Publication: Journal of Business Venturing
We examine how country-level institutional context moderates the relationship between three socio-cognitive traits—entrepreneurial self-efficacy, alertness to perceived business opportunities, and fear of failure—and entrepreneurial action. To do this, we blend social cognitive theory (SCT) with institutional theory to develop a multi-level model of entrepreneurial entry. We merge data from the Global Entrepreneurship Monitor (GEM) surveys and the Economic Freedom of the World (EFW) index for 45 countries from 2002 to 2012. Our results, which are based on a multilevel fixed-effects model, suggest that entrepreneurs’ self-efficacy and alertness to perceived opportunities promote entrepreneurial action while fear of failure discourage it. However, the strength of these relationships depends on the institutional context, with entrepreneurial self-efficacy and alertness substantially more likely to lead to new ventures in countries with higher levels of economic freedom. These results suggest that economic freedom not only channels individual efforts to productive entrepreneurial activities, but also affects the extent to which individuals’ socio-cognitive resources are mobilized to encourage high-growth entrepreneurship.