The Institutional Environment and Its Impact On Entrepreneurship
The Institutional Environment and Its Impact On Entrepreneurship
MG5592
10/12/2018
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Introduction
employment while others hold jobs, and do businesses at the same time. This freedom is created
by the growing need for entrepreneurship and financial freedom. Institutional environments
determine if entrepreneurs will succeed or not as they oversee how the formulated laws affect
various industries. For example, the world is embracing blue and green economies, which means
that various institutions are protecting nature, the waterways, and financial stability. Therefore,
Entrepreneurial spaces are highly competitive, and growth is based on extensive research,
especially in the 21st century. This study investigates how the institutional environment affects
relationship between the institutional environment and entrepreneurship. The most distinct
argument is that institutions must be aligned with the need for economic growth, but
First, the study topic was analyzed carefully before developing a set of keywords. They
Other words included stability, national and global interests, clean air, regulations, and
employment. These words link the two parts of the study topic because they align entrepreneurial
needs with economic growth while establishing the need for regulation or promotion of business
sustainability. Secondly, only peer-reviewed articles and journals published between 2015 and
2018 were part of the search. All the ten articles were from credible databases, but the bias was
shown towards Google Scholar, ResearchGate, Emerald Insight, EBSCOhost, and JSTOR. Ten
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articles were selected from the five different sites and each of them correlated entrepreneurship
to the institutional environments. Thirdly, the journals had to relate to business, management,
and environmental studies. As entrepreneurs emerge, not all of them think of clean air or green
businesses. They offer innovative solutions to advance individual needs, and some of them are
likely to forget about the sustainability of the environment. As a result, all the articles had
consistent themes, which sought to advance entrepreneurial prospects while observing the
A Critical Review
Kujinga (2016, 25) investigated the relationship between social entrepreneurial intentions
and tertiary-level students in South Africa. The resources were found through Google Scholar,
and it focused on 193 participants from Gauteng, South Africa. Of the participants, 128
structured and close-ended questionnaires were successfully filled. Kujinga (2016, 46) used
linear multiple regression for data analysis. According to the study, the regulatory environment
was receptive towards social entrepreneurship. On the other hand, a business could only pass the
institutional environmental test if it was perceived to be desirable and durable. In essence, social
environment. The study reveals that the South African government is ready for change, and it
appreciates social entrepreneurship because the principle provides jobs to youths (Kujinga 2016,
14). For a long time, startups were associated with young people even though most of them had
already left college. This study explains how the regulatory institutions are impressed by tertiary
students who show interest in self-employment as they preserve the traditions of the land. Also,
entrepreneurship just to make sure that legal regulations are respected (Kujinga 2016, 18).
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Arguably, institutional environments regulate the activities of startups, and they must be
In advancing Kujinga (2016)’s argument, Urban and Kujinga (2017, 8) explained that
social entrepreneurship is common today because every country wants its ideologies to be
emulated at a global platform. The study also occurred in South Africa, and this time a survey
was conducted. The objectives of the study were to investigate how various institutional profiles
affect the performance of SMEs. Urban and Kujinga (2017, 17) used a cross-sectional survey
design to investigate the way political, social, legal, and cultural institutions approached
entrepreneurship. According to the findings, South Africa strives to grow economically, but
sensitively, and any business that is associated with contrary beliefs is less likely to succeed. For
this reason, Urban and Kujinga (2017, 23) appreciate the role played by technology in promoting
regularly intervene to ensure that business practices are ideal, sustainable, and they do not harm
innocent South Africans. These sentiments are echoed by Kujinga (2016, 85) who reinforced that
the institutional environment was highly interested in the feasibility of entrepreneurial projects
because the rationale was to establish whether the value that would be drawn from the business
Chambers and Mumemo (2017, 6) also provide insight into the world of institutional
environments. The article was found on Google Scholar, and it used a quantitative research
establishment of elaborate strategies for which institutions must conform. The empirical research
was based on 30 individual data sources, which incorporated independent, dependent, and
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controlled variables (Chambers and Mumemo 2017, 28). The researchers investigated the quality
of business productivity with a bias to the performance of startups in 119 countries from 2011 to
2012. According to the research, political stability, accountability and voice, and the regulatory
quality influenced the performance of startups. For example, if the process of business entry
Mumemo (2017, 31) explained that 9.7% of businesses opted out of transactions, which provided
multiple regulations. On the other hand, social stratifications such as age and the communal
interest in business slightly increased interest in entrepreneurship irrespective of the barriers. For
instance, the age group of the working population, as well as their interests, directly influenced
environments are of different natures, and while others focus on environmental sustainability,
some are only interested in the restoration of culture. Chamber and Mumemo (2017 used the
Global Entrepreneurship Monitor to determine that every country or community had its
Sengupta, Sahay, and Croce (2018, 772) offered the most interesting perspective of
institutional environments and entrepreneurship. This study was conceived out of cross-sectional
research in which surveys were used to collect data from emerging economies. BRIICS countries
were selected, and case study analyses coupled with literature studies provided an insight into the
entire concept. Therefore, Brazil, Russia, Indonesia, India, South Africa, and China were studied
in the research. The study filtered 1779 scholarly articles to identify consistencies in the topics
(Sengupta et al. 2018, 778). Also, 123 peer-reviewed articles were assessed, and in total, six
emerging economies are fascinated by economic growth, and they need collective efforts to
reach their objectives. Sometimes this desire overrides the need to take care of the environment.
Social institutions intervened when BRIICS countries started economic stimulus programs. For
this reason, the consequences were expected, and environmental destruction was one of the
rising concerns. Sengupta et al. (2018, 774) explain that country-specific efforts were introduced
to ensure that none of the BRIICS states would experience poverty again. Thus, collective efforts
were introduced to create strict entrepreneurial spaces in which businesses would be accountable
not only for growth, but also the welfare of the society. This explains why CSR has become a
Sengupta et al. (2018, 773) were categorical about the roles of SMEs in advancing
economic growth. On the other hand, Rao, Mutyalu, and Ramakrishna (2015, 4799) believed that
expand the economy. This study was entirely based on qualitative methodologies involving
observations. The main idea was to explain how an increase in the numbers of startups increased
the chances of emissions. The study focused only on the Exhaust Gas Recirculation (Rao et al.
2018, 4800). According to the researchers, institutional environments insist that emissions should
not pass the globally-set index. The research affirms that NOX emissions in high temperatures
are not only dangerous to the environment but also harmful to humanity. The study investigated
the situation in China, which explains that several businesses emit NOX in high quantities and
the daily emissions of over 2000 K explain why smog is a huge issue in the country. Rao et al.
(2018, 4800) further explains that entrepreneurs must realize that the need to make money should
not cause a high level of insensitivity to the society. This EBSCOhost article is resourceful as it
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approaches the subject from a technological, and scientific point of view because of institutional
After going through Google Scholar and ResearchGate, another article which shared the
same thoughts as Rao et al. (2018, 4779) surfaced. Wade, Swaminathan, and Saxon (2018, 906)
also used observations and case studies to explore the topic. Wade et al. (2018, 906) focused on
the local regulations’ impact on the brewing industry in America. First, resource flow was
investigated, and it turned out that the industry was lucrative. On the other hand, alcohol was the
most abused substance in the United States, and regulations were rife. Contrarily, the businesses
still flourished. Wade et al. (2018, 921) explained that institutional environments have always
shaped the way entrepreneurs and the organizations work. This form of alignment not only
creates consistency, but also changes the behaviors of the business managers. For this reason,
cash flow is still experienced, but the Brewers are taking control by warning consumers about the
excessive consumption of alcohol. Another concern is that brewers are known for dumping waste
on land and in waterways. The Environmental Protection Agency is interested in firms that
violate environmental codes, and huge fines are imposed to ensure that such behaviors are not
friendly, and they should provide jobs to people without taking advantage of their vulnerabilities
Suddaby, Bruton, and Si (2015, 1) were direct in its investigation, which involved content
analysis. First, the study affirmed that entrepreneurship provides jobs to many people. The
research material was acquired from the JSTOR website, and it was analytical when discussing
imprinting in social entrepreneurship. Suddaby et al. (2015, 3) confirmed that this is the era of
entrepreneurship, and people must be careful about the business ventures, which increase income
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rapidly and create financial freedom. Imprinting refers to a psychological or mental phase in
which people are highly sensitive about issues. For example, several people are interested in
becoming their bosses, and this explains why several startups are coming up. Others are in the oil
sector, some in the technological industries, and several businesses focus on mass production.
Suddaby et al. (2015, 7) believe that imprinting in the era of entrepreneurship should be
controlled because people will rarely focus on businesses that will protect the environment.
Already, multinationals produce a lot of greenhouse gasses, and it would be unfair for SMEs to
opt for the same route. Institutional environments are available to provide entrepreneurs with
controls and guidance. They are regulatory in nature, some finance entrepreneurs while others
focus on the protection of nature. In every country, layers of institutions are available to ensure
that regulation is achieved even as entrepreneurial ventures earn income and sustain the
economy.
Guerrero, Cunningham, and Urbano (2015, 748) approached the subject using Kujinga
(2016, 9)'s angle. Acquired from Google Scholar, Guerrero et al. (2015, 748) explained that
university students should learn about entrepreneurship and institutions extensively, especially
when they are planning to start their businesses in the future. The researchers believe that
students should explore all facets of entrepreneurship instead of focusing on finances only.
Guerrero et al. (2015 749) mentioned that the socio-political setting, economic issues, and
political matters must be considered before starting businesses because the implications not only
affect an individual, but also influence the society. Guerrero et al. (2015, 751) were concerned
that several entrepreneurs today only focus on human capital, and they have nothing to offer
young people who envision the successful lifestyle. As a result, the society is fixated on the
immediate gratifications offers once knowledge and human capital are invested. In the UK
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universities, instructors reinforce the importance of technology in making work easy, affordable,
and clean. Therefore, youths are encouraged to embrace innovative measures to increase
sustainability in the industry. This study was conducted on 147 Universities across the UK, and
only data from 2005 and 2007 was used. Also, only the 74 NUTS-3 regions were studied.
Martinez, Cummings, and Vaaler (2015, 527) explored another exciting aspect of
entrepreneurship. This study was found on ResearchGate, and the paper used surveys to explore
the attitudes of entrepreneurs towards funding. Normative and cognitive aspects were tested, and
the research revealed that regulations mostly applied in areas where funding took place. In
essence, some people lack the financial ability to fund businesses, but they have excellent ideas.
Institutions that fund them often exercise some level of control because the capital comes from
an external party (Martinez et al. 2015, 526). In non-regulatory environments, entrepreneurs are
expected to behave well because they know the implications of business failure. On the other
hand, dual-regulations apply when other parties, fund a particular project or an entrepreneur. The
researchers warn entrepreneurs against following all the principles of the investors, especially
when such ideas are misleading. The problem is that it is difficult to find institutions that offer
financial help without expecting interest accrual. Martinez et al. (2015, 530) establish that
businesses are mandated to follow the right legal and ethical frameworks when under pressure to
impress financiers. Nonetheless, these problems are only common in unstructured societies that
Bach, De Francesco, Maggetti, and Ruffing (2016, 9) further explored the dying
bureaucracies and transatlantic politics. The article was found on Emerald Insight, and it
explored how the changing political landscapes are providing rooms for businesses to grow.
However, growth must be treated sensitively because some countries take advantage of their
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political positions to advance their growth prospects. For example, the European Union was the
most important region of comparison during the systematic empirical research (Bach et al. 2016,
10). The researchers established that the Eurozone has multiple multinationals that operate in
several other regions including Africa and North America. As a result, the region earns
financially from the investments, but environmental degradation occurs in the target regions. The
EU agencies refute such claims by mentioning that their rivals are using the idea to promote
propaganda. Bach et al. (2016, 16) affirm that power can be instrumental in breaching
institutional environmental regulations even though entrepreneurs must take personal initiatives
Conclusion
The researchers did an excellent job by providing reliable information on credible sites in
industries in Europe, and the Americans while forgetting ASEAN and African economies. Only
Bach et al. (2016, 22) talked about the ASEAN countries, but political relationships still gave
Europe dominance in the discussion. Entrepreneurship is slowly replacing employment, and this
topic must be discussed in-depth. Otherwise, society will never understand the roles of
social, political, financial, and ecological regulations because entrepreneurs must be reminded
about their responsibilities to society. If not, most of them will only concentrate on financial gain
References
Bach, T., De Francesco, F., Maggetti, M. and Ruffing, E., 2016. Transnational bureaucratic
Chambers, D. and Munemo, J., 2017. The Impact of Regulations and Institutional Quality on
Entrepreneurship.
Guerrero, M., Cunningham, J.A. and Urbano, D., 2015. Economic impact of entrepreneurial
dissertation).
Martinez, C., Cummings, M.E. and Vaaler, P.M., 2015. Economic informality and the venture
Nakpodia, F., Adegbite, E., Amaeshi, K. and Owolabi, A., 2018. Neither principles nor rules:
Rao, K.S., Mutyalu, K.B. and Ramakrishna, A., 2015. Effect of exhaust gas recirculation on
performance and emission characteristics of diesel engine fueled with waste cooking oil
methyl ester. ARPN Journal of Engineering and Applied Sciences, 10(11), pp.4799-4804.
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Sengupta, S., Sahay, A. and Croce, F., 2018. Conceptualizing social entrepreneurship in the
Suddaby, R., Bruton, G.D., and Si, S.X., 2015. Entrepreneurship through a qualitative lens:
Wade, J.B., Swaminathan, A., and Saxon, M.S., 2018. Normative and resource flow