Institutional governance matters in the context of social capital and international entrepreneurial entry: A multi-level perspective

Abstract

Purpose. The main aim of current research is to come about with a better comprehension for institutional governance factors impacting the relationship between social capital possessed by the entrepreneurial ventures and their ability to enter into the international market.

Design/Methodology/Approach. The current study utilizes the data of social capital and internationalization collected from Global Entrepreneurship Monitor (GEM) between 2002-2013 with 696882 observations and covering 70 countries emphasizing on early
stage entrepreneurs as explained by TEA index (nascent and new) involved in considerable international entrepreneurial entry. For statistical analysis a Multi-level Modelling approach is used to test the hypothesis by using STATA.

Findings. Possession of strong social capital facilitates international entrepreneurial entry. Keeping in view the overall aggregated impact of institutional governance on internationalization of new ventures is negative but the individual indicators of institutional
governance moderates positively between the relationship of social capital and internationalization.

Limitations/Implications. The study is based on the institutions from world governance indicators that states the importance of institutions as means of exercising the authority in a country, using a comprehensive sample size and multi-level modelling. Whereas, various other institutional indicators are remained to be considered that might effect international entrepreneurial entry. For the policy makers results depicts that the explained institutional governance indicators favorably correlate with international entrepreneurial entry when individuals have strong social capital, therefore policy makers should structure a safe governance framework to facilitate internationalization process for new ventures.

Originality/Value. The existing study tends to examine five dimensions of formal institutions i.e. -voice and accountability, political stability, government effectiveness, regulatory control, rule of law- in a single study within the context of social capital and international entrepreneurship. By utilizing all the five dimensions the existing research theoretically explains empirically observes the effect of individual level social capital on international entrepreneurial entry made by entrepreneurial ventures.