Geopolitical Risk, Institutional Quality, Financial Development, and Environmental Pressures as Drivers of Entrepreneurship in E7 Economies

ABSTRACT The research study evaluates the complex interaction of institutional, financial, environmental, and geopolitical factors that interact to shape entrepreneurship in the E7 economies (i.e., China, India, Brazil, Mexico, Russia, Indonesia, and Turkey) in the period between 2006 and 2022. Using the cross‐sectionally augmented autoregressive distributed lag (CS‐ARDL) approach, the findings explain a stable long‐term relationship between entrepreneurship and its underlying structural variables. Empirically, 1 % improvement of institutional quality is associated with a 0.33% improvement in the creation of new firms, and a 1% improvement in financial development is associated with a 0.29% improvement in this field. In addition, there is an additional trade liberalization and economic growth, which contributes to the activities of the entrepreneurs in 0.20 and 0.31, respectively. Conversely, a 1% increase in geopolitical risk triggers a decrease in entrepreneurship by 0.21, and a 1% increase in CO 2 emission leads to a decrease of 0.18, thus supporting the idea that instability and environmental stress is a systemic constraint to innovation. The large error‐correction coefficient (−0.41) means that 41% of the short‐term deviations are corrected on an annual basis on the way to equilibrium on a long‐term basis, which is an example of adaptive resilience in E7 entrepreneurial systems. The findings highlight the fact that strong governance, monetary inclusiveness, and sustainable integration of trade can have the power to ensure that high‐risk environments transform into drivers of the opportunity‐based entrepreneurship. Strategically, the study outlines sustainable institutional and financial reforms as the key tools in achieving balanced growth in line with SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), and SDG 13 (Climate Action).