both normative institutions and innovativeness, reducing the positive impact of normative institutions while mitigating the negative impact of innovativeness on entrepreneurial activities. (3) Conversely, negative reciprocity significantly amplifies the effects of both normative institutions and innovativeness, intensifying the positive impact of normative institutions and exacerbating the negative impact of innovativeness. By incorporating data from diverse national contexts, this research contributes to a comprehensive understanding of the factors affecting entrepreneurial activities and emphasizes the importance of fostering balanced social interactions. This approach aims to enhance the growth and sustainability of entrepreneurial activities globally, offering valuable insights for national policy development focused on sustainable entrepreneurial ecosystems.