Microfoundations of Institutional Entrepreneurship: The Interactive Effects of CEO Entrepreneurial Self-efficacy and Organizational Characteristics

Abstract To better understand the microfoundations of institutional entrepreneurship, we introduce entrepreneurial self-efficacy (ESE) as a mechanism to explain why some organizations engage in institutional entrepreneurship while others do not. Although it is clear that ESE is critical to understanding entrepreneurship, we lack an understanding of how ESE affects institutions. Drawing on novel survey data on Flemish work-integration social enterprises which are exposed to a significant policy reform, we find that organizations with CEOs who exhibit high ESE are more likely to engage in political tactics to actively shape their institutional environment, and that this effect is amplified for firms that have more resources, reputation and connections in the field. These findings provide a better understanding of the cognitive microfoundations of institutions, complement existing research on conditions enabling institutional entrepreneurship and provide guidance for practice.