The institutional environment and its impact on entrepreneurship.

Qinjie li

Abstract：In history，there are many real cases to prove whether institutional factors can influence entrepreneurship，and institutional factors often exist as the external influence of entrepreneurship.Studying the influence of institutional environment on entrepreneurship is often helpful to identify the advantages and disadvantages of entrepreneurial opportunities.The entrepreneurs sensitive response to these factors reflects a strain.

Key words：institutional environment;entrepreneurship

1 INTRODUCTION

This article focuses on the relationship between the institutional environment and entrepreneurship.This is a topic of common interest in the fields of histology，economics，and management.The institutional environment is generally seen as a popular sphere where many factors converge.Economists and social theorists have been paying attention to the theory of institution，and there are also many studies on the influence of various factors on entrepreneurship.This paper analyzes the relevant academic journal articles to discuss this topic.Following a brief introduction，this paper will give a brief review of Institutional theory and entrepreneurship，followed by a systematic description of the process of this research.The perspectives of education for new opportunity entrepreneurship and female entrepreneurship，the relationship and influence between system and entrepreneurship will then be discussed through a qualitative analysis.The article will discuss the perspectives of education，opportunity recognition，and female entrepreneurship and argue that the encouraging institutional environment is more conducive to entrepreneurship.

2 MAIN BODY

2.1 Literature Review

2.1.1 Institution

There are different schools of thought about the definition of the institution.The concept of an institution can be traced back to Adam Smith （1776），who proposed that formal and informal institution is the “invisible hand” under the background of a market，as a system coordinated by pricing system to manage the market.Wesley Mitchell （not in your reference list！） （1935） mentioned that institutions are collective behaviors like habits and ways of thinking that control individual behaviors.Institutions，according to Mitchell，explained the permanence of the system and determined the evolutionary nature of the system.This has been called Old Institutional Economics （OIE） in the economic literature.It is generally believed that the New Institutional Economics （NIE） began with Ronald Coases article on the nature of companies （Coase，1937）.According to the NIE，institutions are defined   as structures of social interaction including money，law，weights and measures，transportation，and companies that establish and embed lasting，systematic language and social rules （Robert，1996）.

The new institutionalists defined the economic concept of “institutions” as “constraints” as rules-constraints or rules-conventions， （North，1990）：institutions are artificially designed constraints that constitute political，economic and social interactions，including informal constraints and formal rules，to create order and reduce uncertainty in exchange. North （1995） redefined the system as formal and informal restrictions.He proposed three basic elements of the system constituting the institutional framework：the first is formal or written constraint，such as political system，law，management contract，tax collection，tariff，and regulation.These constraints can arise within governments as well as within companies and organizations.The second kind of informal constraint is written in peoples minds and hearts and can be described as culture，norms of behavior，customs，values，and religion.Finally，the execution mechanism.Without practice or enforcement，institutions are meaningless.（Jack and Itai，2001）

More recently， New Institutionalizes like James & Kathleen （2009） have argued that economic problems are institutional problems.They stress the role of institutions in reducing transaction costs and improving economic efficiency.However，Anthony （1984） pointed out that the definition of institution should be a more lasting feature of social life，including institutional order，curriculum model，political system，economic system and legal system and so on.Similarly （？），Rom Harre follows the definition of theoretical sociologists and defines an institution as a social practice with expressive and practical purposes and results.McCloskey （2016） argues that the new institutional theory is too absolute to judge human nature rationally. Environments need to express humanness and be given new meaning.

2.1.2 Entrepreneurship

The definitions of  entrepreneurship have shifted over time.Kirzner （1997） emphasized that entrepreneurs are leaders.His actions introduced the means of production to previously untapped markets，and other producers followed him into those new markets.Kirzners vision of entrepreneurship is seen as arbitrage，pointing out that individuals get entrepreneurial profits based on the knowledge and information gaps that exist in the market.An entrepreneur is an astute person who uses knowledge or information asymmetry to discover opportunities by acting as an arbitrator or price regulator in the market.The entrepreneur is wary of arbitrage opportunities based on past mistakes and serves to exploit and correct them，doing so and guiding the market toward balance.However，until the late 19th and early 20th centuries，entrepreneurship was largely ignored in theory until the revival of business and economics.

In the 21st century，the scholarly discussion of entrepreneurship has expanded from its origins as a for-profit enterprise to include social entrepreneurship，in which business goals are pursued alongside social，environmental or humanitarian goals and the concept of political entrepreneurship.In the social sciences，links are actually crucial to the integration of individuals into modern society，encouraging people to choose groups over natural selection.Andrew Schotter （2008） noted that changes in population and environmental conditions，technological changes or new information are typical features of bottom-up changes in an institutional environment，and human activities also change accordingly.Schumpeter （2000） stated that an entrepreneur who introduced a new product or method of production，opened a new market or found a new source of supply，or implemented a new industry organization，was an innovator and an agent of change.Schumpeters entrepreneurship has different drivers：risk-taking roles，managerial skills，wealth，a preference for control，flexibility and other attributes of work.Both Schumpeter and Kerzners entrepreneurial philosophy was based on taking advantage of profit opportunities，the biggest difference is that the former leads to market deviation from equilibrium while the latter continues to move towards equilibrium with different concerns.

2.2 Method

The research on the correlation between institution and entrepreneurship is worth finding in  real social activities.The current paper chose two magazines of Business history and Business history review from Business Source Premier Publications（EBSCO）and British Periodicals in order to assess the history of entrepreneurship.The literature search focused on articles with titles，abstracts，or keywords followed by the institutional theory.

The Business Source Premier database was then used to source 246 pieces of literatures about institutions and entrepreneurship as abstract from 2013 to September 2018，and 28 pieces of literature about institutions and entrepreneurship as the keywords.This investigation of the history of entrepreneurial research，found that there is much research on institutional identification and entrepreneurial opportunity identification before the economic crisis in 2008.In recent years，scholars have gone through a deepening process from simply determining the institutional factors that lead to entrepreneurship to expanding the theoretical connotation of the system.

Thirdly，in terms of searching the catalogs of planning，keywords such as entrepreneurial entry，entrepreneurship education，and female entrepreneurship were been searched from these journals.Twelve articles for critical review are from ABS List.Three related articles are from Journal of Business Venturing，Strategic Management Journal，and International Entrepreneurship and Management Journal.They have been cited for verification after consolidated the results as follows.

2.3 Discussion

2.3.1 Institutional environment and entrepreneurship education

The possibility of entrepreneurship education has generated wide interest in more and more countries.A paper by Sascha and Jorn（2015） attempted to explore how the relationship between entrepreneurial education and entrepreneurial activities is restricted by national institutions through the investigation of five national characteristics.This empirical research was based on entrepreneurial behavior theory and institutional theory.Data from more than 26000 interviews with people aged 15 and above in 32 countries were analyzed at multiple levels.It used a polynomial Logit model to measure the correlation between goals.The personal data covered 27 EU countries，five other European countries （Croatia，Iceland，Norway，Switzerland，and Turkey），as well as telephone interviews with people in China，Japan，South Korea and the United States from December 2009 to January 2010.The results showed that the positive relationship between entrepreneurial education and entrepreneurial activities was not so obvious in big cities，but it is stronger in the entrepreneurial hostile institutional environment.This means that entrepreneurial education can more effectively stimulate entrepreneurial activities in countries with friendly entrepreneurial environments when the availability of financial capital and education capital is low，corruption is high and the public evaluation is not good enough.But the correlation between individual factors and changes in the institutional environment was the opposite in this case.The study called for continued national support for entrepreneurship education.

While we affirm the positive role of education in entrepreneurship，education in young entrepreneurship has a different effect.Syed，Mohd and Robert （2014） conducted an empirical survey on the effectiveness of entrepreneurship courses of the polytechnic institute of Malaysia in terms of students entrepreneurial tendency.The research results showed that，due to the poor curriculum setting effect，the teaching method seems to be insufficient，and the faculty did not have the necessary entrepreneurial skills，knowledge or training，so the amount of students believed that entrepreneurial education is not necessary.There were two possible ways of handling this problem.Edmilson，Rose，V?nia and Dirceu （2015） suggested that the diversity of curriculum and the enrichment of teaching contents in Brazile.Maksim and Keith）2017 also recommended providing infrastructure and opportunities for students to communicate with policymakers and entrepreneurs and facilitate networking with students and alumni.In contrast，Leanne，et al.（2018） argued that the positive effect of formal education on entrepreneurship is not obvious.Perhaps informal education resources themselves are more important，such as establishing cultural awareness and organizational relationship through language media.

2.3.2 Institutional environment and the new chance for entrepreneurship

The possibility of a new entrance has generated wide interest in the different industry.The purpose of an analysis by Jeffrey and Michael（2014） was to find the impact of the institutional environment on new companies and experienced companies when they plan to enter a new industry.The theoretical basis of the study was the organizational entry mode and institutional theory.The samples were collected from 351 new entrants companies and 714 diversified existing companies in 50 states from 2000 to 2008 in Green building supply industry.A stochastic effect model was used to measure the correlation between the targets.State policy incentives had a greater impact on new entrants than on experienced ones.The study resulted in three findings：The research on the correlation between collective action and social norms and emerging sectors that generate inherent ecological benefits.It has found that the influence of social and cultural environment on the occupancy rate of new enterprises is greater than that of diversified existing enterprises.The second was the research on the correlation between national incentive policies and the entry of companies.It was found that the diversified decision-making of existing enterprises is driven to a greater extent by the economic interests that depend on the certainty and legitimacy provided by the state-level economic incentives.State policy incentives had a greater impact on new entrants than on experienced ones.Third，the study on the correlation between environmental and social norms and self-made environmental entrepreneurs found that the impact of social norms on environmental entrepreneurs exceeded the economic or political conditions of a region，and there was a strong and lasting positive relationship between the two.

The same situation from another case was Indias telecoms industry.It affirmed the role of institutional environments in moving into new industries and stressed that this role is reciprocal.By studying the history of the rise of the telecommunications industry in India，Nayak and Maclean （2013） indicated that opportunities always come from and are limited by the particularity of environment and community，at the same time，it can be seen as the products of the historical process.Specific entrepreneurial opportunities can also be seen as composed of rules，regulations，practices，and countless interrelationships.Institutions as regulators，cultures，and politics have been combined with individual players interact in this process.Likewise， Andrew and Haiming（2016） introduced the improvement of financing environment has a close promotion effect on the emergence and success of modern department store owners in China in the last decade.In contrast，the importance of a stable institutional environment has been highlighted by reviewing a case in which the North American lightning protection industry failed due to a wrong market response of discontinuity institutional environment （Sara，2013）.

2.3.3 Institutional environment and female entrepreneurship

Many investigators have recently turned to female entrepreneurship.The purpose of Xuemei and Jiuchangs （2017） article was to examine how the institutional factors supporting female entrepreneurship.Data were collected from more than 300 female entrepreneurs or founding team members from the different field of companies under the age of 8 years.Hierarchical regression was performed on the total samples，Pearson correlation coefficient has been used for correlation analysis.The results showedthat institutional support not only directly promotes the performance of female-dominated technology start-ups but also weakens the negative correlation between the resource shortage of female technology start-ups and the performance of new companies.In other words，institutional support could balance the greater challenges faced by women entrepreneurs in new technology enterprises and provide them with a large number of valuable resources.For example，easier access to financial resources reduced their dependence on the external environment and alleviate the problems of resource shortage and reputation loss.This study contributed to the theoretical framework of farmers entrepreneurial resources in the transition economy.

The literature on female entrepreneurship and institutions is highly dispersed.Amanda and Maija （2017） observed female entrepreneurship from a cultural perspective in India. The research confirmed that for women，collectivism has a significant impact on the ownership of their business，particularly within the group like their family，friends or colleagues.This is not only the influence of political or economic factors but also a reflection of social culture.Similarly，Mohsen2016） reported that informal factors such as social networks and female business icons have a positive impact on Iranian womens entrepreneurship.One thing we should notice，many of the respondents highlighted their process of legalizing entrepreneurship in the Middle East through the use of lslamic resources in patriarchal and traditional societies.

3 Conclusion

To sum up，based on literature research，this paper analyzed the influences of institutional environment on entrepreneurship from the perspectives of education，opportunity recognition，and female entrepreneurship.This paper has shown that entrepreneurial education，can seem like a universal institutional factor conducive to entrepreneurship，and some improvement methods have been introduced.The next step is to propose research on education of social entrepreneurship.As a result of new opportunities for entrepreneurship，when entering a new industry，such as politics，financing，law and other formal factors still play a strong role.The factors influencing womens entrepreneurship were complex，and informal factors such as culture and religion need to be observed.In the future，more research on female entrepreneurship in advanced economies will be discuseed more.

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作者簡介

李沁洁（1986—），女，汉族，四川成都市人，助理安全工程师，管理学硕士，单位：伦敦布鲁内尔大学;研究方向：管理学。