When Do Natural Resources Promote Entrepreneurial Activities in Oil‐Rich Countries? Fresh Evidence From a Moderated Mediation Analysis

ABSTRACT The relationship between natural resource abundance and economic activities has been a subject of ongoing debate. While it is widely recognized that resources can potentially generate wealth, numerous resource‐rich countries have experienced a deceleration in their economic growth. This study offers fresh insights into how countries can effectively address this challenge by harnessing their resources to stimulate entrepreneurial activity. Specifically, it investigates whether natural resource rents affect entrepreneurship activity by examining the mediating role of financial development and the moderating effect of governance quality in the case of 13 oil‐rich economies from 2005 to 2021. Using Hayes' PROCESS approach, the findings show that while natural resource rents have no direct effect on entrepreneurship, financial development acts as a mediator. In other words, the rent of natural resources decreases financial development, increasing necessity entrepreneurship and decreasing opportunity entrepreneurship. On the other hand, the moderated mediation analysis reveals that good governance moderates the impact of natural resource rents on financial development, promoting opportunity‐driven entrepreneurship and discouraging necessity‐driven entrepreneurship. The study highlights governance as a potential response mechanism that leverages natural resource endowments to promote opportunity‐based entrepreneurship, provided rents are efficiently managed and channeled into the financial sector to increase capital availability for ventures seeking to address unmet needs. A country can help transform these revenues into drivers of financial development and sustainable entrepreneurship by enhancing transparency, combating corruption, and fostering strong institutions through effective policies.