Public perception, government support, and the formation of AI startups: An institution-based view

This study investigates cross-country differences in artificial intelligence (AI) startup formation through an institution-based view. Public perception of science and technology (S&T) is conceptualised as an informal institution influencing societal acceptance of innovation, while government AI strategies are framed as formal institutions shaping policy, resources, and regulation. Using data from 40 developed and emerging economies, and controlling for macroeconomic, innovation, and talent-related factors, multiple regression analyses show higher startup activity in countries with more positive public views of S&T and stronger, well-resourced AI strategies. Spiritual concerns about S&T have a stronger negative relationship with AI entrepreneurship than material concerns, highlighting the role of cultural influences in technology adoption. The findings suggest that alignment between formal and informal institutions is essential for entrepreneurial success in frontier technologies. Policy implications include fostering public trust through education and ethical governance, and strengthening AI ecosystems through targeted investments in talent, infrastructure, and enabling regulation. • Informal and formal institutions jointly shape AI startup formation across countries. • Negative public perceptions of science and technology reduce AI startup activity. • Government AI strategies are positively associated with national AI startup formation. • Spiritual concerns about science inhibit AI entrepreneurship more than material concerns.