Cross-country Differences in Innovative Entrepreneurial Activity: An Entrepreneurial Cognitive View

The purpose of this paper is to clarify the relationship between entrepreneurial cognition and innovative entrepreneurial activity across countries using an institutional perspective. The paper tests theoretical model using data collected by the Global Entrepreneurship Monitor (GEM), the Global Leadership and Organizational Behavior Effectiveness (GLOBE) study, and the Index of Economic Freedom (IEF). A Multilevel analysis is performed based on set of 1,004,620 observations from forty-nine countries spanning thirteen years (2001-2013). The results suggest that in terms of formal regulations; the relationship between entrepreneurial cognitions and Innovative entrepreneurial activity becomes stronger when there is an increase in intellectual property right and business freedom regulations in a country. On the other hand in terms of informal institutions the relationship between entrepreneurial cognitions and Innovative entrepreneurial activity becomes stronger when the level of institutional collectivism and uncertainty decreases and performance orientation increases. The study indicates that entrepreneurship by innovation increases when the individuals possess high level of entrepreneurial cognition under suitable institutional conditions (e.g. intellectual property right, business freedom, institutional collectivism, uncertainty avoidance and performance orientation).