Economic policy uncertainty and new venture initiation: The role of opportunity belief and uncertainty avoidance

This article examines how economic policy uncertainty (EPU) shapes individual decisions to initiate new ventures. We develop and test a multilevel framework in which EPU influences entrepreneurial action via the cognitive mechanism of opportunity belief, moderated by the cultural context of uncertainty avoidance. Drawing on institutional theory and a dataset comprising 677,715 individuals across 22 countries, covering 2010 – 2018, compiled from four data sources, we find that individuals are less likely to pursue new ventures in countries with high EPU, partly because such uncertainty undermines their belief in the availability of viable business opportunities. This effect is amplified in societies with high uncertainty avoidance, where unpredictability is perceived as more threatening. By identifying opportunity belief as a key mediating mechanism and national culture as a boundary condition, this study advances a more integrated understanding of how institutional and cultural contexts jointly shape entrepreneurial behaviour under institutional uncertainty.