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Abstract

What drives entrepreneurial activity and new venture creation? Common explanations within the entrepreneurship literature include the degree of available resources, the cultural inclinations of the society, and the institutional environment in which the activity occurs. Despite continued interest in this area of research, empirical findings remain largely inconclusive. Moreover, relatively few studies have empirically examined the various determinants concomitantly. Relying on panel data from 79 countries, we examine the asymmetrical impact of resources, culture, and institutions on both formal and informal entrepreneurial ventures. We find that higher levels of human capital, financial capital, and technological development lead to increased levels of formal ventures. In contrast, we find that human capital and stage of economic development demonstrate a negative relationship with informal ventures. We discuss implications for theory and practice and offer suggestions for future research.

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