Institutional environment dimensions and business performance of rural-based women entrepreneurs: the role of entrepreneurial orientation

Purpose The existing literature has primarily focused on distinguishing the performance of men and female-owned businesses, often emphasizing challenges specific to women entrepreneurs (WEs) like gender parity and socio-cultural and work-life. However, research on WEs has given limited attention to regional and cultural differences, which are widely considered crucial to business success. This article aims to empirically analyze how the institutional environment (IE) affects the business performance of rural-based women entrepreneurs (WEs) through the mediating influence of entrepreneurial orientation (EO). The IE (regulatory, cognitive and normative) approach is employed as a guiding framework considering the complexities of the entrepreneurial ecosystem in diverse regions of emerging economies. Design/methodology/approach A convenience sample of 344 rural WEs was surveyed, and data were analyzed using partial least squares structural equation modeling (PLS-SEM). Findings Results indicate that the regulatory (ROG) and cognitive (COG) dimensions significantly and positively affect business performance (BPO) among rural WEs. However, the normative (NOR) dimension exhibits no significant relationship with BPO. EO partially mediates the impact of ROG and COG on BPO, while it fully mediates the NOR–BPO relationship. Research limitations/implications These findings offer valuable insights for policymakers aiming to develop rural entrepreneurship strategies by highlighting EO’s mediating role between IE and business outcomes. The study also expands institutional theory by exploring how formal (regulatory) and informal institutions interact to influence WEs’ performance, emphasizing within-gender dynamics. Originality/value The study is an early attempt to investigate rural WEs in an emerging economy, focusing on how IE and EO shape their business performance.