Innovative entrepreneurial activity in five Latin America countries and the effect of external environmental shocks

Purpose Through human capital theory and the external enablers (EE) framework, this study investigates the dynamics of innovative entrepreneurial activity (IEA) among nascent entrepreneurs in Latin America (LA) and how the mechanisms of an external environmental shock, such as the COVID-19 pandemic, reshaped these dynamics. Design/methodology/approach We use data from the Global Entrepreneurship Monitor of five representative Latin America countries covering the period from 2019 to 2022 and a logistical regression with robust standard error to test all our hypotheses. Findings We empirically found that the COVID-19 pandemic acted as an EE for the enhancement of outcomes toward more innovative entrepreneurial activity. Additionally, the pandemic reduced the education gap, maintained the entrepreneurial experience gap and caused a gap between entrepreneurs with an alertness to perceive business opportunities and the innovative entrepreneurial activity in LA. Originality/value We discuss the theoretical contributions that focus on the relationships between EEs and innovative entrepreneurial activity in LA countries and their practical implications, centering on how entrepreneurs, along with public and private actors, can meet the challenges of the new normal caused by an external shock. This study represents the first attempt to empirically analyze the impact of the pandemic before, during and in the “new normality”, with focus in IEA within the LA context.