The three pillars’ impact on entrepreneurial activity and funding: A country-level examination

Extant research suggests that formal and informal measures are substitutive. However, this study builds theory and empirically tests an additive effect of the three institutional pillars (i.e., cognitive, normative, and regulative) on entrepreneurial activity and venture capital availability. Using panel data from 2007 to 2014, we test the impact of these pillars from a sample of 383 observations stemming from 111 countries. The results indicate that all three pillars play an additive role in spurring entrepreneurial activity. Furthermore, education, training, the favorability of the regulative institution, legitimizing media, and social norms all play a significant role in venture capital development.