Foreign direct investment and entrepreneurship: Does the role of institutions matter?

•We examine the moderating effects of institutions on FDI-entrepreneurship nexus for 97 countries during 2006−2016.•Based on SGMM estimator, we find that institutions moderate FDI-spillover effects on domestic entrepreneurship (new business creation).•FDI crowds in domestic entrepreneurship only in host countries possessing above-threshold institutional capacities.•FDI either crowds out or has no effect on entrepreneurship in host countries having below-threshold institutional capacities.•Threshold restrictions/values varies across legal, economic, and conflict-preventing institutional capacities.