Institutions, Globalization and the Dynamics of Opportunity-Driven Innovative Entrepreneurship

Institutional quality and globalization are crucial in influencing both the prevalence and quality of sustainable entrepreneurial ecosystems within an economy. This study examines the relationship between Opportunity-Driven Entrepreneurship (ODE); entrepreneurial quality, as measured by the Motivational Index (MI), and institutional quality, assessed through economic freedom and governance, in high- and middle-income countries. It also examines how globalization impacts both ODE and MI in these country groups. Using data from the Global Entrepreneurship Monitor (GEM) and combined indices of economic freedom, governance, and globalization, the study analyzes an unbalanced panel dataset comprising 64 countries from 2004 to 2018. Estimation is performed using the Robust Least Squares (RLS) method. The findings show that economic freedom has a positive and significant effect on both ODE and MI across high- and middle-income countries. In contrast, governance has a significant impact on ODE and MI only in high-income countries. Globalization exerts a negative influence on ODE across both income groups, with the adverse effect being more pronounced in middle-income countries. Conversely, its effect on MI is positive in middle-income countries but shows no significant influence in high-income economies. The study offers valuable insights for economists, policymakers, and scholars interested in the forces that shape ODE.