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Perceived Institutional Support and Small Venture Performance: The Mediating

Role of Entrepreneurial Persistence

Article in International Small Business Journal · June 2020

DOI: 10.1177/0266242620943194

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 Perceived Institutional Support and Small Venture Performance: The Mediating Role of
Entrepreneurial Persistence

Abstract

This article examines the entrepreneurial persistence of opportunity-motivated entrepreneurs in

Ghana. Specifically, it develops a theoretical model focusing on the relationships among
perceived institutional support, entrepreneurial persistence and small venture performance,
including how entrepreneurial networks condition the relationship between institutional support
and entrepreneurial persistence. Using time-lagged data from 373 opportunity-motivated
entrepreneurs leading small ventures in Ghana, we find broad support for our hypotheses. The
insights from our study provide an integrative understanding of the relationships among
perceived institutional support, entrepreneurial persistence and venture performance in an
adverse environment. Theoretical and practical implications are discussed.

Keywords: entrepreneurial persistence, networks, SMEs, performance

Introduction
Entrepreneurial persistence (EP), described as “behaviour that involves goal-directed energy
(Seo, Barrett, and Bartunek, 2004; Wu, Matthews, and Dagher, 2007), where the goal involved is
success of the entrepreneurial venture” (Cardon and Kirk, 2015: 1030), is subject to increasing
interest within the entrepreneurship literature. This research stream has emphasised that EP
enables entrepreneurs to overcome obstacles they encounter in the entrepreneurial process and
move their ventures forward (Davidsson and Gordon, 2016; Meek and Williams, 2018). Scholars
have examined the influence of various individual, firm and environmental factors on EP
(Adomako, Danso, Uddin, and Damoah, 2016; Lomberg, Thiel, and Steffens, 2019) and
highlighted its positive impact on venture growth (Baum and Locke, 2004) and survival
(Acheampong, 2018; DeTienne, Shepherd, and Castro, 2008). For example, utilising insight
from the literature on risk and decision making (Kahneman and Tversky, 1979; March and
Shapira, 1987), DeTienne and colleagues (2008) find entrepreneurs of underperforming firms are
more likely to persist in a high-munificence environment than in a low one. Similarly, Holland
and Shepherd (2013) find entrepreneurs are less likely to persist in a context of high adversity.
Utilising an expectancy theory framework, Holland and Garrett (2015) examine entrepreneur
decisions to persist with their ventures; ths suggests they are more likely to persist when they
perceive a high likelihood of obtaining positive financial and non-financial outcomes. Simply
put, the extant literature implies that a favourable external environment provides fecund

1
opportunities to succeed, and this increases the tendencies of entrepreneurs to persist with their
ventures.
While existing evidence broadly suggests that supportive institutional environments
enable entrepreneurial activities (Aidis, Estrin, and Mickiewicz, 2008; Hunt, 2015) and improve
firm performance (Baum and Oliver, 1991; Li and Zhang, 2007), it provides limited insights on
how these factors influence opportunity-motivated entrepreneurs (OMEs) operating in
historically adverse conditions. Compared to necessity-motivated entrepreneurs (NMEs), OMEs
may have other opportunities available and might find these more attractive than persisting with
their ventures in adverse conditions. Indeed, certain external factors affect OMEs and NMEs
differentially (McMullen, Bagby, and Palich, 2008). As OMEs play a vital role in developing and
growing the economy, it is crucial to gain a better understanding of how their perception of the
institutional environment influences their EP, and consequently, venture outcomes.
Although perceived institutional support (PIS) could trigger OMEs to act and persist with
entrepreneurial activities, this is more likely to occur when entrepreneurs are embedded in
networks of relationships. These networks not only provide specific resources but also establish
reciprocal dependency relationships and support (Hite, 2005; Sullivan and Ford, 2014).
However, such networks shift from calculative to affective over time (Jack, Moult, Anderson and
Dodd, 2010) with varying impacts on firm outcomes (Acheampong, Narteh, and Rand, 2017).
We therefore, argue that it is pertinent to examine the moderating effects of both social and
business networks on the relationship between PIS and EP.
We test our model using a sample of 373 small ventures in different stages of
development located in Ghana, a developing African country. The institutional environment for
entrepreneurs in less developed countries differs significantly from that of more developed
countries (Fainshmidt, Judge, Aguilera, and Smith, 2018; Lafuente, Szerb, and Acs, 2016). Such
environments offer limited alternate employment opportunities and lack institutions supporting
entrepreneurship such as those available in developed countries whilst a dearth of support
agencies limits business assistance and industry-related information (Ladzani and Van Vuuren,
2002; Mamman, Bawole, Agbebi, and Alhassan, 2019). For instance, Ghana is historically a
factor-driven economy with high unemployment over the years (approximately 7%)1. Not

1
https://www.theglobaleconomy.com/Ghana/Unemployment_rate/, last accessed on 4 June, 2019

2
surprisingly, Ghanaians are actively involved in entrepreneurial activities despite the adverse
conditions with many operating as NMEs2.
This article makes three contributions to the entrepreneurship literature. First, we
examine relationships which have so far, received limited attention; giving a clearer perspective
on the antecedents and outcomes of EP and generating insights into the mediating effect of EP on
the relationship between PIS and small venture performance (SVP). Second, we find
entrepreneurial networking to moderate the PIS–EP relationship. The third contribution relates to
our study sample—OMEs in adverse environments acknowledging that context is vitally
important in entrepreneurship theory building (Zahra, 2007). Entrepreneurship in less developed
economies, particularly those from the continent of Africa, remains under-researched. The
overwhelming focus on developed countries (e.g., US, UK, Canada) calls into question the
generalisability of entrepreneurship findings and theories. We take a step toward addressing this
issue.
Our article proceeds as follows. In the next section, we develop a theoretical model
focusing on the relationships among PIS, EP and SVP, including the moderating effects of
entrepreneurial networks. A section describing the research methodology and findings follows.
Finally, we discuss the theoretical and practical implications, limitations, and future research
opportunities.

Theoretical framework and hypotheses

As depicted in Figure 1, we examine the moderated–mediated relationship between PIS and
SVP; drawing from analyses of institutional theory to argue that OMEs who perceive higher
institutional support are more likely to consider EP as conducive environments that reinforce the
benefits of persistence to exploit the opportunity. PIS affects OME cognition and behaviour
(Aragon-Mendoza, del Val, and Roig-Dobón, 2016; Lim, Morse, Mitchell, and Seawright, 2010),
which improves SVP. Specifically, EP mediates the relationship between PIS and SVP, where
greater PIS leads to higher EP that positively affects SVP. Building on the entrepreneurial
networking literature (for reviews see Hoang and Antoncic, 2003; Hoang and Yi, 2015), we
argue that social and business networks positively moderate the relationship between PIS and EP
making this relationship stronger for OMEs with more robust networks.

2
https://www.gemconsortium.org/economy-profiles/ghana, last accessed on 12 April 2019

3
 Insert Figure 1 here

Institutions, cognition and entrepreneurial persistence

The extant entrepreneurship literature emphasises the influence of local external environments
on entrepreneurial activities highlighting region-specific factors and external enablers. Studies
focusing on region-specific factors cover a wide array of topics such as clusters (Martin and
Sunley, 2011), national innovation systems (Lundvall, 2010) and entrepreneurial ecosystems
(Audretsch and Belitski, 2017). In general, these studies investigate how the structure and
workings of specific geographic regions provide a fertile environment for entrepreneurial
activities. The influence of external enablers/disablers on entrepreneurial activities (Bennett,
2019; Davidsson, 2015) has also been noted. In particular, Davidsson, Recker, and von Briel
(2018) elucidate how the impact of external enablers (e.g., crowdfunding, country-specific
regulation) varies across industry sectors and geographic regions. While the focus on specific
external factors and entrepreneurial agency varies across different conceptualisations (Brown and
Mason, 2017; Davidsson et al., 2018), a critical component of the external environment—
institutions— undeniably influences entrepreneurial activities (Boettke and Coyne, 2009).
Indeed, a multitude of studies show institutions influence firm strategies (Meyer, Estrin,
Bhaumik, and Peng, 2009; Oliver, 1991) and firm performance (Baum and Oliver, 1991; Powell,
1988).
Although there is no single, consensual definition of institutions (Scott, 1995), it is
generally accepted that institutions frame the “rules of the game in a society” (North, 1990: 3).
Well-developed institutions provide a stable environment for firms to operate in, enabling them
to access necessary resources and efficiently conduct their business activities. These institutions
could be formal institutions such as those representing a legal framework or informal institutions
such as those characterised by a code of conduct (North, 1990). The prevailing institutional
environment enables or constrains entrepreneurial activities in a specific location (Boettke and
Coyne, 2009; Minniti, 2008). Formal institutions such as state laws and the capital market can
reduce uncertainty related to business creation and operation enabling firms to access critical
financial resources. Similarly, informal institutions may establish norms and a code of conduct
between a firm and its stakeholders (e.g., suppliers, distributors). Thus, well-established

4
institutions provide supportive environments for entrepreneurs and promote entrepreneurial
activities. Conversely, poorly developed institutions discourage entrepreneurs and adversely
affect entrepreneurial activities (Baumol, 1993; Welter and Smallbone, 2011). Factors such as
perceived corruption signal a weak institutional environment, lowering entrepreneurial activities
(Aidis et al., 2008). However, the effect of external factors on entrepreneurial activities is still
unclear. For instance, prior research indicates that gross domestic product negatively affects
entrepreneurial activities of both OMEs and NMEs, whereas labour freedom positively affects
the entrepreneurial activities of OMEs and NMEs (McMullen et al., 2008). Furthermore, other
indicators of economic freedom (e.g., property rights, monetary freedom) have contrasting
impacts on OME and NME entrepreneurial activities both positive, and negative. The impact of
the external environment on entrepreneurial activities appears to be contingent on the individual-
and firm-specific factors (Davidsson and Gordon, 2016; Welter and Smallbone, 2011). While the
influence of institutions on entrepreneurial cognition and behaviours could vary, entrepreneurs
must display entrepreneurial agency to accomplish venture activities (Hallen and Eisenhardt,
2012; Sarasvathy, 2004). OMEs continuously assess the environment in which they operate,
make decisions about the venture and take necessary action.

Mediating effect of entrepreneurial persistence

While research has predominantly viewed external factors as either enabling or constraining for
entrepreneurial activities, Bennett (2019) argues that external enablers, such as institutional
frameworks, can change with time, and such shifts can transform enabling institutions into
constraining institutions, and vice versa. This can lead to a change in OME’s perceptions of the
opportunity they are pursuing. Holland and Garret (2015) state that entrepreneur beliefs in their
ability to take advantage of opportunities and gather the necessary resources required to pursue
entrepreneurial activities, as well as their confidence in achieving the desired financial and non-
financial benefits, influence EP. This suggests that OME’s perception of the support (or lack of)
from institutions in the local environment will influence their belief of attaining the desired
benefits. It is important to note that OME perceptions about the institutional environment will
improve after they have spent time operating their ventures in a particular institutional
environment. Such active engagement in venture development activities offers a realistic picture
of the institutional environment permitting more precise influences on cognition and behaviours

5
(Holland and Garrett, 2015). OMEs are better positioned to make venture-related decisions after
launching and operating their ventures than prior to the launch.
The mental representation of the external environment affects OME perceptions of
venture potential and consequently, influences the desire to persist (Hayward, Shepherd, and
Griffin, 2006; Steel and König, 2006). A supportive institutional context provides a fertile
context to engage in opportunity exploitation, increasing OME estimates of achieving the desired
outcome; so again, they are more likely to persist. While this could lead to hubris (Hmieleski and
Baron, 2009), we argue that it is likely to be tempered for OMEs, as they can pursue other
opportunities in supportive institutional environments instead of persisting with their venture
activities. Furthermore, OMEs who have been operating for several years acquire knowledge
through their prior experience generating a learning advantage (Eesley and Roberts, 2012),
informing more astute decisions. This is more likely to be evident in the case of owner-CEOs of
small ventures who play an influential role in the operation of their ventures (Ling, Simsek,
Lubatkin, and Veiga, 2008) and have committed substantial time, effort and capital to launch and
develop the venture. The experience of creating and operating the venture gives them a realistic
picture of the institutional environment as well as the chances of seizing the opportunity
(Bennett, 2019). This emphasises that subjective beliefs about institutions would more accurately
influence OME cognition and behaviours, consistent with the view that institutions are
antecedents to entrepreneurial cognition and behaviours (Aragon-Mendoza et al., 2016; Lim et
al., 2010).
In the context of developing countries, where institutions are poorly developed
(Fainshmidt et al., 2018; Julian and Ofori-Dankwa, 2013) and entrepreneurial spirit is dampened
(Aidis et al., 2008), perceptions of higher institutional support reduce the high levels of
uncertainty which OMEs experience, improving their assessment of venture potential. In other
words, supportive institutions make it possible for OMEs to pursue entrepreneurial activities and
be productive when engaging in these activities. The possibility of attaining venture goals
propels OMEs to continue pursuing their venture activities and expend effort towards it.
Although institutional support creates an environment conducive for undertaking entrepreneurial
activities, OMEs need to actively engage in venture activities to seize the opportunity. Research
indicates that such actions have a positive impact on small-firm performance (Cardon and Kirk,
2015). In sum, a supportive institutional environment encourages EP, which includes active

6
engagement and commitment to entrepreneurial activities, and this positively influences SVP.
Thus, we state that:
H1: Entrepreneurial persistence mediates the relationship between perceived
institutional support and small venture performance.

Moderating influence of social and business networks

While a positive perception of the institutional environment can trigger OMEs to act, they need
the necessary resources and knowledge to undertake these actions. The important role of
networks have been noted in the success of entrepreneurial ventures (Hoang and Antoncic, 2003;
Hoang and Yi, 2015). Networks provide access to critical resources such as financial,
informational and human resources and other non-economic benefits (e.g., mentoring) which
enable entrepreneurs to pursue entrepreneurial activities (Ahsan, Zheng, DeNoble, and Musteen,
2018; St-Jean and Tremblay, 2020). In other words, networks supplement institutional support
by providing the necessary resources to undertake entrepreneurial action.
The extant literature broadly highlights two distinct types of networking activities for
those pursuing entrepreneurial activities: social ties and business ties. Entrepreneurs frequently
leverage social relationships for their venture activities, seeking both affective and functional
value from their social ties (Anderson, Jack and Dodd, 2016; Dodd, Jack, and Anderson, 2002).
While relying on social ties has certain drawbacks, especially if the entrepreneur’s network is
dominated by social ties (Khayesi, George, and Antonakis, 2014), these ties also provide
valuable human resources at little or no cost and assist in pursuing venture activities. In essence,
social ties assist entrepreneurs in creating and sustaining ventures with lower capital and effort
(Manolova, Manev, and Gyoshev, 2014). Social ties are likely to motivate OMEs to continue to
persist for two reasons. First, they assist with venture activities, enabling OMEs to bootstrap
their operations. This might involve the sharing of equipment, facilities and other resources
between social ties (Jones and Jayawarna, 2010). Second, the effective support provided by these
ties is likely to encourage OMEs to continue to persist as this can boost morale during periods of
self-doubt (Newman, Mole, Ucbasaran, Subramanian, and Lockett, 2018; Zheng, Ahsan, and
DeNoble, 2020). In other words, social ties can enhance OME confidence as well as provide
valuable resources to pursue entrepreneurial activities. Thus, we state that:

7
 H2: Social networks of OMEs moderate the relationship between perceived institutional
support and entrepreneurial persistence, such that the relationship will be stronger for
OMEs with strong social network ties than OMEs with weak social network ties.

Entrepreneurs also engage in networking activities which connect them with others in the
market such as suppliers, customers and competitors (Lazzarini, Claro, and Mesquita, 2008;
Srinivasan and Brush, 2006). First, such relationships can lead to reciprocal benefits between the
focal venture and its business networks. This can lower opportunistic behaviour and increase
OME confidence in achieving their objectives. Such relationships are especially useful in poor
institutional contexts by reducing uncertainties and overcoming challenges (Welter and
Smallbone, 2011). OME connections with industry stakeholders assist in establishing informal
institutions and together, these institutions help in enforcing norms and codes of conduct
between the network ties to facilitate entrepreneurial activities. Firms which violate these
informal institutions can be removed from the network and may suffer considerable loss if they
engage in opportunistic behaviours (Lau and Bruton, 2011). Second, business networks can
provide OMEs with particular knowledge and resources not readily available in the market
(Shane and Cable, 2002; O’Donnell, 2014). Connections with such stakeholders can give
entrepreneurs privileged access to information and resources so, enabling them to undertake
venture-related activities. Simply put, business networks not only help in establishing norms to
facilitate entrepreneurial activities but also provide valuable resources and knowledge to
undertake necessary actions. Thus, we posit that:

H3: Business networks of OMEs moderate the relationship between perceived

institutional support and EP, such that the relationship will be stronger for OMEs who
extensively leverage their business network than OMEs who minimally utilise their
business network.

Research method

Sample and data collection

We randomly selected 1,500 OMEs from the Ghana Business Directory database (Acquaah,
2007). Our sampling met four criteria: We included only (1) OMEs who had participated in the
founding process of their ventures; (2) ventures which were privately owned manufacturers of
products (that is, we excluded businesses such as restaurants, retail stores and farm produce).

8
These ventures were developed by entrepreneurs based on an opportunity they identified and had
higher capital requirements; (3) ventures which were founded in 2007 or later. We selected firms
aged up to 10 years because we are interested in capturing various developmental stages (Cardon
and Kirk, 2015), and as such we label the firms in our sample as “small ventures” and (4)
ventures must have employed fewer than 250 employees as of January 2017.
We collected data in two waves with approximately four months between the end of our
first survey wave (T1) and the start of the second survey wave (T2). Due to the challenges of
collecting data in a developing country (Hoskisson, Eden, Lau, and Wright, 2000), each wave
took approximately two months. In the first round, 1,500 OMEs were contacted, in person, with
a questionnaire that gathered data on PIS, networking ties (social and business network) and EP.
We obtained 509 usable responses from the first wave, representing a 33.93 per cent response
rate.
In T2, we approached the finance managers of these 509 firms to gather data on the
dependent variable (SVP). Cross-sectional studies typically suffer from common method bias
(Podsakoff, MacKenzie, Lee, and Podsakoff, 2003). By collecting data on the dependent variable
from finance managers we mitigate this issue in our study. Using the same approach as the first
survey, a hand-delivered questionnaire was provided to the finance managers of the 509 firms to
capture performance measures. After two follow-up reminders, we received 402 complete
responses to the time-lagged performance questions. The 107 firms which did not respond to the
second survey had no finance managers. We detected that 29 of the questionnaires had missing
values. Hence, we excluded these 29 responses. Thus, we relied on 373 matched responses
across Time 1 and Time 2 for the analyses. This represents a 24.86% effective response rate (i.e.,
[373/1500] x 100).
On average, the firms in the sample were seven years old (SD = 1.17) and employed 45
employees (SD = 11.61). Respondents’ average age was 48 years. We assessed non-response
bias by comparing early and late respondents. Specifically, we used the Pearson’s chi-square test
for discrete variables (Greenwood and Nikulin, 1996) and compared the characteristics of our
sample, including firm age and firm size as well as OME’s age, education and gender. We found
no statistical differences between early and late respondents, suggesting that non-response bias
does not affect the results of the study (Armstrong and Overton, 1977).

9
Measures

All measures were adopted from previous studies. Appendix 1 presents the details of the
measures used in the current study.
Entrepreneurial persistence. The items measuring the EP construct were taken from
Baum and Locke (2004). This construct has been used in extant research (Cardon and Kirk,
2015). Accordingly, we measured EP with five items on a 7-point Likert scale (1 = strongly
disagree; 7 = strongly agree).
Perceived institutional support. Institutional support is defined as the opportunities the
entrepreneur derives from the environment in terms of the ease of doing business (Turker and
Selçuk, 2009). We measured institutional support by using a four-item scale adapted from Turker
and Selçuk (2009) on a 7-point Likert scale ranging from 1 (strongly disagree) to 7 (strongly
agree).
Social network. We adopted the social network construct from Shane and Cable (2002).
This construct accesses the entrepreneur’s social network activities stemming from the utilisation
of their social contacts and connections. This study used three items to measure the social
network construct by using a Likert scale with anchors 1 (strongly disagree) and 7 (strongly
agree).
Business network. We explored the business network construct with three items taken
from previous studies (Lau and Bruton, 2011; Yiu, Lau, and Bruton, 2007). These measures
assess the entrepreneur’s proclivity to network with major market actors including suppliers,
customers and competitors (that is, the extent to which they utilised these business networks and
connections during the past three years). Each item was measured on a 7-point Likert scale
ranging from 1 (not at all) to 7 (to a large extent).
Small venture performance. We focused on market performance and profitability
measures as the main dependent variables taken from previous studies (Menguc and Auh, 2008;
Sheng, Zhou, and Li, 2011). These indicators capture market share, sales volume and sales
growth relative to market objectives. The measures of profitability were derived from existing
studies (Li and Atuahene-Gima, 2001; Luk, Yau, Sin, Tse, Chow, and Lee, 2008). The
profitability measures include overall profitability, profit margins and return on investment. For
both market performance and profitability measures at T2, finance managers were asked to
compare their ventures with industry rivals in the last three years. Responses were provided on a

10
7-point Likert scale with anchors 1 (much worse than competitors) and 7 (much better than
competitors).
Control variables. We included firm age, size, industry, prior business growth and OME
age, gender, education and entrepreneurial experience as control variables. The firm age variable
was calculated as the number of years since the inception of the firm. Firm size was calculated
by averaging the number of employees in each venture (Sheng et al., 2011). The industry was
measured with a dummy variable, with 0 = high technology industry and 1 = low technology
industry (Karami and Tang, 2019). We included one item to account for the variance of prior
venture growth by calculating the percentage change in employment between 2015 and 2016
[(2016/2015) – 1.0] (Baum and Locke, 2004).
OME age was measured as the log-transformed age in years of the venture’s owner-CEO.
Gender was coded 1 (male) or 0 (female). We measured OME education by asking the
respondents to indicate their highest educational attainment. This variable was coded as follows:
1 = high school, 2 = higher national diploma, 3 = bachelor’s degree, 4 = master’s degree and 5 =
doctoral degree. OME prior entrepreneurial experience was measured by asking respondents to
indicate the number of businesses founded before their current ventures (Hmieleski and Baron,
2009). We used this number because additional learning takes place each time an entrepreneur
founds a new business (Zhao, Seibert, and Hills, 2005).

Common method variance, validity and reliability assessment

We utilised several approaches to attenuate potential common method variance in our
data. First, following Cote and Buckley (1987), we assumed a conservative single-method bias in
confirmatory factor analysis (CFA) to test three alternative hierarchically nested measurement
models presented in table 1.
Insert Table 1 here

First, we estimated a method-only model in Model 1, in which all indicators loaded on a

single latent factor. Second, we estimated a trait-only model in Model 2, in which each indicator
loaded on its respective latent factor. Thirdly, a method–trait model was estimated in Model 3,
that established a common factor linking all the indicators in Models 1 and 2. Finally, all three
models were compared to establish whether a common method bias affects the data. We found

11
that Models 2 and 3 are better than Model 1; however, Model 3 is not substantially superior to
Model 2. Thus, we concluded that common method bias did not significantly influence the data
(Cote and Buckley, 1987).
In our second test for common method variance, we followed Lindell and Whitney’s
(2001) approach and used a marker variable to tease out potential common method variance.
Accordingly, we used “my job allows me the freedom to decide how I do my work”, a variable
which measures job autonomy, as our marker variable. This variable is theoretically unrelated to
our key variables. Here, job autonomy had a non-significant correlation ranging from –.01 to .03
with the main variable of the study. This shows that common method variance may be of less
concern with our sample.
Following the assessment of common method variance, we examined the full
measurement model in CFA using LISREL 9.30 with the maximum likelihood estimation
approach. The CFA results show that composite reliability, discriminant validity and alpha
reliability exceeded the minimum threshold values of .60, .50 and .70, respectively (Bagozzi and
Yi, 2012). Furthermore, factor loadings for each of our multi-item constructs exceeded the
suggested threshold value of .40 (Anderson and Gerbing, 1988), indicating convergent validity.
Besides, each average variance extracted (AVE) was larger than the highest shared variances
between constructs (Fornell and Larcker, 1981), suggesting discriminant validity.

Insert Table 2 here

Results
We present the descriptive statistics and correlations of all key variables in Table 2. Before
embarking on the estimation process, we mean-centred all the continuous variables and inspected
the variance inflation factors (VIF) of all the regression models to check whether
multicollinearity affected the data. The highest VIF value for the regression models is 3.06
suggesting no indication of multicollinearity in the regression results (Aiken and West, 1991;
Barringer and Bluedorn, 1999). We also checked the data for potential problems related to
violations of normality and outliers. The results suggest no significant violations. Thus, the data
were amenable to test our hypotheses.

12
 To check for the potential existence of endogeneity, we followed the procedure suggested
by Wooldridge (2012) by identifying an instrument which explains significant variance in the EP
variable but did not account for significant variance in venture performance. Specifically, we
found that an entrepreneur’s intrinsic interest in entrepreneurship significantly affects their level
of persistence (r = .30, p < .01) but does not directly influence venture performance (r = .01, ns).
The results derived from the instrument test indicated that the instrument has strong explanatory
power for the potential endogenous variables. Thus, we used intrinsic interest in entrepreneurship
as an instrument for the Durbin–Wu–Hausman test but did not find evidence of endogeneity. We
also found that the independent variable remained significant even after including the instrument
variable in the regression equation for venture performance. These findings showed that
endogeneity is not an issue in our study.

Insert Table 3 here

We utilised the ordinary least square (OLS) regression approach to test our hypotheses. We
present the results of the regression analyses in Table 3. Model 1 contains the control variables,
and the results suggest that both entrepreneurial experience (β = .20, p < .01) and prior venture
growth (β = .17, p < .01) have significant influence on EP. The results in Model 2 and Models 5–
12 enable us to test the mediating hypothesis. To test the proposed moderated mediation model,
we followed the classic Baron and Kenny (1986) procedure for mediation. This approach has been
used in recent studies (Baron and Tang, 2011; Mihalache, Jansen, Van den Bosch, and Volberda,
2014). According to this procedure, first, the independent variable and the mediating variable
should be significantly related. The results in Model 2 indicate that the relationship between PIS
and EP (mediating variable) is positive and significant (β = .22, p < .01). Second, the mediating
variable must significantly relate to the dependent variable(s). The results in Model 7 and Model
11 suggest that EP is positively and significantly related to both market performance (β = .25, p <
.01, Model 7) and profitability (β = .28, p < .01, Model 11). Third, when the independent variable
and the mediating variable are concurrently added to the regression equation, the mediating
variable should account for a significant variation in the dependent variable, and the influence of
the independent variable on the dependent variable should be significantly reduced or eliminated.
In Model 8 and Model 12, when both PIS and EP are included in the regression equation, EP has

13
a positive influence on both market performance (β = .25, p < .01, Model 8) and profitability (β =
.29, p < .01, Model 12). At the same time, the effect of PIS on both market performance (β = .04,
ns) and profitability (β = .03, ns) becomes non-significant. Together these results provide support
for Hypothesis 1.
The results also show that when both social and business network ties are included in
Model 3, the influence of PIS on EP is still significant (β = .24, p < .01). In Model 4, we added the
interaction terms between PIS and social and business networks. The results indicate positive and
significant interaction for social networks (β = .42, p < .01) and business networks (β = .39, p <
.01) suggesting both social and business network ties positively moderate the relationship between
PIS and EP. These results provide support for Hypotheses 2 and 3. Also, we followed the approach
suggested by Aiken and West (1991) performed a simple slope test. In Figure 2, we show that the
relationship between institutional support and EP is positive when OMEs effectively utilise their
social network (t = 2.89, p < 0.01) in comparison to ineffective utilisation of social network (t =
.40, p > .10). This supports Hypothesis 2. Similarly, we show in Figure 3 that the relationship
between institutional support and EP is significant when OMEs effectively utilise business
networks (t = 3.13, p < .01) when compared to low utilisation of business network (t = .39, p >
.10). This supports Hypothesis 3.

Insert Figure 2 here

Insert Figure 3 here

Robustness analyses
We ran two additional tests to establish the robustness of our regression results. First, to gain
additional insight into how the results differ in terms of social and business networks, we
performed a PROCESS analysis (Hayes, 2013) to establish the mediation influence when the
moderating effects of social and business networks are added. Accordingly, a bootstrapping
approach was employed to quantify the indirect effects at low (–1SD), mean and high (+1SD)
levels of social and business networks. For the sake of brevity, we present only the conditional
indirect effects of PIS at different values of social networking and 99 per cent confidence
intervals for these effects in Table 4.

14
 Insert Table 4 here

The results in Table 4 indicate that none of the confidence intervals contained zero. This
suggests that the indirect effects are significant (p < .01) at low, mean and high values of the
moderator. Moreover, consistent with Hypothesis 3, the indirect effect of PIS on market
performance is stronger at high rather than low levels of social networks as the coefficient grows
from .38 (low social networks) to .93 (high social networks). Besides, the results in Table 4 show
that the indirect effect of PIS on market performance via EP grows from 1.21 for ventures with
low social networks to 1.91 for ventures with high social networks. Similar results were obtained
when business network was used as a moderator.

Insert Table 5 here

Second, we used employment growth data (2014–2016) gathered from finance managers
of the firms in our sample to retest our hypotheses (N = 157). Finance managers were asked in
the survey to record the level of employment growth in their firms during 2014–2016. Using
these data and following previous studies (Robson and Obeng, 2008), we included an annualised
growth rate for employment in the OLS regression. The results of the OLS regression models
using employment growth are consistent with our initial findings (Table 5). Specifically, the
results indicate that PIS is positively related to EP (mediator) (β = .18, p < .01) and EP is
positively related to employment growth (β = .33, p < .01). Also, the effect of PIS on
employment growth is non-significant when EP is added (β = .05, ns). This result suggests that
EP mediates the PIS and employment growth relationship. These results confirm Hypothesis 1.
In Model 4, the results indicate that the coefficient of the interaction between institutional
support and social network (β = .43, p < .01) and business network (β = .49, p < .01) has a
significant effect on EP. Thus, we confirmed both Hypotheses 2 and 3.

Discussion and implications

We build on prior research which related EP to desire to overcome adversity (Holland and
Shepherd, 2013) and personal and environmental constraints (DeTienne et al., 2008; Holland and

15
Garrett, 2015) to examine how PIS influences EP and consequently affects SVP. In particular,
we relate EP to the agency which OMEs display to navigate the challenges of difficult conditions
and position their venture for success. We also examine the moderating effects of social and
business networks on the PIS–EP relationship. Our findings indicate a positive relationship
between PIS and EP. We also find that EP mediates the relationship between PIS and SVP. This
suggests that when OMEs in developing countries perceive institutions as supportive, this
encourages EP, and it in turn positively impacts SVP. The relationship between PIS and EP is
boosted when OMEs have strong social networks and extensively leverage their business
networks. In sum, our study provides useful insights on how subjective beliefs of their
institutional environment influences OMEs’ EP and consequently impacts upon SVP.

Theoretical implications
Our findings make several contributions to the entrepreneurship literature, specifically to the
literature examining the influence of institutions on entrepreneurial activities as well as the
literature on EP. First, our study examines the mediating effects of EP on the relationship
between PIS and venture performance. The SME literature has predominantly focused on factors
such as innovation and internationalisation to understand SME performance (Love and Roper,
2015; Musteen and Ahsan, 2013). Few studies have broadly discussed the influence of EP on
venture outcomes (Baum and Locke, 2004; Hechavarria, Renko, and Matthews, 2012); limited
evidence exists on its effect on SVP. Our findings indicate that OME perceptions of the support
they receive from institutions in the local environment influences their EP. This insight, to some
extent, helps in better understanding the lack of relationship between macroeconomic crisis and
venture-creation activities (Davidsson and Gordon, 2016) and the differential impact of
economic freedom indicators (e.g., property rights, monetary freedom) on OMEs and NMEs
(McMullen et al., 2008). While context matters, our findings indicate that the perceptions of the
institutional context likely have a stronger influence on entrepreneurial cognition and behaviours.
In particular, OMEs who have the experience of operating ventures in a weak institutional
context will likely have a better understanding of that context than those with little prior
experience, and this is more likely to drive their behaviours.
Further, our study sheds light on the relationship between EP and venture performance.
While there has been some analysis of the impact of external factors, such as microeconomic

16
conditions, economic freedom and physical infrastructure on nascent entrepreneurial activities
(Bennett, 2019; McMullen et al., 2008), relatively less attention has been afforded to examining
the influence of PIS on behaviours of OMEs, such as EP. Our findings address some of the
shortcomings in the literature and enhance our understanding of this issue within a firm context
in which the OMEs play an influential role (Ling et al., 2008) as well as complement prior
studies which have broadly suggested that EP has a positive impact on firm outcomes (Baum and
Locke, 2004; Hechavarria et al., 2012). Further, our study goes beyond the existing literature,
which has predominantly utilised conjoint experiments to investigate EP (Holland and Shepherd,
2013; Holland and Garrett, 2015). We suggest that EP is the mechanism through which PIS
drives venture performance. By highlighting the impact of EP in this relationship, we emphasise
the role the entrepreneurs play in assessing and navigating institutional environments to position
their ventures for success.
Second, the insights from our study indicate that OME social and business networks
affect EP. While the impact of the external environment on entrepreneurial activities has been
noted (Boettke and Coyne, 2009; Welter and Lasch, 2008), less attention has been afforded to
the factors which shield firms against adverse external conditions. In particular, findings indicate
that networks provide entrepreneurs with the necessary resources to undertake the
entrepreneurial actions needed to achieve their goals (Anderson et al., 2016; Zheng et al., 2020).
Indeed, entrepreneurial networks can enable the performance of entrepreneurial firms (Stam and
Elfring, 2008). However, we lack an understanding of whether networks enable entrepreneurs to
persist with their entrepreneurial activities. Our results, including the graphical representation in
Figures 2 and 3, indicate the important role social and business networks play in influencing EP.
In particular, OMEs tend to display higher EP when they perceive higher institutional support
and actively utilise social and business networks. Thus, this article provides a finer
understanding of the nexus linking PIS, EP and entrepreneurial networks.
Third, by undertaking the study in a developing country, a context which has a weak
institutional structure (Fainshmidt et al., 2018; Julian and Ofori‐Dankwa, 2013), we provide
evidence from a real-world setting on how OME perceptions of institutional support influences
EP. The Ghanaian context is significantly different from developed countries in terms of
financial, economic and infrastructure development (Fainshmidt et al., 2018; Julian and Ofori-
Dankwa, 2013). Further, to achieve the goal of raising the country’s economic condition by

17
2020, the government of Ghana introduced initiatives to reward firms based on their financial
performance (Julian and Ofori-Dankwa, 2013). This suggests that our dependent variable, SVP,
is appropriate for our study context. It is also important to note here that our choice of using PIS,
a subjective assessment of institutional support, is appropriate for our study context because such
contexts typically lack institutions which provide objective data (e.g., customer data) and other
assistance to business owners. Our findings corroborate studies which have examined the
influence of the external environment on entrepreneurial behaviours and cognitions (Lim et al.,
2010), and complement studies which have utilised an experimental research design to
investigate the influence of external environment on EP (DeTienne et al., 2008). We also extend
the generalisability of these entrepreneurship theories and findings through our study setting.
Specifically, by examining OMEs in Ghana our study contributes to understanding
entrepreneurship in an emerging context, which is starkly different from developed countries
such as the US, UK and Canada.

Practical implications
This article offers valuable insights for OMEs. First, our findings suggest that entrepreneurial
agency plays an important role in influencing SVP. Those OMEs who persist in conditions they
perceive as supportive are likely to attain better performance. Second, OMEs who can develop
and leverage social and business networks are more likely to achieve higher performance. Such
OMEs may access resources and have privileged connections that can help to navigate
challenging environments. Third, while objective data about institutional support may be useful,
entrepreneurial behaviours are more likely influenced by the subjective beliefs of OMEs
regarding the institutional environment particularly after they gain experience in that context.
Policymakers and organisations supporting SMEs are better able to promote entrepreneurship by
developing programmes to educate OMEs regarding available institutional support.

Limitations and future research

Despite the unique provided within this study, there are limitations which could be addressed
through future research. Although we collected data in two waves (Time 1 and Time 2) to better
understand the relationships among PIS, EP and SVP, we do not know to what extent this is
affected by OME growth aspiration. By collecting information on growth aspiration, risk

18
propensity and other related variables (Ma, Mattingly, Kushev, Ahuja, and Manikas, 2019),
future research could provide a deeper understanding of the dynamics among PIS, EP and SVP.
While we utilise employment growth data (2014–2016) in our robustness analysis, the dependent
variable we use is the subjective assessment of firm performance. Future studies could enhance
our findings by utilising objective performance measures where possible. Moreover, we focuses
on ventures beyond the initial stages of development, which limits our ability to fully investigate
the temporal evolution of PIS and EP from the early life-cycle stage of the firm to a later stage.
Future research can extend the findings of our study by conducting a longitudinal analysis of
early-stage ventures and contrasting those findings with a longitudinal study of late-stage
ventures. Indeed, Klyver, Honig, and Steffens (2018) find that emotional support is more useful
when it is received at earlier stages of venture development than later during the venture
emergence process. Finally, we did not explicitly examine the motives of entrepreneurs for
forming the social and business network ties and the specific resources gained from these ties.
Future research could examine variables such as networking motives and networking actions
(Engel, Kaandorp, and Elfring, 2017; Klyver, Schenkel, and Nielsen, 2020). Relatedly, prior
research has suggested that entrepreneurial networks condition opportunity recognition and
realisation (Jack and Anderson, 2002) which could influence EP. Researchers can add to our
study by examining the relationship between entrepreneurial networks and PIS over time, and
consequently its impact on EP and SVP.

Conclusion
This article extends prior literature by examining the influence of perceived institutional support
(PIS) on small venture performance (SVP) mediated by entrepreneurial persistence (EP). Our
evidence highlight the critical role EP plays in mediating the relationship between PIS and SVP
illustrating that perceptions of OMEs affect their behaviours, which in turn influences venture
outcomes. Furthermore, we demonstrate that the relationship between PIS and EP is moderated
by the social and business networks developed by OMEs; this suggests that social and business
ties provide valuable resources and support needed to persist with entrepreneurial actions. We
hope that the insights in this article motivate researchers to analyse the influence of an
entrepreneur’s perception of the prevailing context upon their cognition and behaviour.

19
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 Social
Networking

Small
Perceived Entrepreneurial Venture
Institutional Support Persistence Performance

Business
Networking

Figure 1. Mediating–Moderating Model of Perceived Institutional Support and Small

Venture Performance

Table 1. Common Method Bias Nested Models and Goodness-of-Fit Statistics

Model χ2 df χ2/df RMSEA CFI NNFI AGFI
M1: Method 1408.05*** 955 1.14 .08 .40 .29 .62
M2: Trait 1325.46*** 534 2.48 .04 .94 .92 .91
M3: Trait-method 1305.22*** 489 2.67 .05 .97 .95 .96
*** p < .001. df = degrees of freedom; RMSEA = root mean square error of approximation; CFI = comparative fit index; NNFI =
non-normed fit index; AGFI = adjusted goodness of fit index.

28
 Table 2. Descriptive Statistics and Correlations

Variables Mean S.D. 1 2 3 4 5 6 7 8 9 10 11 12 13 14

1. Firm size 45.07 11.61
2. Firm age 7.55 1.17 -.01
3. OMEs’ age 48.18 10.24 -.04 -.11
4. Education 2.27 1.14 .00 .07 .09
5. Gender .82 .41 .02 .01 .08 .06
6. Prior venture growth .08 .16 -.04 -.03 -.09 .12 .11
7. Industry .43 .49 .06 .05 .00 .08 .01 .06
8. Entrepreneurial .96 1.33 .03 .08 .25** .05 .02 .14* .02
experience
9. Social network 4.46 .95 .08 -.10 .37** .38** .14* .11 .05 .22**
10 Business network 3.61 1.40 .14* -.03 .18* .15* .08* .06 .06 .18* .05
.
11 Perceived institutional 3.41 1.43 -.05 .05 .02 .03 .03 .18* .12 .07 .16* .18*
. support
12 Entrepreneurial 5.22 .85 -.09 -.08 .11 -.14* .07 .23** .07 .19** .14* .09 .31**
. persistence
13 Market performance 4.56 1.34 -.05 -.04 -.07 .05 .11 .17* .15* .22** .28** .15* .22** .21**
.
14 Profitability 4.86 1.11 -.08 -.05 -.03 .09 .14* .19** .13 .27** .32** .13 .29** .31** .37**
.
15 Employment growth 7.36 12.85 -.05 -.09 -.04 .01 .03 .21** .08 .17* .12 .09 .22** .28** .39** .28**
.

N = 373; *p ˂ 0.05; **p ˂ 0.01 (2-tailed test); S.D. = Standard Deviation.

29
Table 3: Regression Results of Small Venture Performance (N = 373)

Models 1–4: Entrepreneurial Persistence Models 5–8: Market Performance Models 9–12: Profitability
Control variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9 Model 10 Model 11 Model 12
Firm size -.05 -.05 -.05 -.05 -.03 -.04 -.04 -.05 -.05 -.05 -.05 -.05
(employees)
Firm age (years) -.09* -.09* -.11* -.10* -.04 -.04 -.04 -.05 -.05 -.06 -.06 -.06
Industry .10* .10* .11* .11* .14** .14** .14** .14** -.09* -.10* -.11* -.11*
Prior venture .17*** .17*** .19*** .20*** .17*** .18*** .18*** .19*** .22*** .22*** .23*** .23***
growth
OMEs’ age .02 .02 .03 .04 -.09* -.10* -.11* -.12* -.03 -.04 -.05 -.05
Education -.12* -.12* -.13** -.13** .04 .04 .05 .05 .06 .07* .08* .08*
Gender .10* .10* .11* .11* .09* .09* .10* .11* .12* .13** .13** .13**
Entrepreneurial .20*** .22*** .23*** .23*** .23*** .22*** .23*** .24*** .25*** .26*** .26*** .27***
experience
Independent
variable
Perceived .22*** .24*** .23*** .19*** .19*** .20*** .04 .24*** .25*** .26*** .03
institutional
support (PIS)
Moderators
Social network .13** .14** .17*** .18*** .19*** .23*** .24*** .24***
(SN)
Business network .12* .12* .14** .14** .14** .16*** .17*** .18***
(BN)
Interactions
PIS * SN .42***
PIS * BN .39***
Mediator
Entrepreneurial .25*** .25*** .28*** .29***
persistence
Model fit statistics
F-value 1.38 3.93*** 5.26*** 7.03*** 2.72** 3.69*** 5.48*** 4.88*** 2.88** 3.99*** 4.96*** 3.89***
R2 .12 .16 .24 .31 .14 .19 .25 .32 .13 .18 .26 .35
∆R2 - .04 .08 .07 - .05 .07 .06 - .05 .08 .09
Largest VIF 3.06 2.11 1.40 1.74 1.72 2.32 1.53 2.22 1.47 2.22 1.19 1.32

* p < .10.; ** p < .05; *** p < .01; standardized coefficients are shown.

30
Table 4. Conditional Indirect Effect(s) of PIS on Market Performance at Values of Social
Networking1
99% Confidence interval
Mediating variable Social network Effect Lower-level CI Upper-level CI
Entrepreneurial persistence −.88 (−1SD) .38 (.24) .04 1.21
Entrepreneurial persistence 0 (Mean) .67 (.28) .25 1.49
Entrepreneurial persistence .88 (+1SD) .93 (.36) .36 1.91
Bootstrapping standard errors in parenthesis. 1The conditional indirect effect of PIS on profitability at values of social networking
follows the same pattern as above.

Figure 2. Interaction Effect of PIS with Social Network on EP

4
Entrepreneurial
persistence

3 Low social network

High social network
2

1
Low PIS = 1 High PIS = 2

Figure 3. Interaction Effect of PIS with Business Network on EP

5
4.5
4
3.5
Entrepreneurial

Low business network

persistence

3
High business network
2.5
2
1.5
1
Low PIS= 1 High PIS = 2

31
Table 5: Regression Results of Employment Growth (N = 157)

Models 1–4: Entrepreneurial Persistence Models 5–8: Employment Growth

Control variables Model Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8
1
Firm size -.02 -.03 -.03 -.03 -.06 -.05 -.06 -.05
(employees)
Firm age (years) -.11* -.11* -.13** -.13** -.11* -.11* .11* .05
Industry .13** .14** .14** .13** .14** .14** .14** .15***
Prior venture growth .14** .14** .13** .14** .26*** .27*** .28*** .19***
OMEs’ age .10* .11* .12* .12* -.04 -.05 -.05 -.05
Education .07* .08* .10* .10* .01 .01 .03 .04
Gender .12* .12* .13** .11* .03 .03 .04 .04
Entrepreneurial .25*** .27*** .27*** .23*** .19*** .20*** .21*** .22***
experience
Independent variable
Perceived .18*** .20*** .25*** .29*** .31*** .32*** .05
institutional support
(PIS)
Moderators
Social networking .19*** .21*** 25.*** .26*** .26***
(SN)
Business networking .21*** .22*** .22*** .24*** .24***
(BN)
Interactions
PIS * SN .43***
PIS * BN .49***
Mediator
Entrepreneurial .33*** .34***
persistence
Model fit statistics
F-value 2.52** 4.71*** 4.92*** 5.63*** 2.48** 4.46*** 4.51*** 3.21***
R2 .13 .18 .22 .29 .11 .15 .22 .31
∆R2 - .05 .04 .07 - .04 .07 .09
Largest VIF 1.16 1.90 1.59 1.33 3.01 1.12 1.18 1.46

* p < .10.; ** p < .05; *** p < .01; standardized coefficients are shown.

32
 Appendix 1. Constructs, Items, Reliability and Validity Tests

Item Description Loadings

(t-values)
Entrepreneurial persistence: α = .84; CR = .85; AVE = .63
I can think of many times when I persisted with work when others quit. .74(1.00)
I continue to work hard on projects even when others oppose me. .77(11.64)
I work harder than most people I know. .90(13.32)
No matter how challenging my work is, I will not give up. .82(12.22)
I frequently have to tear myself away from my work to satisfy other obligations. .78(11.66)
Social network: α = .95; CR = .96; AVE = .62
I can obtain information about my industry from my network of contacts faster than .94(1.00)
competitors can obtain the same information.
I have a professional relationship with someone influential in my industry. .95(24.56)
I have engaged with someone influential in my industry in informal social activity (e.g., .84(17.65)
playing tennis).
Business network OMEs utilised in last three years: α = .93; CR = .95; AVE = .71
Customers .79(1.00)
Suppliers .95(24.78)
Competitors .78(15.20)
Perceived institutional support: α = .85; CR = .87; AVE = .54
In Ghana, entrepreneurs are encouraged and supported by public and non-governmental .89(1.00)
institutions (e.g., district and municipal assemblies, trade associations).
Ghanaian economy provides many opportunities for entrepreneurs. .85(13.49)
Taking bank loans is quite difficult for entrepreneurs in Ghana (*). .86(13.88)
Ghanaian state laws (rules and regulations) are adverse to running a business (*). .78(12.34)
Profitability: α = .87; CR = .88; AVE = .68
Finance managers’ evaluation of company overall profitability .73(1.00)
Finance managers’ evaluation of company profit margins .90(12.40)
Finance managers’ evaluation of company return on investment .72(8.23)
Market performance: α = .88; CR = .89; AVE = .69
Finance managers’ evaluation of overall market share relative to target market objective .88(14.27)
Finance managers’ evaluation of sales volumes relative to target market objective .92(25.88)
Finance managers’ evaluation of sales growth relative to target market objective .80(10.53)

*Items marked with an asterisk are reversed

33

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